Foxtons’ shares fell almost 11% after the estate agency said the introduction of the Renters’ Rights Act had reduced first-half earnings by up to £3m.
The London-listed firm said the legislation, which abolished fixed-term tenancies and gave tenants greater flexibility to end agreements, had led to a marked increase in tenancy terminations, weighing on short-term earnings.
Foxtons expects adjusted operating profit for the first half of the year to be around £8.5m, down from £12.3m in the same period last year. The company also said residential sales remained subdued amid political uncertainty, conflict in the Middle East and higher borrowing costs.
In response, Foxtons introduced cost-saving measures expected to deliver annualised savings of £4.5m, including a targeted efficiency programme and the relocation of its headquarters.
Despite the short-term impact, the company said it expects demand for professional lettings and property management services to increase over time under the new rental legislation.
Foxtons has narrowed its full-year adjusted operating profit guidance to between £17m and £19m, with performance expected to improve in the second half as seasonal lettings activity strengthens and tenancy termination rates begin to normalise.
The company’s shares closed at 39p, down almost 11% on the day and close to half their value at the start of the year.
