London-focussed agency Foxtons has reported a huge leap in revenue from its lettings division.

Lettings revenue was up 27 per cent in the first quarter to £22.8m contrasting with £17.9m for the same period last year, with organic revenue growth of 20 per cernt and £1.3m contribution from lettings acquisitions completed in May 2022 and March 2023. 

Lettings revenue now constitutes 69 per cent of the Foxtons group’s overall revenue, up from 60 per cent last year.

A statement to shareholders says: “Organic revenue growth was underpinned by operational improvements and an increase in average revenue per transaction. 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.”

The same statement included a shock for the agency’s sales division – revenue for the first quarter of 2023 declined 16 per cent to £8.1m thanks, it says, to the lower under-offer sales pipeline at the start of the year, resulting from reduced buyer activity following the disastrous Liz Truss September mini-budget.

The new chief executive of Foxtons, Guy Gittins, says: “We delivered good year-on-year growth in the first quarter, reflecting strong growth in our resilient lettings business as operational improvements and high levels of tenant demand drove strong organic revenue growth, supplemented by incremental revenues from acquisitions.

“As expected, sales and financial services revenues were lower year-on-year, reflecting the lower under-offer pipeline at the start of 2023 and volatility in the mortgage market. Over the course of the quarter, operational improvements and increasing levels of buyer demand, meant we have made good progress in rebuilding the under-offer sales pipeline. 

“We are focused on delivering the operational upgrades I set out in March at pace. Key areas of progress in the quarter include rebuilding fee generating headcount and embedding estate agency culture changes; including prioritising lead generation in competitive markets, focusing on core estate agency KPIs and improving cross-sell across the Group.

“I am encouraged by the early results achieved to date. We have grown our market share of sales instructions and completed the highest number of viewings in the last five years, delivered growth in the cross-sell of Lettings property management services, and in financial services delivered growth in both the volume of mortgages underwritten and the cross-sell of protection products. 

“I remain confident in our refocused strategic priorities and the determination of the business to deliver market share growth and shareholder value by making Foxtons London’s go-to estate agent.”