Rightmove plc, the UK’s largest property portal today provides a further update as a result of the evolving COVID-19 situation.
The speed of the slowdown in the UK housing market has been significant. Notably the number of property transactions failing to complete in recent days and likely changes in tenant behaviour following the announcement of the renters’ protections by the government may put further pressure on estate and lettings agents.
Although the likely duration of these market conditions is unclear, given this sudden challenge for customers Rightmove has chosen to offer more substantial assistance to support their businesses.
A statement from Rightmove read: “This follows extensive dialogue we have had with many of them. We also firmly believe this rapid action is in the long term interests of our shareholders.
“In recognition of the unprecedented environment we will today be contacting all our Agency, New Homes and Commercial customers to let them know that from April we will be discounting their invoices by 75% for the next four months, superseding our deferred payment offer.
“During this difficult time we will continue to innovate to make home moving easy for customers and home movers for our long term growth.”
The financial impact of these actions over the next four months will result in a reduction in revenue of £65m to £75m for the financial year ended 31 December 2020. The Board at Rightmove believed that it was important to act quickly and were are able to implement this initiative given the strength of its balance sheet.
Peter Brooks-Johnson, CEO, commented: “At Rightmove we are doing everything in our power to rise to the challenges of COVID-19.We have chosen to utilise our position to support our customers at this difficult time.”
The move comes as the number of property transactions failed to complete across the UK rose and the group anticipates changes to rental behaviour.
Following the announcement, the shares in Rightmove rose 4% in early trading.
Nicholas Hyett, Equity Analyst at Hargreaves Lansdown
On some levels Rightmove is perfectly placed to ride the coronavirus storm – it’s high margin, capital light, cash generative and debt free. Unfortunately the same cannot be said for its customers.
Estate agents have been struggling for some time, but a spike in the number of property transactions falling through has clearly got Rightmove worried and it’s taken the decision to sacrifice profits in the short term to help customers keep their heads above water. That’s sensible, but whether it will be enough remains to be seen.
In the long term a strong balance sheet should mean Rightmove’s well placed to weather a downturn, but if the looming economic slowdown sees a shakeout in estate agency that could have permanent consequences for revenue and profits.