The estate agency Foxtons has warned of weak sales for the rest of the year as economic uncertainty and potential property tax changes in next month’s budget deter buyers, sending its shares sharply lower.
The London-focused company, known for its F-emblazoned green and yellow minis, said buyers had been holding off ahead of the budget on 26 November, which is a month later than usual.
Slower-than-expected interest rate cuts from the Bank of England are also having an impact by affecting the cost of mortgages, it said. As a result, “sales are likely to remain subdued for the rest of the year”, with a risk that sales revenues in the fourth quarter could fall below management’s expectations.
Guy Gittins, the chief executive who started his career at Foxtons in 2002 and returned to lead the company three years ago, said: “Macroeconomic uncertainty and speculation surrounding the delayed autumn budget has resulted in a subdued sales market as some buyers adopt a ‘wait and see’ attitude to purchases.”
The Foxtons share price fell as much as 11% in early trading but later settled at 4.5% down.
The Treasury is considering whether to bring in a new property tax to replace stamp duty on owner-occupied homes worth more than £500,000, the Guardian reported in August. Buyers in England and Northern Ireland currently pay stamp duty on homes worth more than £125,000, while first-time buyers pay the tax on homes valued at more than £300,000.
On Monday, Dan Tomlinson, exchequer secretary to the Treasury, said during parliamentary questions that stamp duty raised around £12bn every year, adding: “Any changes to taxes such as SDLT [stamp duty land tax] would therefore have to be carefully considered given the potential effect on public finances.”
Foxtons’ sales revenues in the third quarter fell by 7% to £12.5m, while lettings revenues increased by 5% to £33.4m. Overall, the estate agent made revenues of £49m between July and September, up 3% from the year-earlier period. In the year so far, it has taken in £135.1m, up 7%.
Gittins believes that there “remains significant pent-up demand in the London volume market and we believe market conditions will improve once there is better clarity following the budget”.
The company, founded in 1981, said the more stable revenue stream from lettings was helping to offset weaker sales from properties changing hands. Gittins said lettings remained the central part of its growth strategy. Recent acquisitions in Reading and Watford were performing well, and he said there would be more lettings-focused acquisitions.
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As the renters’ rights bill approaches its final stages in parliament, Foxtons said it could offer landlords guidance on the changes and expand its property management services business.
Meanwhile, St James’s Place shares also fell on Thursday, by nearly 4%, after the wealth management firm’s chief executive, Mark FitzPatrick, predicted “a more uncertain picture for UK consumers amid soft economic growth, stubborn inflation and heightened speculation around the forthcoming autumn budget”.
This came as the Gloucestershire-based firm reported a near-doubling in net inflows, driving 15% growth in funds under management to £212bn over the third quarter.
