Foxtons Hit by £3 Million Revenue Reversal After Renters' Rights Act
Estate agency chain Foxtons has reported that a surge of students ending their tenancies following the scrapping of fixed-term contracts in May has resulted in the reversal of approximately £3 million in previously recognised revenue. The company said the changes, introduced under the long-awaited Renters' Rights Act, led to elevated levels of tenancy terminations in May and June, particularly in student rentals.
According to Foxtons, the new law ended fixed-term contracts in England's private rental sector, replacing them with open-ended or rolling tenancies. This meant existing renters could leave at any time with two months' notice, causing a flurry of exits from student properties.
Impact on Financial Performance
Foxtons stated that the £3 million reversal of revenue was contractually due but had to be written off due to the early terminations. The company expects to report an adjusted operating profit of £8.5 million for the first half of the financial year, down from £12.3 million in the same period last year. The decline was also attributed to a challenging sales market, with political uncertainty and the Iran war weakening consumer confidence and keeping interest rates higher for longer.
Home sales since April have been subdued, and the market is expected to remain sluggish. Last year's sales had been boosted by homebuyers rushing to benefit from stamp duty relief before changes in April 2025 made it less generous.
Cost Savings and Market Outlook
Foxtons said it had identified £4.5 million in annual cost savings, partly offsetting increased national insurance contributions. Despite the turbulence, the company expressed confidence that the Renters' Rights Act would increase demand for professional lettings and property management services in the long term.
Shares in Foxtons fell by about a tenth on Thursday morning following the update, reflecting investor concerns about the immediate financial impact.
