Foxtons' shares plummeted by almost 11% yesterday, closing at a paltry 39p, as the company grappled with the financial fallout of the Renters' Rights Act. The legislation's introduction has dealt a significant blow to Foxtons' first-half earnings, shaving off up to £3 million from its profit margins.
The impact is stark: Foxtons now anticipates an adjusted operating profit of approximately £8.5 million for the first half of 2026, down from £12.3 million in the same period last year. This downturn highlights the immediate challenges faced by the agency, exacerbated by subdued residential sales due to ongoing political uncertainty, global conflicts, and elevated borrowing costs.
Undeterred, Foxtons has embarked on a cost-saving programme aimed at delivering annualised savings of £4.5 million. The measures include an efficiency drive across its operations and the relocation of its headquarters. While the company remains optimistic about long-term demand for professional lettings and property management services, investors are naturally concerned about the current financial pressures.
Foxtons' revised full-year adjusted operating profit guidance now ranges from £17 million to £19 million, with expectations of an improved performance in the second half driven by a seasonal uplift in lettings activity and normalisation of tenancy termination rates. However, the share price at 39p represents nearly half its value from the beginning of 2026.
For UK households, the Renters' Rights Act offers greater security and flexibility for tenants, potentially reducing costs associated with breaking fixed-term agreements. For businesses like Foxtons, however, the transition period is proving challenging, influenced by the Bank of England's ongoing efforts to manage inflation through interest rates and their indirect impact on borrowing costs.