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Tax and Brexit take toll on Foxtons profit, sales forecast
March 8, 2017 / 7:42 AM / 9 months ago

Tax and Brexit take toll on Foxtons profit, sales forecast

(Reuters) - London-focused estate agent Foxtons (FOXT.L) was hit by a slump in demand due to a property tax increase and Britain’s vote to leave the European Union last year and predicted on Wednesday that 2017 would be tough for sales.

A Foxtons estate agent sign is seen outside a branch in north London, Britain September 3, 2013. REUTERS/Suzanne Plunkett/File Photo

Foxton’s pre-tax profit fell to 18.8 million pounds, below the average 19.6 million pounds forecast in a Thomson Reuters poll of analysts, while its revenue fell to 132.7 million pounds from 149.8 million pounds in 2015.

Once a symbol of London’s surging property market and known for its pioneering coffee shop-style outlets and fleet of Mini cars, Foxtons floated in 2013 ahead of a market peak and has since failed more than once to meet market expectations.

Shares in Foxtons were 1.8 percent lower at 0832 GMT after the firm said earnings before interest, tax, deprecations and amortisation (EBITDA) fell by 46.5 percent to 24.6 million pounds last year, lower than the 25.8 million forecast by a Thomson Reuters poll of analysts.

Central London property prices have fallen sharply in recent months, according to a series of surveys, after a tax hike introduced in April hit demand for top-end homes, compounded by the uncertainty for particularly foreign investors of the Brexit vote.

“Last year’s London property market was severely impacted by changes to stamp duty and the EU referendum vote leading to a substantial reduction in property sales transactions in Central London,” Chief Executive Nic Budden said.

“Expect trading conditions to remain challenging throughout 2017. Should current sales activity continue through the remainder of this year, it is likely that 2017 sales volumes will be below last year,” he said.

Britain’s third-largest housebuilder Taylor Wimpey (TW.L) also said in early January that lower selling prices in central London had affected its performance, with the value of its full-year order book falling marginally.

Revenue from lettings, a strong area for the firm that could be hit by the introduction of a ban on lettings fees, fell 1 percent to 68.3 million pounds.

“It is too early to assess the impact of the government’s proposed ban on tenants’ fees,” Foxtons said in a statement.

Editing by David Clarke and Alexander Smith

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