Foxtons Group Q2 Earnings Call Highlights

Key Points

• First-half performance weakened: Revenue fell 3% and adjusted operating profit dropped 29% to £8.9 million as London sales volumes declined, borrowing costs remained high and the Renters’ Rights Act disrupted lettings.
• Lettings provided resilience: The portfolio grew to 32,000 tenancies, with recurring and non-cyclical activities accounting for 69% of revenue. Tenant-led terminations initially offset underlying lettings growth, but management said they moderated through June and July and views the legislation as a medium-term opportunity.
• Outlook maintained: Financial Services revenue rose 20%, while £4.5 million in annualized group cost savings were implemented. Foxtons retained its 2026 adjusted operating profit guidance of £17 million–£19 million, with performance expected to be weighted toward the second half.

Foxtons Group LON: FOXT reported a 3% decline in first-half revenue as a subdued London sales market and disruption following the implementation of the Renters’ Rights Act weighed on results, although the company said its expanded lettings operations continued to provide resilience.

The London-focused estate agency said adjusted operating profit fell 29% to £8.9 million in the six months to June 30, while adjusted EBITDA declined 25% to £10.4 million. Statutory profit before tax was £4.4 million, and adjusted operating profit margin narrowed by 400 basis points to 10.6%.

Management said the trading backdrop was challenging, citing domestic political uncertainty, higher borrowing costs, weaker consumer confidence and conflict in the Middle East. London exchange volumes declined 13% year over year, while the Renters’ Rights Act produced an adjustment period in the lettings market after taking effect on May 1.

Lettings growth offset by tenant terminations

Lettings revenue was flat at £54.7 million. The company said organic and acquisition-led growth was offset by £3 million in reversals of previously recognized revenue after elevated tenant-led tenancy terminations under the new rental rules. Lower interest earned on client funds also reduced revenue by £0.4 million.

Chris Hough, Foxtons’ chief financial officer, said the business generated £1.9 million of higher like-for-like lettings revenue before the effects of the terminations, supported by growth in Build to Rent activity and cross-selling of ancillary services. Acquisitions, primarily in Milton Keynes and Birmingham, added £1.7 million of revenue.

Foxtons said its lettings portfolio had grown to 32,000 tenancies, with 69% of group revenue now derived from non-cyclical and recurring activities, compared with 65% a year earlier. Property-management penetration rose 10% from the prior-year period, while ancillary lettings products increased 17%.

The company said around 150 additional tenancies per week ended following implementation of the Renters’ Rights Act, a small share of its overall portfolio. Management said the impact was most pronounced in May and had reduced through June and July.

Foxtons said the additional terminations included tenants whose properties no longer suited their needs, students using the increased flexibility of the new rules, and normal tenancy turnover that would previously have occurred at the end of a fixed-term agreement. Management said the departures were tenant-led rather than a result of landlords leaving the market.

During the question-and-answer session, management said roughly 15% of its London portfolio was occupied entirely by student households. It said student tenancy patterns had shifted, with some properties becoming available earlier in the summer and incoming students taking tenancies in June or July rather than in September.

Renters’ Rights Act seen as a medium-term opportunity

Foxtons said the legislation has raised compliance requirements and increased the value of professional advice, helping drive demand for managed services and Build to Rent support. The company said it expects more self-managed landlords to move to full property management over time.

The group also said it is seeing some new landlord demand as property values decline and rental yields rise. Management cited auction sales in which landlords were seeing yields of 8% to 9%, including increased activity in Canary Wharf.

Tenant demand remained strong, with an average of 17 renters per available property during the first half, up 4% year over year. Foxtons said properties were being let at their fastest pace in four years, while rental values remained elevated and broadly stable due to affordability constraints.

Sales weakness and Financial Services growth

Sales revenue declined 13%, or £3.4 million, reflecting a 15% decline on a like-for-like basis. Used-home revenue fell 11%, broadly in line with the market, while new-homes revenue dropped 46% as developers and purchasers remained cautious. Sales volumes were 11% lower.

Foxtons’ sales business recorded an adjusted operating loss of £4.7 million. The company said it had completed an operational review of the division and implemented measures intended to improve productivity, simplify processes and better align staffing with current transaction volumes.

The company said it has delivered £3 million of annualized savings in its sales operations. Across the group, it implemented £4.5 million of annualized cost savings during the first half, of which £1.3 million benefited first-half results. The full year is expected to benefit by £3.5 million, according to Hough.

Financial Services was a relative bright spot, with revenue rising 20% to £5.4 million and adjusted operating profit increasing 42%. Volumes increased 25%, supported by a stronger refinancing pipeline, estate-agency cross-selling and improved adviser capacity and productivity.

Cash flow, acquisitions and outlook

Net free cash flow was £1.4 million, down £2.2 million from the prior year. The group reported net debt of £28.4 million at June 30, compared with £16.9 million at the end of 2025, reflecting acquisition spending, shareholder returns and other cash outflows.

Foxtons increased the capacity of its revolving credit facility to £50 million from £40 million and extended its financial flexibility through a facility that matures in June 2028. The company spent £8.8 million on acquisition consideration during the period and said it has a pipeline of bolt-on acquisition opportunities, particularly in Birmingham and Milton Keynes.

The interim dividend was maintained at 0.24 pence per share and is scheduled to be paid on Sept. 11 to shareholders on the register on Aug. 7.

Looking ahead, Foxtons said it expects tenant terminations to continue moderating in the second half and anticipates supportive conditions in lettings as demand continues to exceed supply. It said sales-market conditions remain difficult but that its cost actions and operational changes should improve the division’s positioning. The company maintained guidance for 2026 adjusted operating profit of £17 million to £19 million, with performance weighted toward the second half.

About Foxtons Group (LON:FOXT)

Foxtons Group plc, an estate agency, provides services to the residential property market in the United Kingdom. The company operates through three segments: Lettings, Sales, and Financial Services. The Lettings segment engages in letting and management of residential properties. The Sales segment sells residential properties. The Financial Services segment offers mortgages and related products. Foxtons Group plc was founded in 1981 and is headquartered in London, the United Kingdom.

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