Foxtons has made up to 60 of its agents redundant after a sudden downturn in the London property market that caused the estate agent’s annual profit to fall.

The London-based agent hired extra staff early last year expecting the frenzied property market to continue. But an abrupt slowdown in the second half prompted it to cut between 50 and 60 jobs – representing up to 7% of its workforce – towards the end of the year.



Foxtons’ chief executive, Nic Budden, told industry analysts: “We saw very significant activity in the market during the first half of 2014. We had already used up excess capacity in the business in 2013. We began to recruit for what we thought was a longer term uplift and as the downturn came we were a little bit overstaffed and we reduced that overstaffing.”

The job losses may not draw that much sympathy from buyers and sellers of houses in London. Foxtons’ sharp-suited agents are known for their aggressive sales tactics, high commissions and for driving round in liveried Minis.

Foxtons employees are encouraged to live on their wits and have little security from the outset. When a new agent is hired, they are given the use of a boldly painted Foxtons Mini and can choose to earn a £10,000 salary – less than the minimum wage – plus 10% commission or a £17,500 salary plus 5% commission.



The group’s earnings before interest, tax, debt and exceptional items fell by 6.9% to £46.2m in the year ending 31 December. The figure, Foxtons’ preferred measure, was roughly in line with analysts’ average forecasts. Pre-tax profit rose 8.2% to £42.1m.

Foxtons blamed much of the market slowdown on wariness among buyers and sellers created by the approaching general election.



Budden said: “We see the sales market remaining somewhat constrained until at least after the general election and even then we will need some certainty and clarity in the market before we can predict with any level of certainty where volumes are likely to move in the market.”

Foxtons is warier about prospects for the property market this year than its rival, Countrywide, which said late last month it expected some sluggishness until the election. Labour has proposed a mansion tax and there is general pressure to find new ways to tax property because rich people cannot move their houses to avoid the taxman.

With the polls tight and another coalition government a possibility, Foxtons thinks it may take longer for buyers and sellers to feel confident about government policy. Budden warned that even an immediate boost to the market following May’s election would take until the final quarter of the year to turn into revenue.

Business at Foxtons boomed after it floated on the stock market in 2013 as the property market took off after years in the doldrums. But the company warned in October that annual earnings would be well below forecasts of £57m as the London market slowed down.



Foxtons listed its shares at 230p in September 2013 and they jumped to 399p by the end of February 2014 as activity in the London housing market became feverish. They have roughly halved since then and were down 2% at 202.75p in late morning trading on Wednesday.

One of Foxtons’ tactics is to charge no commission when it opens a new branch to win business from established agents. Budden said it sold 500 houses for zero commission last year at a cost of about £5m and that sometimes new branches were taking sales from nearby Foxtons offices.

“We may look to attenuate it in bits and pieces” in those circumstances but the policy will remain broadly intact, he said.