Winkworth’s annual figures for 2016 reveal a franchise turnover drop of six per cent and a pre-tax profit fall of 25.6 per cent - but with rental income increasing significantly and plans for new initiatives in the current year.
“The resilience of Winkworth’s franchising model has been demonstrated in a difficult market, while the increasingly balanced exposure between sales and rentals has proved to be a considerable benefit” explains Dominic Agace, chief executive of the company.
He says 2016 was an “irregular” year for sales, with buyer still adjusting to higher stamp duty for the most expensive properties.
“The early part of the year saw a boom in activity in the run up to stamp duty changes on second home properties, but this was followed by a lull surrounding uncertainty over Brexit and its likely implications. Underlying these events, the sales market was driven by strong fundamentals, with interest rates remaining at record lows, employment high, and wage inflation showing an uptick” he continues.
Lettings was the star performer, representing 44 per cent of Winkworth’s income versus 38 per cent in 2015.
“With an improved proposition for landlords, property management commissions grew by 16 per cent to represent 15 per cent of rental revenue compared to 12 per cent in 2015” says the company.
Winkworth says that in geographic terms, the best performing markets over the course of the year were in suburban areas and provincial towns, where higher stamp duty was less of an impediment.
Winkworth’s sales income grew by three per cent in the country markets, despite a pause in activity around the Brexit vote, and represented 27 per cent of its total sales revenues, up from 22 per cent in 2015.
Rental income growth in the country was stronger still, rising by 21 per cent, so that the total contribution to group turnover from of offices outside of London increased from 19 per cent in 2015 to 21 per cent.
Looking forward, Winkworth warns that it believes low unemployment, wage inflation and record low interest rates will continue to underpin the domestic property market.
“While the increased cost of transactions above £1 million and the knock-on effect lower down the chain will continue to act as a brake on transactions in 2017, we are starting to see higher stamp duty absorbed in prime central London where prices are stabilising” says the company, adding that a more stable year to come - without the repeat of a referendum - will lead to improvements in both the country and London markets.
“In the rentals market we expect that the over-supply from the buy-to-let boom will increasingly be absorbed and that demand from corporate tenants will stabilise. As interest in central London, the area most affected, recovers there may be some lowering of rents in greater London as a result” it says.
The agency says it’s launching a recruitment service in the third quarter of this year to help franchisees lower costs while improving their ability to attract high quality employees.
“We are also excited about the new website that was launched this month, providing a platform that will enable clients to deal with their properties and interact with us both on and of ine. Our experienced local franchisees will be in a position to maintain the high standards of personal service that they provide while offering clients new digital options for communicating, transacting or managing their properties” says the company.