March 9, 2017 / 8:49 AM / 10 months ago

UPDATE 1-Estate agency Countrywide profit plunges; tax hike hits demand

(Adds details, comment, share movement)

By Justin George Varghese

March 9 (Reuters) - Countrywide Plc’s profit more than halved in 2016 as the largest estate agency by revenue in Britain saw a slump in demand due to higher property tax and the country’s vote to leave the European Union last year.

Shares in the company fell 13 percent to a record low of 162.75 pence in morning trade in London.

Countrywide’s pretax profit fell 59 percent to 19.5 million pounds ($23.7 million) from a year earlier.

The company had forecast income for the full year to be broadly flat at 737 million pounds, after issuing two warnings on results since July. Total income for 2016 rose 0.4 percent to 737 million pounds.

Countrywide warned in January that the volume of house sales in London in the final quarter continued to be below 2015 levels, resulting in a 6 percent drop in the number of deals for the year.

The sales market volatility is likely to continue in 2017, it said.

Countrywide also expects headwinds from tenants’ fees regulation and pressured landlord environment in 2017.

Britain has said it would ban one-off tenant fees to try to bring down the cost of renting and cool the market already hit by a property tax increase in April on houses bought by buy-to-let landlords.

London-focused estate agent Foxtons Group was also hit by a slump in demand due to the property tax hike and Britain’s vote to leave the European Union last year and predicted on Wednesday that 2017 would be tough for sales.

Annual British house price growth cooled in February to its weakest since July 2013, hurt by increasingly squeezed consumer finances, mortgage lender Halifax said on Tuesday.

Property dealers, including Countrywide, are forced to invest in digital expansion, close branches and slash headcount to fight against the growing threat from online agencies that are luring customers by charging lower fees.

“We intend to focus on share gain through digital rollout ... in 50 percent of branches by June 2017,” the company said.

While no final dividend was proposed for 2016, the company rolled out a new dividend policy that will pay out between 30 and 35 percent of earnings. ($1 = 0.8224 pounds) (Reporting by Justin George Varghese and Esha Vaish in Bengaluru; Editing by Sunil Nair and Gopakumar Warrier)

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