Foxtons' slump in sales means 55% of revenue now from lettings

Foxtons has reported its half-year figures for the six months to the end of June and, as expected, they show how tough the London market is right now.

The agency reported a 64 per cent drop in pre-tax profits to £3.8m while total revenues at the group fell 15 per cent to £58.5m. 

Lettings revenue for the six months was £32.1m - that’s down two per cent against the same period of 2016. Volumes were up one per cent but this was offset by a fall in rental rates. However, the company has told the City this morning that this remains “a resilient, recurring revenue stream.”

Sales revenue was £22.2m - that’s down 29 per cent in the half year, although that is compared against a busy first half of 2016 when the stamp duty surcharge on additional homes was about to launch. 

The April-May-June period of 2017 saw sales revenue down three per cent overall against the previous year “impacted by increased political uncertainty towards the end of the period” says the company.

Nic Budden, chief executive, says: “Our performance has been resilient in the context of a London property market that has been further impacted by unprecedented economic and political uncertainty. 

“Whilst sales commissions in the second quarter as a whole were down three per cent versus prior year, sales exchanges and our under offer pipeline weakened through June and the early part of July. The growth in our lettings portfolio was encouraging, up two per cent to circa 19,800 tenancies and now accounts for 55 per cent of group revenues, delivering a steady and recurring income stream.

“During the last six months we have maintained our relentless focus on delivering a market leading service for our customers and that remains our priority. We recently launched MyFoxtons for tenants and buyers, a sophisticated online portal to complement the equivalent for landlords and vendors launched last year, and early feedback has been encouraging. 

“We have several new and exciting initiatives underway designed to build our lettings portfolio and strengthen our customer offer further. While conditions remain challenging, we are confident that these initiatives, together with the strength of our network, our balance sheet and our brand will support long term growth for our shareholders.”

City analysts Jeffries this morning said Foxtons’ figures were at the higher end of expectations. 

Analyst Anthony Codling says: “To some extent Foxtons has to roll with the punches whilst the London housing sales market remains dreadful, however it is boxing clever in lettings and although rents are falling the Group has increased the number of properties under management. 

“We expect the trends of the first half to continue into the second half of the year.  Foxtons is a fighter and although the results took a hit in the first half, with cash on its Balance Sheet it has the stamina to stay in the ring for many more rounds to come.”