London-listed estate agency Foxtons recorded a noticeable drop in revenue in the third quarter of the current financial year. The property group's total revenue fell by six per cent year-on-year to £45.9 million. The effects of the current regulatory intervention via the British Renters' Rights Act, which weighed on the group's operational lettings business, are considered the main reason for this development.
The downward trend was particularly evident in residential lettings, which traditionally forms a main pillar of the London company's business model. Revenue in the lettings division fell by seven per cent during the reporting period to £31.1 million. Market uncertainty in the wake of the legislative reforms noticeably dampened tenancy transaction volumes.
Regulatory reforms weigh on the lettings segment
The Renters' Rights Act aims for far-reaching changes in the relationship between landlords and tenants and brought operational delays to the London market. Both landlords and institutional players acted with greater caution in view of upcoming obligations, leading to temporary stagnation in new agreements and portfolio realignments. Foxtons felt this reluctance directly in its lettings division, which generates the majority of overall revenue.
The group also suffered losses in residential sales transactions. Revenue in the sales division decreased by five per cent in the third quarter to £12.0 million. The sales segment thus fell short of the previous year's level, although the decline was more moderate than in the lettings sector, which was under greater regulatory pressure.
Quarterly results at a glance
- —Group-wide total revenue: down 6 per cent to £45.9 million
- —Lettings revenue: down 7 per cent to £31.1 million
- —Property sales revenue: down 5 per cent to £12.0 million
The latest figures illustrate the immediate vulnerability of property service providers to legislative intervention in the private rental sector. Foxtons now faces the challenge of adapting its organisational processes to the new legal framework and stabilising market share in its core London territory despite the demanding environment.
