Some previously successful estate agents working in the top end of the London market are said to be in trouble.

Although property prices are so high in London, the agents have been hit by the combination of very low sales volumes and the extremely costly overheads associated with operating in the capital.

One agent is said to have had administrators appointed last month, and Ed Mead, director of Douglas and Gordon, said two more high-end firms are “tottering”.

He told Eye: “I suspect there will be many more. Indeed, there are very few agents who made money in prime central London last year and it’s only going to get worse.”

Other agents have spoken of the extremely difficult start to the year for the London market.

Cluttons said there had been “a sharp tailing off in demand during the first quarter, with vendors withdrawing properties and buyers adopting a ‘wait and see’ approach”.

Faisal Durrania, international research and business development manager at Cluttons, said there had been “a conspicuous absence of activity”.

Knight Frank has also reported a 2.3% rise in prime central London sales prices in the year to May – the lowest uplift in five and a half years. Tom Bill, Knight Frank’s head of London residential research, says that Stamp Duty Land Tax is a significant problem.

Mead, writing on the Douglas & Gordon website, says: “The pressure the Treasury has been putting on the sector, squeezing every last penny in what has seemed like an ever-increasing vice, seems to be taking its toll, with previously successful top-end estate agents now going into liquidation and the number of deals continuing to fall.

“Slipping in under the Mansion Tax wire, though the changes in last year’s Autumn Statement were trumpeted as doing away with the slab system, benefitting 98% of the population, but for those seeking their dream Chelsea home the effective rate of SDLT is now 12%.

“So for those worrying about volumes in London continuing to fall, I’d say they’re right.

“Values, far more likely to catch the journalist’s eye, would seem set fair to rocket at some point for exactly the same reason they always have – lack of supply.

“Sadly it seems that this more brittle driver of values is going to continue to set the tone.”

Mead’s blog is here