Lettings drives Foxtons revenues as sales conversions slow

Lettings has helped drive Foxtons revenue and profits for the first half of the year, a company update has revealed.

The listed agent posted its half-year results this morning, revealing 20% revenue growth in lettings but a 17% decline in sales and financial services – albeit compared with last year’s stamp duty holiday rush.

Its adjusted operating profit was £6.2m, up 13%, while pre-tax profit was up 21% to £4.3m.

Foxtons said its sales traded in line with expectations, with revenue down £4.4m, or by 17%, as the first half of 2021 benefited from transaction volumes pulled forward to take advantage of stamp duty relief ahead of the 30 June 2021 deadline, “creating a tougher comparative period.”

It said: “We expect a stronger third quarter in sales compared to the prior year with an under offer commission pipeline of £19m at 30 June 2022, significantly higher than both the prior year and 2019.”

The update warned that under offer to exchange conversions continues to be “slower than normal” due to continuing industry-wide capacity issues in conveyancing and surveying.

It said: “This means, while we saw good levels of buyer demand and agreed sales, the time for these transactions to exchange contracts has extended which can increase the risk of transaction fall through. The time for a property to convert from 'under offer' to 'exchange' was approximately 96 days, 23% higher than pre-pandemic norms, a trend we expect to continue through the second half.”

Meanwhile, lettings revenue grew £6.5m, or by 20%.

Foxtons said: “Organic growth was driven by a 23% increase in average rental prices compared to the prior year, longer tenancies, and growth in Build to Rent and short lets. In the second half, supply of lettings properties is expected to remain restricted but strong tenant demand will likely underpin rents over the remainder of 2022.”

Nigel Rich, chairman of Foxtons, said: "In the first six months of the year we have made significant progress against our plans to reset the business and get back on the front foot. To this end I am very much looking forward to welcoming Guy Gittins as chief executive in September this year.

“In the period, we successfully completed the integration of D&G lettings, as well as making a further two acquisitions in our lettings business to enhance earnings and market share. 

“We enter the second half with a tightening grip on costs, a focus on sales intensity, and an improved ability to generate revenue from prudent investment in negotiators and financial services advisers.

“There remains much to do, but the heart of Foxtons is strong, and we are well placed to accelerate profit growth and realise the potential of the business."

https://www.londonstockexchange.com/news-article/FOXT/half-year-report/15559677