Home » Uncategorised »
Foxtons Sees Profits Drop Ahead of Election
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
A slowdown in the property market approaching the general election has affected revenues and profits at London estate agent Foxtons. Buyers and sellers are awaiting the result of next week’s poll.
The chain made revenues of £33.1m in the first three months of the year, a 3.1% drop on the first quarter (Q1) of 2014 when the sales market was its strongest since 2007.
Sales commissions also fell almost 12% to £15.5m in Q1, but lettings were up, with a 5.4% increase to £15.9m. Mortgage broking also rose by 13.5% to £1.6m. Foxtons made underlying profits of £8.3m, which is around a quarter less than the same period in 2014.
Foxtons Sees Profits Drop Ahead of Election
Chief Executive of the firm, Nick Budden, says: “As expected, property sales transactions in London have remained relatively flat since the end of last year with many potential buyers and sellers apparently delaying their decisions until the outcome of the general election is known.
“Encouragingly, growth in our lettings business has continued from the momentum we saw at the end of last year.”1
Foxtons is not anticipating a market boost until there is security after the election. Rival company Countrywide, Britain’s largest estate agent, cautioned this week that market transactions in the first six months of the year would be substantially down on last year’s levels due to the election. However, it is predicting a recovery in the second half of 2015.
The outcome of the election is unclear. Nate Silver, who correctly predicted the results in every state of the US 2012 election, expects a “messy outcome” for the UK, resulting in a possible coalition.1
The sudden drop in profits caused Foxtons to reduce its staff, after hiring more last year for the anticipated long-term improvement. Currently, the firm employs 1,270 people.
Despite the dip, Budden thinks that the long-term fundamentals of the London housing market are secure. Many of Foxton’s branches are situated in less central parts and have reported better levels of volume growth recently.
Foxtons has continuously expanded, opening five new branches in areas such as Walthamstow, northeast London, and Bromley, southeast London. It now has 56 offices. Another two are scheduled to open this year.
Shares in Foxtons increased by 6% to 312p.
