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Foxtons started the year with the biggest pipeline of agreed home sales since before the Brexit vote, as first-time buyers rushed to complete ahead of stamp duty changes, sending its shares up 6 per cent on Tuesday.
The London-focused estate agent said April’s stamp duty deadline boosted sales in November and December, pushing up its under-offer pipeline to the highest opening position since 2016.
Foxtons, which said it was on track to beat expectations for the year, added that its sales business was “well positioned to return to profitability” if a more positive market backdrop was sustained through the year, despite “recent uncertainty” over borrowing costs and consumer confidence. It said its own growth over the past nine years had also boosted its pipeline.
However, chief executive Guy Gittins said UK home buyers had now mostly missed the window to save before stamp duty goes up in April. Buyers who were not already under offer by mid-December would be “up against it” to complete their purchases before the stamp duty land transfer tax thresholds change, he added.
Chancellor Rachel Reeves announced in the Budget that temporary stamp duty relief would end in April, kicking off a race to complete transactions ahead of the deadline — especially for first-time buyers, who currently pay no stamp duty on up to £425,000.
But the estate agency said the impact of the tax changes would be more modest than the stamp duty holiday during the pandemic, because the savings available were smaller.
“We are still agreeing on a very high number of sales per week,” despite the narrowing prospect for tax savings, Gittins said. “We don’t think it is going to be a light switch. It is a nice to have.” He added that buyers had started to adjust to higher mortgage rates, and were hopeful that rates would fall this year.
Foxtons on Tuesday reported a 33 per cent rise in adjusted operating profit for the year to the end of December, to about £19mn, while revenue rose 11 per cent. Foxtons shares rose about 6 per cent in early trading.
The group was boosted by a 5 per cent rise in revenue from lettings, which accounts for about 65 per cent of group turnover, as well as a pick-up in sales from first-time buyers.
After April, first-time buyers will pay no stamp duty on properties only up to £300,000. For other buyers, the threshold will fall from £250,000 to £125,000.
The change is expected to more than triple the proportion of first-time buyers who pay stamp duty, according to estate agency Hamptons. The maximum savings available by beating the deadline is about £11,000, Foxtons said.
The process of getting from an agreed sale to closing a transaction is notoriously slow in the UK, partly because of a lack of conveyancers. Only 29 per cent of purchases complete within three months, according to Hamptons, with just 13 per cent managing to complete in two months.
Gittins also expected little change in London rents in the coming year, after correctly anticipating a year ago that the rental market would cool after a period of record rent increases. The company will report its final results on March 5.
