Foxtons is warning that the private rental sector - traditionally a strong earner for the company even in times of challenging sales markets - is under threat on a number of fronts.
“In the last five years over 150 new regulations have affected landlords; ranging from responsibility for tenants residency status to licensing requirements, enhanced maintenance criteria and increased financial sanctions” explains the company in its annual report, issued yesterday.
“Recent tax changes have reduced the attractiveness of purchasing new investment property, through higher stamp duty, and reduced returns for some landlords as new financing tax changes take effect.
“As the rental market grows, new institutional operators have begun to enter the market, providing a more professional rental experience. Whilst small private landlords still own the vast majority of rented homes, there is now considerable financial and government impetus behind the institutional build to rent sector.
“Estimates of capital poised for investment range between £30 billion and £50 billion, and developers have received support from both the Government and the London mayor” it adds.
However, it says its long term focus on lettings and expertise provides a significant competitive advantage and leaves the agency well-placed, despite the sector’s changes.
However, it says its long term focus on lettings and expertise provides a significant competitive advantage and leaves the agency well-placed, despite the sector’s changes. In addition, London’s growing population disproportionately relies on private renting, suggesting that rental income will remain a strong income source.
Lettings and property management now constitute over half of Foxtons’ annual income and the firm says it is working on seeking alternative revenue to replace that which may be lost when the letting agents’ fees ban comes into force next year.
You can see the annual report in full here.