The tenancy fees ban will cost Belvoir 6% of its profits, the firm told investors this morning.
Separately, Foxtons reported a £7m slide in revenue from sales, down from £43m in 2017 to £36m. It said in a trading update that it expects to report EBITDA for last year to be £3m, down from £15m in 2017.
Foxtons said it also expects to report a one-off charge of £16m for last year, with £6m relating to branch closures and a further £10m write-down in relation to goodwill in the sales segment.
Foxtons said this morning that group revenue for last year was around £111m, down from £118m in 2017. The fall in sales revenue was partially offset by a rise in lettings revenue to £67m, up from £66m in 2017.
Total revenue for the final quarter of last year was £23m, down from £24m in the same period the year previously. Foxtons said that sales revenue in the final three months of last year was £9m, compared with £10m in the last quarter of 2017. It described this as a “solid performance amidst ongoing reduced transaction levels”.
Foxtons CEO Nic Budden said that 2018 “was one of the toughest sales markets we have ever had in London”. He said that conditions in sales are expected to remain challenging throughout this year.
Meanwhile, Belvoir in its trading update reported this morning that the likely hit to its profits from the fees ban is set to be less than the 8% it had previously anticipated, with its franchisees adopting additional revenue streams.
It did not say what these were, but added that over nine months the loss to its profits will reduce to 3%. It called this an ‘encouraging development’.
Reporting on last year, Belvoir said it saw continued and encouraging growth, with revenue up 21% to £13.7m, outperforming both the sales and lettings markets generally.
Its management services fee from lettings was up 7.1%, and up 8.5% on the sales side.
Group income from financial services – which Belvoir also said will help offset the loss created by the fees ban – rose last year by 20%.
Belvoir told the City that it expects to report full-year results for 2018 in line with market expectations.
CEO Dorian Gonsalves said: “In 2018, Belvoir delivered on its promise to support franchisee growth through its Assisted Acquisitions programme, adding network revenue of £6.9m, ahead of our £6.6m target for the year and over double that achieved in 2017.
“Meanwhile, we are also pleased to see our organic lettings growth and our increase in sales transactions exceeding market performance.
“The board believes that Belvoir is well prepared to meet the challenges, and take advantage of the opportunities, anticipated in 2019.”
The company’s full year results will be announced on April 2.
* Separately this morning, Nationwide reported a slowdown in the housing market at the start of this year. It said house price growth had almost ground to a complete halt this month with annual inflation up just 0.1%. It said that the average house price in January was £211,966, down from £212,281 last month. Nationwide said that uncertainty was acting as a drag on the market.
Comments (15)
I presume, as it was a statement to the city, the article is referring to Belvoir’s profits not Belvoir’s franchisees profits, I bet their tenant fees are a much higher percentage than 6%.
I attended the ARLA Property Mark conference at Leeds today and many letting agents have already dumped RM to compensate for the fee ban and many others said they plan to follow suit. The general consensus was that they get most leads from the other portal and unlike vendors, landlords are not bothered which portal agents use as long as the property is let. So the fee ban will have an impact on RM profit.
On a slightly different note, does anyone know where I can get some definite information relating to the Ban? I know that we cannot force a Tenant in to a contract with a third party, so I assume that means we cannot make them use a particular suppliers. However, LPG tanks are installed basically on a contract, which means that the gas company owns the tank and the tenant HAS to get the gas from them. How would that work? At the moment my only idea is we tell the tenants to use Company A, or they have to pay to get the tank changed and a new one installed…
It will only knock off 6% profit providing the other acquired business also hit their targets.
I would say on average 20% of income in Lettings comes from tenant fees.
Appreciate that characters like Quirk have set the clock back with more spin than substance .CWD’s inept management has decimated shareholder value but please don’t tar Belvoir with the same brush.
Take the trouble to read their annual reports and RNS and you will find a well managed company with exceptional, well respected property individuals who do exactly what they say onthe tin
Are you the spin doctor?
No I will leave that title for Quirk .Seen very little evidence of spin at Belvoir. I take as I find Maybe ask the question of Eric Walker and Mark Newton Directors at Belvoir both with long records of outstanding performance and success and respect of their peer group .Definitely more substance than spin
6% looks light, not sure if its spin or substance.
Plenty of spin from agents, once angry about the ban, saying ‘Oh, well, we didn’t charge much anyway’. Hmm.
CWD said publicly 2 years ago that TT fees were ~£20m of gross revenue. There are some costs attached to it but I imagine most of it is profit. This loss of profit has been priced in by analysts since then along with the slowdown in sales transactions, etc.
It is light, so spin doctors at work.
Is that the best you can do .You clearly have some beef with Belvoir
Peter
Which part of these 2 comments don’t you understand?
The tenancy fees ban will cost Belvoir 6% of its profits, the firm told investors this morning.
Group income from financial services – which Belvoir also said will help offset the loss created by the fees ban – rose last year by 20%.
They acquired Brook Financial Services in Dec 2017- well in advance of the fees ban
“The tenancy fees ban will cost Belvoir 6% of its profits, the firm told investors this morning.”
Hillofwad, if you read the article again, you will find:- “with its franchisees adopting additional revenue streams.” So the tenant fee ban will cost Belvoir more than 6%. The article also stated:- “It did not say what these were” Hence my comment.
I did read about the financial services, but they appear to be referring to the increase in financial services revenue:- “which Belvoir also said will help offset the loss created by the fees ban” It is like saying an increase in landlord fees will offset the tenant fee ban; any increase in current income will offset the tenant fee ban.
If you have read the Belvoir story they have only recently embraced sales and rolled out financial services so more than likely to pick up the slack here. Furthermore with letting agents leaving the business Belvoir franchisees are well placed to pick up portfolios. The management very supportive both financially and operationally As one door shuts another opens Clearly if they increase revenue from financial services from a stable cost base this is going to add to profits?
Belvoir shied away from stating what impact the actual fee ban will have on them; and it would have been interesting to know what measures they have taken to mitigate the loss of income as a result of the fee ban.
Another impressive update from the solid Belvoir .Refreshing to see a well run ,professionally managed team .who lets actions speak louder than words. Delvering to both shareholder and client .after the fiasco at Emoov
6% drop off in profit expected which franks their decision to move into financial services
Foxtons update today dodges the issue of tenant’s fees completely
Shareholders in CWD can only sit and wait for the latest update !