A business consultancy says the improved economic prospects created by an estate agency’s recent acquisitions has been eaten up by the government’s National Insurance hike.

The investment consultancy Edison, which advises Foxtons, has issued a statement praising the agency’s surprise move into commuter towns.

Last month is snapped up two agencies, taking the company into markets outside London for the first time in many years. It acquired Haslams in Reading and the Imagine Property Group in Watford – each of them has three branches in their respective patches. 

Analyst Andy Murphy from Edison issued a note at the start of the weekend saying: “Foxtons Group’s recent acquisition of estate agents in two London commuter towns highlights the outer-London potential for low-risk, value-added expansion. Furthermore, it adds to the developing success of the company’s strategic vision and implies that medium-term targets are now coming into focus.”

However, he adds: “We have updated our forecasts for the deals, but additional profit from the acquisitions is broadly matched by the increase in employer’s National Insurance costs, hence we retain our valuation.”

At the moment businesses pay a rate of 13.8% on employees’ earnings above a threshold of £9,100 a year.

In the Budget at the end of October Chancellor Rachel Reeves said this rate would increase to 15% in April 2025, and the threshold would be reduced to £5,000.

The employment allowance – which allows companies to reduce their NI liability – will increase from £5,000 to £10,500.

More recently Reeves addressed the CBI business group’s conference and pledged not to come back again to slap higher taxes on companies.

At the time of Foxtons’ acquisitions, agency chief executive Guy Gittins said: “Our latest acquisitions add to our strong track record of identifying, acquiring, and integrating high quality lettings businesses to deliver attractive returns and are a key part of our strategy to deliver £25m to £30m adjusted operating profit in the medium term.

“We are delighted to have completed the acquisitions of Haslams and Imagine as we continue to pursue acquisitive lettings growth, to supplement our organic growth strategies. We have been impressed with the quality of both businesses which hold established leadership positions in their local markets and have built long-standing client relationships over many years, making them a great fit with Foxtons.

“Reading and Watford are new markets for Foxtons and reflects our confidence that the Foxtons operating platform, and in particular our technology, data and reach can unlock new growth opportunities in these new markets.”