Foxtons has just provided a Q1 trading update in which it says that it has started the new financial year well and in line with management’s expectations.

Revenue in the first quarter was up 10% to £32.9m (Q1 2022: £30.0m) with letting revenue up 27%, reflecting continued progress against the group’s strategy to grow its resilient letting business both organically and through acquisition.

Group revenue: 3 months ended 31 March

¹ 2022 revenues are presented on a continuing basis and exclude revenue from the D&G Sales business which was disposed of on
11 February 2022.

Letting

Letting revenue was up 27% in the first quarter to £22.8m (Q1 2022: £17.9m), with organic revenue growth of 20% and £1.3m contribution from the acquisitions completed in May 2022 and March 2023. Letting revenue grew to 69% of group revenue, up from 60% last year.  

Organic revenue growth was underpinned by operational improvements and an increase in average revenue per transaction. Growth in average revenue per transaction includes a focus on securing longer non-cancellable tenancy terms (resulting in a greater proportion of revenue being recognised at the start of the tenancy), increased cross sell of our higher value property management service, and higher average rental prices.

Sales

In line with management’s expectations, sales revenue declined 16% to £8.1m (Q1 2022: £9.6m), driven by a reduction in exchange volumes in the quarter. This was a consequence of the lower under-offer sales pipeline at the start of the year, resulting from reduced buyer activity following the September mini-budget.

However, Foxtons says that it is much encouraged by the early impact of the operational improvements the agency has made. During the quarter, the company saw an increase in instruction market share and they completed the highest number of quarterly viewings in the last five years. Combined with growing levels of buyer demand, this has supported good growth in the value of the under-offer pipeline over the course of the first quarter.

Financial Services

Financial Services revenue was similarly down 18% in the quarter to £2.0m (Q1 2022: £2.4m). Against a backdrop of lower sales market activity, investment in adviser capacity supported marginally higher volumes, particularly from refinance customers.

Reflecting on Q1, Guy Gittins, CEO, said: “We delivered good year-on-year growth in the first quarter, reflecting strong growth in our resilient lettings business as operational improvements and high levels of tenant demand drove strong organic revenue growth, supplemented by incremental revenues from acquisitions.

“As expected, sales and financial services revenues were lower year-on-year, reflecting the lower under-offer pipeline at the start of 2023 and volatility in the mortgage market. Over the course of the quarter, operational improvements and increasing levels of buyer demand, meant we have made good progress in rebuilding the under-offer sales pipeline. 

“We are focused on delivering the operational upgrades I set out in March at pace. Key areas of progress in the quarter include rebuilding fee generating headcount and embedding estate agency culture changes; including prioritising lead generation in competitive markets, focusing on core estate agency KPIs and improving cross-sell across the Group.

“I am encouraged by the early results achieved to date. We have grown our market share of sales instructions and completed the highest number of viewings in the last five years, delivered growth in the cross-sell of Lettings property management services, and in financial services delivered growth in both the volume of mortgages underwritten and the cross-sell of protection products. 

“I remain confident in our refocused strategic priorities and the determination of the business to deliver market share growth and shareholder value by making Foxtons London’s go-to estate agent.”