Foxtons records first loss in a decade after London’s housing woes bite

London’s dire housing market pushed estate agent Foxtons to its first loss in a decade on Monday.

The agent, renowned for its branded Minis and pushy sales tactics, span to a £2.5 million pre-tax loss in the first half of 2018 as it paid the price for a “very subdued” market in the capital. That compared with a £3.8 million profit a year earlier.

Today’s results are the worst since Foxtons, then under private equity ownership, racked up losses in the financial crisis, and also mark its first plunge into the red as a listed company after floating on the stock market in 2013.

Chief executive Nic Budden said: “The property sales market in London is undergoing a sustained period of very low activity levels with longer and less visible transaction outcomes, which clearly impacts our business.”

Property sales have been rocked by stamp duty hikes, attacks on buy-to-let investors and economic uncertainty in the aftermath of the Brexit referendum. According to official figures, London is the worst-performing housing market in the UK and prices have fallen for four months running.

Sales revenues of £17.2 million were 23% down on the previous year, and the immediate outlook for the London sales market also looks poor with “less visibility on exchanges proceeding”.

The losses were also driven by Foxtons’ increased spending on marketing and branding as well as a new, more lucrative pay scheme for its agents to help weather the storm, which put up short-term costs.

Foxtons is betting on steadier income from its lettings business, 60% of group revenue, to combat the volatile sales market. But lettings revenues fell 1% on the prior year, driven by lower rents and there is the prospect of a Government clampdown on letting agent fees.

Its mortgage broker, Alexander Hall, also suffered as rising deal volumes were offset by a greater proportion of lower-margin remortgage business.

Shares in Foxtons, which floated at 230p, have halved in the past year but recovered slightly today, rising 2p to 49.6p.

Credit Suisse analysts noted a “cautiously more optimistic” tone from the agent as it gears up for the peak letting period over the summer.

It also has £11.8 million of cash on the balance sheet.

AJ Bell’s Russ Mould said: “The one saving grace for Foxtons is a very solid balance sheet, which provides the capacity to ride out the soft market conditions, at least for a time.”

.