There has been a significant increase in the number of UK estate agents declaring insolvency, fresh data shows.

According to figures from the Insolvency Service, 286 UK estate agency firms went out of business in the 12 months to 31 July, a 32% increase from the 216 in the previous year.

The highest cost of borrowing for 15 years has hit lettings as well as sales, according to Forvis Mazars, an international tax and advisory firm, which said buy-to-let was no longer the investment of choice for many investors, as they seek better returns elsewhere.

Rebecca Dacre, a partner at Forvis Mazars, said: “The high level of estate agents going insolvent shows just how tough the last few years have been for the sector. Higher interest rates have proved to be a significant deterrent to virtually anyone moving up the housing ladder.

“Smaller-scale local firms can find themselves at substantial disadvantage against their larger regional rivals and an increasing number of PE [private equity]-backed consolidators who can invest more marketing spend to attract those instructions that are still coming through.”

Ex-agency boss tells agents to transition business models towards recurring income