A major shake-up of LSL Property Services’ estate agency division, which included franchising its network of more than 180 locations, was said to be paying off with lower volatility.

The estate agency division turned a profit of £1m in the first two months of the year, up from losses of £1.5m and £2m for the same period in 2023 and 2022, as LSL reported a strong start to the year with operating profits exceeding expectations.

The Newcastle-based group, which includes brands such as Your Move and Reeds Rains, told investors that operating profits in the first two months of the year were £7.5m ahead of 2023 levels and £2.5m above 2022 levels. It said there had been particularly strong trading across its surveying and valuation business.

Elsewhere, in the group’s financial services division, mortgage completions met expectations while applications over the first two months of 2024 were ahead of expectations at 23% higher per day and 5% above 2022’s strong performance. LSL said the applications would benefit the first half of the year.

Preliminary results are expected for LSL next month when it will hope to report a turnaround in profitability, which had been impacted by the fallout from 2022’s mini-Budget and its disruption to the mortgage market.

Franchising the estate agency business was intended to cut out most of the division’s cost base, reducing it from £125m to £2.5m.

Under the new model the group has ambitions to provide estate agency services to more than 300 branches operated by 62 franchisees under the Your Move, Reeds Rains and LSL group brands.

Last month LSL issued a trading update in which it said 2023 group revenue from continuing operations was £144m, down from £217m owing to the franchising action. Adjusting for disposals, including the sale of D2C brokerages to Pivotal Growth, like-for-like revenue was 10% below 2022 in a housing market it said was 19% lower.