Belvoir trading update: Lettings income offsets sales slump

Belvoir has reported revenue growth for the first half of 2023 despite “challenging market conditions,” with its lettings performance offsetting lower levels of sales activity.

A trading update released ahead of the release of the franchise brand’s half-year results next year showed group revenue was up 3% on 2022, while management service fees (MSF) rose 4%.

This was helped by a strong lettings performance, up 8% and mitigating the lower level of property sales activity, down 9%, Belvoir said.

Total revenue from the property division was 4% lower, having successfully franchised out two corporate-owned Nicholas Humphreys offices in September 2022 and March 2023 respectively, the update said.

Taking into account the 2022 acquisition of the Mr and Mrs Clarke network and the franchising out of the two Nicholas Humphreys offices, lettings MSF in the underlying business was up 6%, ahead of the UK rental index in June 2023 of 5.1%. 

Underlying sales MSF was 12% lower which Belvoir said compared favourably with a reduction of 15% in the number of UK housing transactions completed in the first half of 2023.

Meanwhile, financial services revenue was up 11% with the performance stronger than forecast at the start of 2023. 

During the first half of the year, the total number of mortgages written by group advisers increased by 11% annually to 10,252.

The ratio of purchase mortgages to remortgages/product transfers was 47:53 compared with 61:39 this time last year, with advisers able to service demand from Belvoir's extensive client bank.

Belvoir said its pipeline of future acquisition opportunities remains strong.

Dorian Gonsalves, chief executive of Belvoir Group, said its brands have outperformed the uncertain market.

He said: "Our tried-and-tested franchise business model, the diversity of our income streams, the recurring nature of our lettings revenue and our successful acquisition strategy, both at franchisee and corporate level, have enabled the group to meet and overcome the challenges currently facing the property sector.

"Our franchisees derive 80% of their income from recurring lettings fees and have benefitted from increasing rents.

“This has more than offset the impact of a reduction in UK housing transactions in the first half of 2023.  

“Meanwhile, our financial services advisers have been able to meet client demand for remortgages and product transfers in the face of increasing mortgage rates and this has mitigated the reduction in new purchase mortgages.”