Estate agent’s pre-tax profit fell to £10.5m in the first six months of year from £18.1m a year earlier, with Brexit uncertainty blamed

Profits at Foxtons fell by 42% in the first six months of the year as uncertainty and confusion caused by the EU referendum led to a slump in property sales, with the estate agent warning that the downturn in London’s housing market would continue at least until the end of 2016.

Foxtons’ pre-tax profit dropped to £10.5m over the period, from £18.1m a year earlier. Property sales volumes were down by 10.2%, pushing revenues 7% lower to £31.3m. Lettings revenues also suffered in the run-up to the referendum on 23 June, declining by 2.7% to £32.6m. Foxtons scrapped a special dividend as it said the Brexit vote had caused a prolonged period of further uncertainty.

Nic Budden, the Foxtons chief executive, told analysts and investors: “Certainly, interesting times in the first half ... As the EU referendum debate continued, uncertainty and confusion among customers and clients did lead to significantly weaker market conditions.

“We are anticipating relatively weak market volumes through to the end of the year. We’ll probably just take our foot off the pedal a little bit in 2017, naturally taking a more cautious approach to investment while the market settles down.”

Budden said Foxtons would scale back its aggressive expansion plans next year, after opening seven new branches this year. “It won’t be seven next year and it won’t be zero,” he said. Since floating on the London stock market in 2013, the company has opened between five and seven branches a year.

The Monday after the Brexit vote, Foxtons issued a profit warning, which sent its shares plummeting by 25%. The company’s share price fell by 10% to 111p on Friday, after trading 13% lower at one stage.

“Given the unexpected nature of the vote, you saw quite a dramatic fall in new applicants in the week or two following [the] Brexit [vote] and exchanges slowed because people were trying to renegotiate deals,” Budden said. “That was a sharp decline, but that has stabilised and since then it hasn’t got any worse.”



Budden said he remains confident that Foxtons can increase its share of the lucrative London market, which currently stands at between 6% and 7%. “Longer term, while recent political events have produced uncertainty for buyers and sellers, we expect London to remain a highly attractive property market for sales and lettings, and we remain committed to our goal to reach 100 branches across greater London,” he said.

Foxtons’ results came a day after a profit warning from Countrywide, the UK’s biggest estate agent. It said commercial and London residential transactions had stalled following the UK’s vote to leave the EU.



However, property website Rightmove and housebuilder Taylor Wimpey have shrugged off the impact of the Brexit vote, although they also warned of increased uncertainty and said it was too early to assess the long-term impact of the referendum result.

Foxtons’ results for the first six months of 2016.

The year had started well for Foxtons. Revenues in the first quarter hit a record high as property investors rushed to complete deals before the introduction in April of additional stamp duty for buy-to-let properties and second homes. However, this was followed by a sharp fall in sales in the second quarter, as potential buyers and sellers anxiously awaited the outcome of the referendum.

The Jefferies analyst Anthony Codling said: “With a focus on London, Foxtons has to bear the consequences of betting everything on red, rather than the more balanced approach of its listed rivals.



“Expanding in a contracting market is proving even too difficult for Foxtons and growth plans are being reviewed. Perhaps a sign of the times, but even with first-half profits of £10.5m, the stock market value of Foxtons is less than that of the challenger low-cost estate agent Purplebricks, which has yet to turn a profit, recently delivering a full-year loss of £11.9m.”

Foxtons has been pushing into the capital’s outer zones to reduce its reliance on central London. The estate agent has opened five new branches in recent months in Loughton, Sutton, New Malden, Fulham and Maida Vale, taking its total to 63 branches. There are two more branch openings in south London planned for September, in Peckham and Vauxhall, where the company will trial an offering of zero fees to landlords for the first 12 months.

Foxtons noted that London had experienced a significant shift, with nearly 30% of households now living in private rented accommodation, double the rate seen in the past decade. Competition in lettings has intensified as the number of agents has more than doubled.

Laith Khalaf, a senior analyst at Hargreaves Lansdown, said: “If the Brexit negotiations don’t go well, the London property market is probably first in the firing line, because financial jobs could move out of the city. However, at this early stage it’s far too early to judge the likelihood of this happening.”

House prices have so far defied the gloom brought on by the Brexit vote, rising by 0.5% in July, according to Nationwide, Britain’s biggest building society.

Neil Wilson, a market analyst at ETX Capital, said: “But prices are very different to activity in the housing market – strong demand and few sellers coming to the market could squeeze prices higher even if activity collapses.”