The estate agent Foxtons is braced for weaker sales in the coming months as buyers become jittery in the face of mounting uncertainty over Britain’s future in Europe.
The London-focused agent said the possibility of Brexit in the run-up to the EU referendum in June was expected to weigh on its first-half results.
Nic Budden, Foxtons’ chief executive, said: “We expect the first half of the year to be challenging with a reduced sales pipeline entering into the second quarter and the underlying short-term impact on transaction volumes from the uncertainty around the European referendum.”
Foxtons reported a strong first quarter with sales boosted as investors rushed to buy properties before the government imposed a new stamp duty surcharge on second homes.
The company, known for its fleet of minis and cafe-style offices, reported a 16.2% increase in revenue to £38.4m in the first quarter to 31 March.
The revenue rise was mainly driven by a 28.5% increase in property sales commissions as investors went ahead with their purchases before the new surcharge was introduced on 1 April.
Under the new rules, anyone buying a property for more than £40,000 to let or use as a holiday home will pay stamp duty on the purchase at a rate three percentage points higher than the standard rate.
“We have had a strong start to the year with a record first quarter driven by a number of sales transactions being brought forward before the introduction of the additional stamp duty surcharge on buy-to-let properties,” Budden said.
However, because completions were brought forward to beat the stamp duty deadline, Foxtons said the sales pipeline for the second quarter was lower than it was a year ago.
Lettings revenue was flat in the first three months of the year, as tenants renewed existing contracts and entered into longer tenancy periods.
Revenue at Alexander Hall, Foxtons’ mortgage broker, increased 57.6% over the period.
Budden said the company was pressing ahead with expansion plans, as it increases market share in parts of outer London. Foxtons opened four new branches during the quarter, in Loughton, New Malden, Sutton and Fulham, taking its total to 62.
It plans to open three more branches in 2016, all outside central London’s zone one.
Budden’s basic wage for this year will be £550,000, up from £461,250 in 2015, while his maximum bonus will rise from 125% of salary to a maximum of 150%.
Including bonuses and share incentive payments, Budden’s total pay packet could hit £2.3m for this year compared with the £856,000 he received last year.