You are here: Home - Mortgages - Buy To Let - News -

Foxtons profits plummet 65% as London property market stalls

0
Written by:
28/02/2018
Foxtons estate agency has announced a 65.4% plunge in profits in 2017 in its preliminary statement for annual results – the third consecutive fall since 2015.

Foxtons currently has 67 branches across London and Surrey, and covers around 85% of Greater London.

The exposure to the capital – once its source of growth – is now the group’s vulnerability.

Analysts at the higher end of the market had previously predicted a £9m profit before tax, but the results showed that pre-tax profits fell 65.4% to £6.5m from £18.8m in 2016.

This marks another year of marked declines for the group, as it continues to battle a cooling London market. Foxtons’ pre-tax profits more than halved in 2016, falling to £18.8m from £41m in 2015 – which had dropped from £42.1m in 2014. Group revenues for 2017 fell to £117.6m from £132.7m in 2016.

The lettings division remains its strongest area.

Market risks

Foxtons’ chief executive officer Nic Budden said he expected trading conditions to remain challenging in 2018, and noted that current sales pipelines is below where it was this time last year.

The statement warned that continuous property price inflation could impact affordability and reduce transaction levels, and Brexit may harm the capital’s “standing as a major financial city”.

Furthermore, the challenge of a highly competitive marketplace was emphasised, as “new or existing competitors could develop new services or methods of working include online and hybrid agents which could give them a competitive advantage over Foxtons”.

Outlook

After years of expanding branch presence to capture market share, the group will now focus more on the less cyclical lettings side of the business, adding that there are “several initiatives underway to promote growth in the lettings business”.

It will make investments in tech to cut down costs, increase branch reach, and facilitate targeted digital marketing using new analytical tools and a “vast customer database”.

Budden said: “2017 was a challenging year for the property market in which Foxtons operates.

“Whilst the lettings business continues to deliver a steady income stream for the group, the London sales market continues to be weighed down by the impact of stamp duty tax changes introduced during 2016 and declining consumer confidence, as a result of the general macro-political uncertainty

“Notwithstanding the challenging environment, Foxtons retains a strong balance sheet, high cash generation and no debt which allows us selectively to invest in areas that will drive long-term growth of the business.

“We will continue to review and optimise our business structure and leverage our proprietary technology and data in order to make our agents as productive and competitive as possible.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
2316771-online-banking
Refund scheme for money transfer victims to be launched

Victims of Authorised Push Payment (APP) scams will be better protected later this year as a uniform refund scheme is...

Close