London estate agency group Foxtons has reported a 57% decline in pre-tax profit to £4.4m for the six months ending 30 June, as the company navigated weaker sales market conditions and the effects of the Renters’ Rights Act on its lettings business.
Revenue fell 3% year-on-year to £83.7m, with sales revenue declining 13% due to lower transaction volumes. The company attributed the drop to reduced stamp duty-driven activity compared to the previous year, alongside weak consumer confidence and higher interest rates.
Rental reforms trigger revenue reversal
While lettings revenue remained broadly flat overall, Foxtons recorded a £3m reversal of previously recognised revenue following increased tenant-led tenancy terminations after the introduction of the Renters’ Rights Act. This reversal directly impacted profitability, contributing to a 29% fall in adjusted operating profit to £8.9m.
The company said the impact of elevated tenant terminations has moderated since May, with levels expected to stabilise in the second half of the year. Foxtons does not anticipate significant changes in tenant behaviour or occupation levels over the medium term.
The broader London sales market remains under pressure, with buyer activity continuing to be constrained by weak consumer confidence and elevated interest rates, according to the company.
Cost savings and strategic focus
Foxtons implemented cost-saving measures generating £1.3m in savings during the first half, with annualised benefits expected to reach £4.5m. The measures include a proactive cost-reduction programme in response to sales market headwinds and savings from the January 2026 headquarters relocation.
The company reported that recurring and non-cyclical income streams now account for 69% of total revenue, up from 65% a year earlier. Financial Services revenue rose 20%, driven by stronger refinancing activity and increased ancillary income.
Net debt increased to £28.4m, reflecting lower cash generation, acquisition spending of £8.8m and shareholder returns. The group’s revolving credit facility has been increased from £40m to £50m to support future growth, including two platform acquisitions in Milton Keynes and Birmingham.
Market outlook
Foxtons maintained its interim dividend at 0.24p per share despite the challenging trading environment. The company expects full year 2026 adjusted operating profit to be in the range of £17m-£19m, with performance weighted towards the second half.
Chief executive officer Guy Gittins acknowledged the challenging backdrop of continued sales market weakness and short-term lettings volatility, while noting the company’s continued execution on its strategy.
The company believes the Renters’ Rights Act will create medium-term growth opportunities by driving demand towards larger quality agents, increasing adoption of ancillary services, and accelerating sector consolidation. This comes as the wider market experiences declining rental property availability, with underlying drivers of the lettings market remaining robust and demand continuing to outstrip supply.
