𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

A flurry of students ending tenancies after fixed-term contracts were scrapped in May has knocked off some £3 million worth of revenues for Foxtons, the lettings agent said.

The long-awaited Renters’ Rights Act came into force in May, bringing sweeping reforms to England’s private rental sector.

It ended fixed-term contracts and moved to a system of open-ended or rolling tenancies.

This meant existing renters’ end date no longer applied and they could leave a tenancy at any time, with two months notice.

Foxtons, a London-based estate agency, said it experienced “elevated levels of tenancy terminations in May and June, particularly in student rentals” after the changes.

“This resulted in the reversal of approximately £3 million of previously recognised revenue that had been contractually due,” according to the firm.

Foxtons said that, despite there being a period of turbulence while the lettings market adjusts to the new laws, it was confident that the changes would increase demand for professional lettings and property management services.

The company also flagged that the sales market had become more challenging as political uncertainty in the UK and the Iran war have weakened consumer confidence and kept interest rates higher for longer.

This has led to fewer home sales since April and the market is expected to remain subdued.

Foxtons said it expects to report an adjusted operating profit of £8.5 million for the first half of the financial year, down from £12.3 million the previous year.

House sales last year had been boosted by a rush of activity by homebuyers hoping to benefit from stamp duty relief before it became less generous because of changes coming into effect from April 2025.

The estate agency chain said it had found £4.5 million worth of annual cost savings, some of which helped to mitigate increased national insurance contributions.

Shares in Foxtons nonetheless slumped by about a tenth on Thursday morning following the update.