Foxtons Revenue Slips 6% as Renters' Rights Act Bites

Foxtons says third-quarter revenue fell 6%, with the Renters' Rights Act unsettling lettings and higher mortgage costs weighing on sales. Even so, the estate agency group expects full-year adjusted operating profit of £17m to £19m, in line with its July guidance.

The chief executive's reading

Chief executive Guy Gittins said lettings traded broadly in line with expectations, and that the first disruption after the Act arrived eased through the quarter. Re-letting activity stayed robust, he said. His summary: "We continue to see longer-term benefits from the RRA, notwithstanding some short-term volatility."

Gittins also wants the government's Your First Home scheme to cover pre-owned homes, not only new builds, in a modified form. He argues that this would open up the housing market without repeating the price rises linked to Help to Buy. He added that stamp duty remains a major obstacle to housing transactions.

Buying more, spending less

Foxtons completed four acquisitions in September, adding operations in Birmingham, Watford and Reading. It expects returns above its 20% return-on-invested-capital target, though those returns have not yet appeared. It has also found further lettings acquisition opportunities.

On costs, a reduction programme delivered £4.5m in annualised savings. Part of that came from downsizing the sales operation in the first half. The company says it kept its market share despite the smaller sales business.

Lettings: an early-exit hit

The Renters' Rights Act took effect on 1 May. Foxtons says many tenants ended their agreements early afterwards. That cost £2.7m of revenue in the third quarter and £5.7m across the first nine months. Terminations peaked in May and June and eased through the quarter and into October. The company adds that the financial effect was largely non-cash.

Strip those terminations out and year-to-date lettings revenue grew £3.5m. Acquisitions supplied £2.6m of it. Build to Rent and extra property management services also helped. On the reported figures, nine-month lettings revenue still fell 3% to £85.8m.

Sales and financial services

Sales revenue was £12m in the quarter, down 5%. Like-for-like volumes held steady, yet each sale brought in 8% less. Foxtons ties this to a bigger share of cheaper homes, since mortgage affordability constrained buyers at the upper end. Over nine months, sales revenue fell 10% to £35.5m, despite £1.1m from acquisitions.

The company says London buyers have been held back by uncertainty about the economy, geopolitical strain and costlier borrowing. Regional markets held up better, which it says backs its move beyond the capital.

Financial services revenue fell 7% to £2.9m in the quarter because smaller average mortgages cut the revenue earned per deal. For the nine months the division grew 9% to £8.3m, which the company puts down to refinancing activity and extra product sales.

The totals

Group revenue for the three months to September was £45.9m, against £49m a year earlier. Lettings accounted for £31.1m, down 7%. Over the first nine months, group revenue fell 4% to £129.6m from £135.1m in 2025.

Our Take

Foxtons presents the lettings hit as temporary, and the monthly trend it describes supports that for now. The sales side looks harder to fix, since it depends on mortgage rates and buyer confidence. Acquisitions supplied much of the lettings growth, so the next results will show whether the existing business recovers without them.

Source: Property Industry Eye