London-focused estate agent faces sales slowdown, with revenue from lettings falling as ban on one-off fees looms

This article is more than 3 years old

This article is more than 3 years old

Profits at London-focused estate agent Foxtons have plunged by 64%, hurt by slowing demand and increased economic uncertainty.

Foxtons said pre-tax profits in the first half of this year dropped to £3.8m from £10.5m in the same period of 2016. Group revenue fell 15% to £58.5m in the period.

Once known for its pioneering coffee shop-style outlets and fleet of Mini cars, Foxtons floated in 2013 ahead of a market peak and has since failed more than once to meet market expectations.

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The company has been warning since 2014 that double-digit price rises and strong demand in London were cooling, hitting its profits.

Foxtons chief executive Nic Budden blamed “unprecedented economic and political uncertainty” for the fall in profits.

Sales revenue crashed 29% to £22.2m in the period, with Foxtons saying the performance was set against a surge in the first quarter last year, when transactions were brought forward ahead of the stamp duty surcharge on buy-to-let investments and second homes.

The estate agent again also pointed to “inflationary pressures on household incomes”.

Budden said in March that the London market was “severely impacted” by the Brexit vote, which he claimed had led to a “substantial reduction in property sales transactions”.

The numbers come after official figures showed annual house price growth cooled down further in May.

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Britain’s housing market has slowed sharply since last June’s vote to leave the EU, when prices were growing by almost 10% a year.

The UK’s third-largest housebuilder, Taylor Wimpey, said earlier that it believed the risk of material impact on the market from the EU referendum in the short term has significantly reduced.

Revenue from lettings, a strong area for the firm that could be hit as the government introduces a ban on one-off tenant fees, fell by 2% to £32.1m.

The letting fees, which are to cover the cost of conducting viewings, verifying references and drawing up contracts, have become an increasingly important money-earner for the industry, averaging £337.

Lettings now represent 55% of Foxtons’ revenue.

“As the lettings market grows, it is becoming more complex too, with significant new regulation, legislation and tax changes introduced in recent years,” the company said in a statement.

In the longer term, while recent political events have produced uncertainty for buyers and sellers, Foxtons said it expected London to remain a highly attractive property market for both sales and lettings.