Northwood, the firm bought by Belvoir in June, is unlikely to hit its performance targets and is not expected to achieve its full earn-out.

Northwood was acquired in a deal worth a potential £22m.

Of this, the initial consideration was up to £11.5m, with the balance as a two-year earn-out.

Analysts at Cantor Fitzgerald investment bank said that while the outlook for Belvoir as a whole “remains positive”, Northwood management’s ambitious growth plans were “highly bullish”.

Yesterday, Belvoir CEO Mike Goddard told EYE that he did not disagree with this assessment.

He said: “We have covered ourselves with the earn-out, which will only pay what they achieve.

“Realistically, they will not achieve the figures that they put forward.

“However, Northwood will continue successfully.”

Cantor Fitzgerald said it was also trimming its expectation for Belvoir because it was expecting only 3% revenue growth in the overall lettings industry.

Goddard said: “The rental market is continuing to grow, but what the Government is doing is to take the froth out of the market – targeting the type of investor with multiple properties and interest-only mortgages.

“However, these are not our clients. We have safer types of clients looking for a rental income in their retirement, and often trying to pay off their mortgages as quickly as they can.”

Goddard was speaking after strong interim results for Belvoir for the six months to June 30 were announced.

Group revenue was up 60% to £4.3m, while pre-tax profits were up 69% to £1.8m.

Following the acquisition of Northwood and the opening of five new franchise offices in the first half of this year, the number of branches nationwide is now 306 across four branded networks – Belvoir, Northwood, Goodchilds and Newton Fallowell.

Goddard said that Belvoir will continue to consolidate the market, by helping franchise owners to grow their networks by making local acquisitions.

Asked if Belvoir itself would make further acquisitions of other franchise networks, Goddard said: “Watch this space.”

While Countrywide is closing offices, Goddard said that the next two years should be “boom” ones for Belvoir.

He said: “We operate a franchise network heavily geared towards very entrepreneurial individuals, highly incentivised to succeed, and we focus on having shop fronts.

“In contrast, Countrywide is a corporate operating a large number of brands, and having problems integrating its new brands into the network.”

Goddard said that 50% of the Belvoir network is now offering sales: “Sales are very successful for us, in that they have stopped the haemorrhage to other agents.

“We used to have to say to our clients wanting to sell up that we couldn’t do anything to help, and to go to the agent down the road. Now we can retain the client with most of this business being investment sales.”

Yesterday evening, Ian Wilson of Martin & Co revealed that his firm had been the under-bidder for Northwood, but would not have bought it for the price that Belvoir paid.