Franchise veteran issues warning on future of lettings market

Winkworth’s latest figures to shareholders show that sales revenues have slumped badly - but lettings have boomed for the moment at least.

The company insists the new figures, for the first half of this year, appear worse because they are contrasted with “the extraordinarily strong first half of 2021.”

Sales revenues were down by 39 per cent to £15m and pre-tax profits dropped 46 per cent to £1.07m.

However lettings revenues were up by eight per cent to £12.7m.

Even so, some storm clouds may be gathering in the lettings world according to 

Simon Agace, Winkworth’s non-executive chairman. 

He says: ““Over the course of my career, I have experienced the Rent Acts pre-1986 and I am, therefore, personally wary of the outcome of the current debate on the relationship between landlords and tenants.

“It is interesting to note that the Irish government has recently suggested introducing incentives to encourage landlords to grant longer leases to tenants in return for tax incentives, whereas in the UK, July 2022’s White Paper considers scrapping fixed-term tenancy agreements altogether.

“While the build to rent sector may replace some of the demand at the mid to lower end of the market, it will not replace the higher demand for the individual and varied supply of rental properties generated by the private rental sector.”

And he adds: “At this point of the cycle, we suspect that Winkworth’s sales business will grow faster than rentals.”

Commenting on the latest figures, Winkworth chief executive Dominic Agace says: “We enter the second half with an overhang of unfulfilled business, the confidence that our franchisees are adept at adjusting rapidly to changing markets, and a business model that is designed to perform throughout the property cycle.

“We do expect the increased cost of borrowing to have an impact on property, softening demand and slowing the price increases seen of late. With strong levels of employment, however, as well as the significant pent-up demand to relocate post-Covid, and as the cost of renting increases, we expect sales demand to remain strong for the remainder of the year, with prices in positive territory.

“Beyond that, much will depend on the trajectory of interest rates and macro-economic factors.”