Lettings boom helps franchise brands offset sales falls

Increased lettings income proved a valuable balance to a declining sales market for The Property Franchise Group in the first half of this year.

The Property Franchise Group's brands are Martin & Co, EweMove, Hunters, CJ Hole, Ellis & Co, Parkers, Whitegates, Mullucks & Country Properties.

In a trading statement to shareholders, TPFG says: “Lettings Management Service Fee continued to perform strongly, achieving 12 per cent growth over H1 2022. This growth more than offset the reduction in sales MSF over the same period as the residential sales market continued to adjust to the uncertainty regarding inflation, interest rates and house prices. 

“Sustained demand for lettings properties, growth in the portfolio of managed properties and rental inflation meant lettings MSF continued to be a growing and highly resilient revenue stream … contributing 61 per cent of total MSF in the period.”

This is up from 55 per cent of total MSF in the first half of last year.

Elsewhere in The Property Franchise Group agency stable, hybrid brand EweMove continued to perform well with MSF increasing by 15 per cent over H1 2022. 

It sold 17 new territories in the half year, down slightly from 17 in the same period of last year. TPFG says: “This model continues to be attractive especially during more uncertain macro-economic times, allowing franchisees to benefit from a low-cost base and increased flexibility.”

TPFG chief executive officer Gareth Samples comments: "The benefits of operating a focused franchise model with multiple income streams are reflected in these results, as we continue to demonstrate considerable resilience in the face of an uncertain macro-economic backdrop. Whilst the Board expects the macro-economic uncertainty to continue, it is confident that trading remains in line with expectations for the full year."

Last month Winkworth admitted that it, too, relied heavily on lettings income to offset the poorer sales market. 

Preliminary gross network income figures for the first half of 2023 for Winkworth indicated an overall fall of six per cent, with lettings revenue approximately 11 per cent higher and sales revenues down by 20 per cent compared with H1 2022.