Editor's note: This brief was summarised by The Property AI Team from a report by Property Industry Eye. Read the original article for full details.
Foxtons Shares Drop After £3m Hit from Renters’ Rights Act
Foxtons’ shares fell almost 11% after the estate agency reported that the introduction of the Renters’ Rights Act had reduced its first-half earnings by up to £3 million. The company said the new legislation, which abolished fixed-term tenancies and gave tenants greater flexibility to end agreements, led to a marked increase in tenancy terminations and weighed on short-term earnings.
Foxtons expects its adjusted operating profit for the first half of the year to be around £8.5 million, down from £12.3 million in the same period last year. The company also noted that residential sales remained subdued, citing political uncertainty, conflict in the Middle East, and higher borrowing costs as contributing factors.
In response to these challenges, Foxtons has introduced cost-saving measures expected to deliver annualised savings of £4.5 million. These measures include a targeted efficiency programme and the relocation of its headquarters.
Despite the short-term impact of the Renters’ Rights Act, Foxtons stated that it expects demand for professional lettings and property management services to increase over time under the new rental legislation. The company has narrowed its full-year adjusted operating profit guidance to between £17 million and £19 million, with performance expected to improve in the second half of the year as seasonal lettings activity strengthens and tenancy termination rates begin to normalise.
Foxtons’ shares closed at 39p, down almost 11% on the day and close to half their value at the start of the year.
Source: Property Industry Eye