July 27, 2017 / 7:13 AM / 3 years ago

Foxtons first-half profit drops 64 percent on low demand, political uncertainty

(Reuters) - London-focused estate agent Foxtons Group Plc (FOXT.L) posted a 63.8 percent fall in first-half profit, hurt by slowing demand and increased political uncertainty.

Foxtons said pre-tax profit dropped to 3.8 million pounds ($4.99 million) in the first six months ended June 30 from 10.5 million pounds a year earlier.

Once 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.

The company has been warning as early as 2014 that double-digit price rises and strong demand in London were cooling, hitting its profits.

Revenue from lettings, a strong area for the firm that could be hit as the government introduces a ban on one-off tenant fees, fell 2 percent to 32.1 million pounds.

The letting fees, which go towards the cost of conducting viewings, verifying references and drawing up contracts, have become an increasingly important money-earner for the industry, averaging 337 pounds ($417), according to independent group Citizens Advice.

Lettings now represent 55 percent of Foxtons’ revenue.

“As the lettings market grows, it is becoming more complex too, with significant new regulation, legislation and tax changes introduced in recent years,” the company said in a statement.

In the longer term, while recent political events have produced uncertainty for buyers and sellers, Foxtons expect London to remain a highly attractive property market for sales and lettings, the company added.

Britain’s housing market has slowed sharply since last June’s vote to leave the European Union, when prices were growing by almost 10 percent a year.

Britain’s third-largest housebuilder, Taylor Wimpey (TW.L), said earlier that it believed the risk of material impact on the market from the EU Referendum in the short term has significantly reduced.

Group revenue fell 15 percent to 58.5 million pounds in the period.

Reporting by Justin George Varghese in Bengaluru; Editing by Sunil Nair

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