Key facts
- Foxtons' pre-tax profit fell 57% to £4.4m in the year to June.
- The company blamed the Renters’ Rights Act for increased tenant cancellations, resulting in an estimated £3m loss of rental income.
- Sales decreased by 13% in the six months to June.
- The Renters’ Rights Act outlawed no-fault evictions and ended fixed-term tenancies.
- Despite short-term volatility, Foxtons sees medium-term opportunities in the new legislation.
Foxtons has reported a 57% decrease in pre-tax profit to £4.4 million for the year ending June, attributing the decline primarily to the Renters’ Rights Act. The company stated that the new legislation, which outlawed no-fault evictions and ended fixed-term tenancies, led to a surge in tenants cancelling their rental agreements in May and June. This resulted in an estimated loss of £3 million in expected rental income.
The estate agency also experienced a 13% drop in sales during the six months to June. Foxtons cited uncertainty surrounding Prime Minister Andy Burnham's property tax regime and higher-than-expected interest rates, exacerbated by the Iran war, as contributing factors to the challenging London sales market. Weak consumer confidence and elevated interest rates continue to hinder buyer activity.
Despite the immediate financial impact, Foxtons' board indicated that the company sees significant medium-term opportunities once the initial volatility subsides. They noted that landlords are increasingly seeking professional advice on their new obligations under the legislation. Stockbroker Panmure Liberum described the UK's lettings and sales market as having deteriorated but views the current market changes and political uncertainty as temporary headwinds, suggesting Foxtons is well-positioned for future benefit.
Shares in Foxtons saw a 2% increase, trading at 40p in early trading.