London Daily

Focus on the big picture.

Foxtons cashes in on London rents aided by 'longer non-cancellable tenancy deals'

Foxtons cashes in on London rents aided by 'longer non-cancellable tenancy deals'

The company's latest update to investors shows how it is benefiting from the lettings market at a time when house prices are easing back following their COVID pandemic era spurt.

The London-focused estate agency Foxtons has been accused of "boasting" after recording a 27% leap in lettings revenue, partly aided by a focus on securing "longer non-cancellable terms" from tenants.

The company reported a 10% increase in total revenue to £32.9m during the first three months of the year - driven by its lettings division which contributed £22.8m of that sum.

Poor availability and high demand saw rents rise by an inflation-busting 20% in 2022, with the most recent data from HomeLet showing costs still going up.

The average London monthly rent stands at just under £2,000, it reported.

The private rental market has been boosted by growing affordability concerns over house purchases as the Bank of England raises its main interest rate to combat high inflation.

"Organic revenue growth was underpinned by operational improvements and an increase in average revenue per transaction", Foxtons said of its lettings performance.

"Growth in average revenue per transaction includes a focus on securing longer non-cancellable tenancy terms (resulting in a greater proportion of revenue being recognised at the start of the tenancy), increased cross sell of our higher value property management service, and higher average rental prices."

Longer tenancy terms are potentially attractive to all parties.

House prices have eased back while the rental market has been described as 'frenzied'

That is because landlords have greater sight over their short term yields while such deals also give tenants clarity over their costs, despite being locked in for longer.

The shortage of properties is a strong bargaining chip for Foxtons while a recent report for the Royal Institution of Chartered Surveyors warned that fierce competition for rented properties would continue to squeeze prices higher.

It described the lettings market as "frenzied".

Dan Wilson Craw, acting director of the campaign group Generation Rent which speaks up for private renters, told Sky News that tenants were being squeezed horribly by the lettings market.

He said of Foxtons' performance: "This is more to do with the long-term failure to build enough homes to meet demand than Foxtons' operational nous.

"But it is nevertheless grim to see the company boasting about practices that sound like forcing tenants into longer fixed term tenancies or paying multiple months' rent up front.

"Generation Rent has heard from renters who have been told by agents that the only way to secure a tenancy is to sign up for a two- or three-year term, or pay more up front.

"In a normal market, where tenants had a reasonable choice, Foxtons wouldn't be able to name their terms in the same way."

The Office for National Statistics released data on Thursday showing that Britons starting new private-sector housing tenancies spent an average of 26.8% of their income on rent in March.

That was up from 25% in March 2019.

The company, like its rivals nationwide, has struggled in sales of properties.

Transactions and prices have fallen amid the cost of living crisis and the backdrop of rising interest rates, which have made mortgages more expensive.

That slowdown in buying activity was particularly acute in the wake of the Liz Truss government's disastrous mini-budget of last September that spooked financial markets and forced a spike in home loan costs.

While the damage inflicted on rates from the so-called growth plan has now largely been eroded, Foxtons said on Thursday that sales revenues were 16% down on the same quarter last year due to a reduction in completions.

It blamed the fall on the drag caused by the mini-budget.

Sales typically take four months from a price being agreed to exchange.

But it was more upbeat on the future, telling investors: "During the quarter, we saw an increase in instruction market share and we completed the highest number of quarterly viewings in the last 5 years.

"Combined with growing levels of buyer demand, this has supported good growth in the value of the under-offer pipeline over the course of the first quarter."


Related Articles

London Daily
UK Man Jailed for Non-Consensual Condom Removal
Reform UK Surpasses Conservatives in Historic Poll
US, Britain, Canada Accuse Russia of Interference in Moldova’s Election
Taylor Swift Fans Create Seismic Activity in Edinburgh
Sunak Aide Under Investigation for Election Bet
Labour Leader Starmer Focuses on Wealth Creation for Upcoming UK Elections
G7 to Use Frozen Russian Assets for $50 Billion Ukraine Aid
Anti-Israel Irish MEP Clare Daly LOST her seat in the EU Election
Johnson & Johnson Settles Talc Safety Claims for $700 Million
EU Urged to Welcome Skilled Russians to Weaken Putin
EU Elections Overview: Far-Right Gains and Major Political Shifts
Israel Rescues Four Hostages from Gaza
Emmanuel Macron Calls for Snap Election
Jordan Bardella: Young Far-Right Leader Poised for Future Political Influence in France
World's Oldest Privately Owned Book Auctioned for $3.8 Million
Animal Rights Activists Deface King Charles' Portrait in Protest
Dutch Military Intel Uncovers Extensive Chinese Cyber Espionage
Turkish Student Arrested for Using AI to Cheat in University Exam
Rise in Dengue and Other Mosquito-Borne Diseases in Europe Due to Climate Change
EU Elections Overview: Far-Right Gains and Major Political Shifts
Far-Right National Rally Dominates France's EU Vote
Macron Calls Snap Legislative Elections After Far-Right Victory
Far-Right Gains Significantly in EU Election
UK Job Market Shows Signs of Recovery
Orban’s Fidesz Party Wins Majority in Hungary’s EU Elections as New Challenger Emerges
Meloni's Far-Right Party Wins European Elections in Italy
Key Insights from the European Union Elections
European Union Elections and Rise of Far-Right Parties
England Loses Over 260,000 Social Rent Homes in a Decade
Campaigners Urge Government to Block Shein's FTSE Listing
First NHS AI-Run Physiotherapy Clinic Launches This Year
British TV Presenter Michael Mosley Found Dead on Greek Island
Ukrainian Forces Claims First Strike on Russia's Su-57 Fighter Jet
Macron Dissolves Parliament and Calls Snap Elections
Russia Adds Yulia Tymoshenko to Wanted List
UK Foreign Secretary David Cameron Tricked by Hoax Caller Posing as Former Ukrainian President
Kate Middleton's Absence from Colonel's Review Due to Chemotherapy
UK Foreign Secretary Deceived by Prank Video Call
Sunak Criticised Over D-Day Exit in BBC Debate
Rishi Sunak Apologizes for Leaving D-Day Commemoration Early
UK Woman Sentenced After Causing Fatal Crash While Sending Selfies
Danish Prime Minister Mette Frederiksen Assaulted in Central Copenhagen
UN to Add Israel to Human Rights Blacklist
Germany and France Oppose EU Luxury Car Restrictions to Russia
Plus-Sized Miss Alabama Sara Milliken Responds to Online Critics
Nigel Farage's Return Boosts Support for Reform UK Party
Labour Party to Pledge Recognition of Palestinian State in Election Manifesto
British Paratroopers Greeted by French Customs After D-Day Anniversary Airdrop
UK Statistics Watchdog Chief Urges Sunak to Clarify Labour Tax Claim Source
UK Conservatives Promise to Restore Child Benefit for Higher Earners