London estate agency Foxtons has reported a significant decline in pre-tax profit, which fell by 57 per cent to £4.4m in the year to June. The firm attributed this reduction partly to the Renters’ Rights Act, stating that the new legislation led to a surge in tenancy cancellations during May and June.
Foxtons indicated that a higher number of tenants exercised the flexibility offered by the new law, resulting in £3m in lost expected rental income. The board informed shareholders that the impact was most immediate following the legislation's implementation in May.
The Renters’ Rights Act, championed by Housing Secretary Angela Rayner, outlawed no-fault evictions and ended fixed-term tenancies. Despite the initial financial hit, Foxtons anticipates “significant medium-term opportunities” from the legislation, expecting increased demand from landlords for professional advice on compliance.
Separately, Foxtons experienced a 13 per cent drop in sales in the six months to June. The company blamed this on uncertainty surrounding Prime Minister Andy Burnham’s property tax regime and higher interest rates linked to the Iran war. Analysts from Panmure Liberum noted a deterioration in the UK’s lettings and sales market since April, particularly in London and the South East, citing ongoing political uncertainty.