Foxtons profit hit by lettings disruption and weaker property sales

What has happened at Foxtons?

Foxtons Group has warned that first-half profitability will fall after the estate agency was hit by disruption in lettings and a prolonged downturn in property sales.

The London-focused group expects to report adjusted operating profit of approximately £8.5 million for the first half of 2026. That compares with £12.3 million in the same period last year, representing a decline of around 31%.

Management now expects full-year adjusted operating profit of between £17 million and £19 million, with earnings weighted towards the second half.

The update contains two separate problems for investors to consider. The sales division is facing a difficult market that Foxtons expects to remain subdued. Meanwhile, the normally more resilient lettings operation has suffered short-term volatility following the introduction of the Renters' Rights Act in May.

Foxtons trading update: key figures

Measure	Latest update
Expected H1 2026 adjusted operating profit	Approximately £8.5 million
H1 2025 adjusted operating profit	£12.3 million
Approximate year-on-year decline	31%
Lettings revenue reversal	Approximately £3 million
Annualised cost savings delivered in H1	£4.5 million
Full-year 2026 adjusted operating profit guidance	£17 million to £19 million
Half-year results date	30 July 2026

Adjusted operating profit is the company's preferred measure of profit from normal operations before certain items. The precise adjustments were not disclosed in this trading update.

Renters' Rights Act causes short-term lettings disruption

The most striking detail is the reversal of approximately £3 million of previously recognised lettings revenue.

Foxtons said the Renters' Rights Act abolished fixed tenancy terms and gave tenants greater flexibility to end tenancies. Following its introduction in May, the group experienced elevated tenancy terminations during May and June, particularly in student rentals.

This meant revenue that had previously been recognised and was contractually due had to be reversed.

For investors, this matters because lettings is central to Foxtons' strategy. The company focuses on non-cyclical and recurring lettings income, which is intended to provide greater resilience than transaction-dependent property sales.

A sudden revenue reversal in this part of the business is therefore uncomfortable, even if management views the disruption as temporary.

Foxtons expects termination levels to normalise and believes the new legislation could create medium-term opportunities. Its argument is that landlords may have greater need for professional lettings and property management services as they adjust to the new framework.

That opportunity is credible within the logic presented by management, but its scale and timing were not disclosed. Investors will want evidence that termination levels are settling and that higher demand for professional services can offset the initial disruption.

Property sales remain under pressure

The sales division is dealing with a more conventional cyclical slowdown.

Foxtons said domestic political uncertainty and conflict in the Middle East have weakened consumer confidence. It also pointed to a higher-than-expected interest rate environment, which has contributed to lower property transaction volumes.

The group is preparing for a prolonged period of reduced activity. It has already taken steps to align the sales business with current market conditions, while further operational and organisational changes are under consideration.

That language suggests management is not expecting a rapid recovery. Sales revenues are sensitive to completed transactions, so lower market volumes can have a meaningful effect on profitability.

The comparison with last year is also demanding. Foxtons noted that first-half 2025 sales activity was elevated ahead of the March 2025 stamp duty deadline. Part of the expected profit decline therefore reflects an unusually strong prior-year period, rather than deterioration from a normal starting point.

Even so, the outlook remains cautious. Management expects the sales market to stay subdued amid political uncertainty and a challenging macroeconomic backdrop.

Cost savings provide some protection

Foxtons has responded by reducing costs.

The group delivered £4.5 million of annualised savings during the first half. Annualised savings show the expected benefit over a full year, rather than necessarily the amount captured in the reported six-month period.

The total includes £3 million from a cost-reduction programme introduced in response to sales market headwinds. A further £1.5 million came from the January 2026 relocation of the company's headquarters.

Foxtons said the relocation savings largely mitigated increases in National Insurance costs and other inflationary pressures.

These actions are a clear positive. They demonstrate that management is reacting to weaker trading rather than simply waiting for market conditions to improve. However, cost reductions cannot fully compensate if sales volumes remain depressed or lettings disruption lasts longer than expected.

Investors should also watch the nature of any further organisational changes. The potential cost, timing and operational impact of those measures were not disclosed.

Financial Services offers a brighter spot

Financial Services delivered revenue growth during the period.

Foxtons attributed this to stronger mortgage refinancing volumes, increased sales of related services and resilient revenues from mortgages for new property purchases.

This is encouraging because it shows that not every part of the business weakened. Stronger refinancing activity can provide some support when housing transactions are under pressure.

However, the company did not disclose Financial Services revenue, its growth rate or its profit contribution. It is therefore difficult to judge how much protection this division can provide at group level.

Can Foxtons deliver its full-year guidance?

The full-year adjusted operating profit range of £17 million to £19 million implies that performance needs to strengthen during the second half.

Based on the approximate first-half figure of £8.5 million, Foxtons would need to generate roughly £8.5 million to £10.5 million of adjusted operating profit in H2 to reach its guidance range.

Management expects this weighting because lettings revenue is seasonal and tenancy termination levels should normalise. The main uncertainty is whether that normalisation arrives as anticipated while the sales market remains weak.

What should investors watch next?

Foxtons will publish its half-year results on 30 July 2026. The key questions are:

• Whether tenancy termination levels have started to normalise after May and June.
• How much of the £3 million revenue reversal could be replaced by new lettings activity.
• Whether the group is seeing evidence of increased demand for property management services.
• How deeply lower transaction volumes are affecting the sales division.
• What further operational or organisational changes management is considering.
• How much of the £4.5 million annualised cost-saving programme will benefit 2026 profit.
• Whether Financial Services growth is large enough to offset weakness elsewhere.

This is a disappointing update because profitability is falling and both of Foxtons' main property divisions have faced disruption. The £3 million lettings revenue reversal is particularly notable given the strategic importance of recurring lettings income.

On the positive side, management has acted on costs, Financial Services is growing and the full-year profit guidance still points to an improvement in the second half. The next results will need to show that the lettings disruption is genuinely temporary and that Foxtons can protect earnings in a subdued sales market.