Rightmove said it had enjoyed its busiest January as a record number of UK homebuyers search for properties even though they are likely to miss out on a government tax break.
Buyers who make a purchase now face missing out on the stamp duty holiday, which has increased the threshold for paying the tax on a new home from £125,000 to £500,000.
The tax break is scheduled to end in March, although it may be extended to June. However, even with an extension, many buyers agreeing a sale now will not have completed on time, as property agents and surveyors struggle to deal with the volume of demand for new homes.
Rightmove’s comments came as it announced annual results for 2020, which included tumbling sales and profits, largely due to a 75 per cent discount offered to member agents between April and July, and a smaller reduction until September.
The FTSE 100 company said operating profits fell 37 per cent to £135.1m, while revenues declined 29 per cent to £205.7m.
Even with the discounts, some member agents complained Rightmove’s fees were too high given the housing market was effectively closed between March and May, and as a result left the platform. The portal’s membership fell 3 per cent in 2020.
Rightmove’s operating margin in 2020 was 66 per cent, down from 74 per cent in 2019, and the company’s average revenue per customer per month increased to £1,103 over the year.
Anthony Codling, an independent analyst, said: “Rightmove has previously shown itself recession-proof, and for now, it seems to be pandemic-proof as well.”
Despite the fall in membership, more homes were advertised on Rightmove in 2020. Traffic to the site increased by almost a third on 2019 as the stamp duty holiday and demand for more space drove buyers to the market.
Interest from prospective buyers has not dimmed, even with the end of the stamp duty holiday in view. Rightmove recorded its highest number of visitors in a single day on February 17, according to Peter Brooks-Johnson, Rightmove’s chief executive.
“It’s been a year where the Great British public’s obsession with property has been really clear,” he said.
Natasha Brilliant, an analyst at Citi, said Rightmove had been “remarkably resilient through Brexit and the pandemic”.
But the bank put a sell rating on the company, citing concerns that fee increases that had driven revenue growth to date were approaching a ceiling.
“Historically this has been a great business model: put through some price increases in January and it’s job done. Despite some complaints from agents, it’s a very sticky model with a captive audience. But we wonder how sustainable that is,” added Brilliant.
Brooks-Johnson said he expected revenue growth to come from the launch of new products from agents, rather than higher fees or a growing membership base.
Shares in Rightmove fell 2 per cent to 593p on Friday morning.