Countrywide Stock Falls to Record Low as Brexit, Rule Changes Hit Hard

Countrywide plc (CTYWY) , the U.K.'s largest realtor for rental properties, saw shares fall to a record low Thursday after a gloomy trading update and response to the government's intervention on fees charged to tenants.

The group said full-year transaction levels will be 6% lower than in 2015, due to the cumulative effect of tax changes and a Brexit-related slowdown in activity. Management also forecast transactions are likely to fall again in 2017.

Group revenues for the third quarter were down by nearly 5% to £188.5 million ($230 million), the company said, while 2016 Ebitda is likely to be at the lower end of market expectations, according to management.

"There's no light at the end of the tunnel here," said Gavin Jago, an analyst at Peel Hunt in London.

Countrywide stock slumped as much as 13% in early trading, to a new low of 166.0 pence, extending the full-year decline to nearly 60%.

U.K. finance minister Philip Hammond said Thursday that the government will ban agents from charging administration and referencing fees directly to tenants 'as soon as possible' as part of his official budget statement to parliament.

"In light of the chancellor's announcement yesterday regarding letting agents' fees, we look forward to working with the government through this consultation process," said Countrywide CEO Alison Platt. 

Real estate agents do not break-out their revenues from fees charged to tenants, although Anthony Codling, an analyst at Jefferies, estimates the revenue impact will be £20 million to Countrywide, with around half of that amount translating into a direct bottom line hit of around £10 million, equivalent to nearly 20% of pre-tax 2015 profit.

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