Foxtons’ decision not to pass higher costs on to landlords, following the Government ban on tenant fees, has hit revenues, the estate agent has revealed.
However, the London-focused company said the ban did help grow market share – as landlords shifted away from other agencies which have increased their fees.
Overall, revenues for the three months to September 30 hit £32.5 million, down 7% on the same period a year ago, meaning revenues for the first nine months of the year are 5% lower at £83.6 million.
We continue to manage costs tightly to ensure the business is well-placed to withstand this prolonged market downturn and are confident that this, coupled with our improved overall offer, positions us well for the futureNic Budden, Foxtons
Chief executive Nic Budden said: “Overall, this was a resilient performance set against the London sales market, which continues to deteriorate, and the impact of the tenant fee ban on our lettings business.
“We are encouraged by landlords’ reaction to our improved lettings offer and are confident we can continue to gain share in the London lettings market.
“We continue to manage costs tightly to ensure the business is well-placed to withstand this prolonged market downturn and are confident that this, coupled with our improved overall offer, positions us well for the future.”
The issues with the London housing market hit Foxtons’ sales business in particular.
Revenues from the division dropped 15% during the period to £8.4 million, with the company blaming “a combination of lower volumes, falling prices and fewer high value sales”.
Shares fell 3%, down 2p to 65p by Thursday lunchtime.
The company’s mortgage business, Alexander Hall, was flat with the same period last year at £2.1 million.
Back in 2017, the Government said it would place a ban on tenants being forced to pay fees to letting agents. The legislation came into force this summer.
Charities had welcomed the ban on fees, including charges for looking around a property, setting up a tenancy – such as for referencing or credit checks, or for check-out.
According to Citizens Advice, private renters in England had been paying £13 million a month in letting fees, a total of £234 million between when the Government committed to banning them in November 2017 and June this year when the ban came into force.