Editor's note: This brief was summarised by The Property AI Newsroom from a report by Property Industry Eye. Read the original article for full details.

LSL profits jump as estate agency franchising hits record margin

LSL Property Services increased first-half profit despite weaker residential sales, helped by a sharp improvement in its estate agency franchising business. Group revenue rose 3% to £92.3m in the six months to 30 June 2026, with underlying operating profit up 11% to £15.9m and the underlying operating margin increasing from 16% to 17%.

Franchising division leads the way

The Estate Agency Franchising division recorded a particularly strong first half. Underlying operating profit increased 24% to £3.9m on revenue up 2% at £13.2m, with the division's underlying operating margin reaching a record first-half level of 30%, helped by restructuring carried out last year.

The franchise network expanded by 13 branches, following the acquisition of a small South Coast franchise network and growth among existing partners. LSL also supported franchisees with the acquisition of seven lettings books, helping increase the number of properties under management by 4% to 38,660 — a figure of direct interest to letting agents and inventory clerks, as growth in managed stock typically drives demand for inventories, check-ins and check-outs.

Market conditions and sales

Residential sales transactions were 4% lower than in the first half of 2025, with last year's figures including a spike in activity ahead of the Stamp Duty changes. The London market was softer, although LSL said it has limited exposure to the capital.

Surveying and Financial Services

The Surveying & Valuation division increased revenue by 6% to £56.2m, with underlying operating profit up 11% to £13.1m and margin rising from 22% to 23%. Mortgage revenue increased 8% and LSL maintained an 8.9% share of total mortgage lending. However, total Financial Services revenue slipped from £23.5m to £22.8m, with underlying operating profit falling from £4.3m to £3.4m. LSL attributed the decline mainly to its previous exit from several protection-only firms and continued investment in a new CRM system.

£5m transformation programme

Alongside its results, LSL announced a group-wide transformation programme aimed at simplifying the business and cutting duplication. The company expects the programme to deliver at least £5m in annualised benefits as implementation progresses through 2027, with £4m of implementation spend across 2026 and 2027. The group is targeting an underlying operating margin of more than 20%.

Chief executive Adam Castleton said LSL performed well in the first half, delivering further profit and margin growth and strong cash generation, and that the transformation programme is expected to improve structural cost-effectiveness and make better use of the group's scale.

Outlook

LSL said trading since the end of June has developed as expected, and the board remains on track to meet its full-year 2026 expectations, anticipating another increase in profit. The group had net cash of £22m at the end of June, maintained its interim dividend at 4p per share, and its £12m share buyback programme remains on course for completion by January 2027. LSL also completed a small regional acquisition after the period ended, expected to add around 50 advisers to its PRIMIS network.