Countrywide shares are crashing after the government made a huge change to the rental market

LONDON – Shares in Britain’s largest estate agency group Countrywide are crashing on Thursday morning, after the government announced huge changes to the country’s rental market.

As of 8.30 a.m. GMT (3.30 a.m. ET), Countrywide’s stock price cratered by nearly 14%, after the group also released a statement confirming that transaction volumes are likely to fall this year and in 2017.

Here is the chart:

On Wednesday, Chancellor Philip Hammond announced in the Autumn Statement that tenancy fees charged by letting agents to renters will be banned. The costs will instead be shifted to landlords. Investors are worried that this could lead to less property going through agencies and instead renting out privately because of the large amount of upfront fees landlords would have to pay.

The announcement sent other property shares crashing, such as London's largest estate agency Foxtons. Its stock price fell down as much as 10% at one point. Foxtons made close to 50% of its revenue - £33.5 million - from letting fees in the first half of the year. The estate agent said in its half-year results that its strong lettings business provides "significant downside protection" to the Brexit-driven slowdown in the London property markets.

On Thursday, it is Countrywide's turn.

Mike van Dulken, Head of Research at Accendo Marketssaid in an emailed statement:

"Shares in UK estate agent Countrywide have fallen through this morning after its Q3 trading statement contained a FY profits warning attributed to less transactions since the referendum and changes to stamp duty.

"Although not specifically mentioned, new Chancellor Hammond's pop at the rentals sector by banning administration fees probably hasn't helped either. With said fees likely generating easy profits, especially in the key London market, their loss is almost certain to hit group margins.

"With less sale/purchase transactions expected in the second half of the year (-6%; declines expected in 2017 too) and negative trends seen in the rental market, the outlook is not exactly fostering a bidding war. Uncertainty related to Brexit isn't helping."