Why Foxtons lettings performance is not what it seems

Foxtons has reported to its shareholders that its lettings revenue in the first quarter of this year was a stunning 21 per cent up on the same period of 2021 - but it has explained that the jump is not on a like-for-like comparison.

Foxtons snapped up the lettings book of rival London agency Douglas and Gordon early in 2021 - so the Q1 2022 lettings revenue includes a full three months of D&G lettings business, while the first quarter of last year contained only one month of D&G business following its acquisition.

Foxtons  acquired 2,900 nw tenancies through the purchase of the D&G book.

So this week’s trading statement shows the 21 per cent leap to £17.9m, which reflected an estimated 10 per cent of actual organic growth.

The statement says the London rental market remains characterised by an excess of demand over supply, with increases in rental prices and growth in renewal revenues more than offsetting a reduction in new transaction volumes which were constrained by the supply of available rental stock. 

Commenting on his company’s first quarter performance across sales, lettings and mortgages combined, chief executive Nic Budden says: “I am pleased to report we have had a good start to the year, with all areas of the business trading in line with our expectations. The lettings business has performed strongly, growing both organically and through the contribution from the D&G acquisition. 

“Our sales business has continued to deliver market share growth and entered the second quarter with a healthy under offer pipeline. We continue to take cost action and have made good progress with our pipeline of potential lettings portfolio acquisitions.” 

On the sales side, the agency says its revenue for the first quarter of this year is actually down nine per cent compared to the same period of 2021 when the market was frenzied ahead of the original stamp duty relief deadline.

Sales revenue was £9.6m in the three months to March 31 this year, down from £10.6m in Q1 2021: but it says it is entering 2022 with an under offer pipeline that is eight per cent ahead of the position a year ago.