Longer tenancies dent lettings income for Foxtons - but it still looks strong

Foxtons latest trading update shows growing reliance on lettings income.

However it says the performance - which saw double digit growth in lettings new business volumes - was dented by what Foxtons calls “an expected temporary reduction in the volume of existing tenancies re-transacting in H1 2024.”

This was because longer tenancy terms were signed across 2022 and 2023. 

The agency says: “Average tenancy lengths have increased by circa 20% since 2022 as part of [Foxtons] strategy to improve client retention and grow its portfolio of recurring revenues.”

The company says it’s now the largest lettings agency in the UK, bolstered by its acquisition of Ludlow Thompson last year.

Overall the company has reported 24% growth in adjusted operating profit with revenue up 11% to £78.5m.

Lettings revenue was up 5% to £52.4m: sales revenue rose 28% to £21.6m.

Foxtons chief executive Guy Gittins says: "The strong momentum we started the year with has continued, with double-digit revenue and earnings growth and our position as London's largest Lettings and Sales agency reinforced.

"Despite macro headwinds and the election interruption, we continued to outperform the market, delivering strong Sales revenue growth of 28% and market share growth of 30%. Growth was also delivered in Lettings, with a double-digit increase in new business volumes, further bolstered by the acquisitions we made in 2023.

"This growth is the result of the significant gains we have delivered in our market share of sales instructions, alongside the strengthening of our Foxtons Operating Platform and improvements to our market-leading data capabilities following considerable reengineering of the business over the last 18 months.

"When I joined the business in 2022, I knew there was a significant amount of work to unlock the vast amount of value within the business. 

“Two years on, and we are making great progress thanks to the collective effort of the Foxtons team. The work we did to rebuild the business' foundations continues to deliver progress; we are growing the non-cyclical and recurring Lettings business, our Sales under-offer pipeline is at a record level since the Brexit vote in 2016, and we are on track to deliver against our medium-term target of £25m to £30m adjusted operating profit.

"Momentum can be felt across every aspect of the business and I am very excited about the second half and beyond as we work hard to deliver excellent results for the property owners of London and our shareholders."