Franchising business Winkworth has reported small drops in both revenues and profits in the first half of this year – and says its strategy is to wait for volumes in the sales market to recover rather than acquire lettings businesses.

Revenues were down 2.5% to £2.73m, while pre-tax profits went down 1% to £588,000.

The firm reported that gross revenues of the office network stood at £21.4m, 1% ahead of total revenues for the first half of last year.

However, sales income fell by 8% to £10m, while lettings and management revenues rose by 10% to £11.4m, representing 53% of the total revenue, up from 49% in the same period last year.

It was the first time that lettings revenue has been stronger than that from sales.

Performance was weakest in the difficult central London market, where income was down overall by 10%. In London generally, income from sales dropped 15%, balanced by a 15% rise in revenues from the country markets.

Despite the more robust lettings income, chairman Simon Agace said: “Sales volumes are historically low and the rentals business, while attractive as a counterbalance, is not as profitable as sales.

“Our policy therefore is not to invest heavily in buying rental businesses but to prepare for an upturn in sales volumes which should increase our profitability in the future.”

CEO Dominic Agace said that the tenant fee ban was having only a limited impact, as Winkworth had only derived a small income from this source.

He went on: “We do however envisage that with more landlords having to bear these costs, combined with the ongoing impact of changes to tax relief and increased Stamp Duty, there will be further contraction in the buy-to-let sector.”

Winkworth signed up three new offices in the first half of this year with a further two set to open before the end of the year.

It declared and paid dividends of 3.8p during the first half of this year and says it will continue to pay dividends at the current level. The business is debt-free.

Shares yesterday closed at about 114p, down from a spike of 130p in May.