Posts with tag: Foxtons estate agents

Foxtons Could Face £42m Legal Bill for Charging £616 for Changing a Light

London estate agent Foxtons could soon face a huge legal bill of up to £42m after it charged a landlord £616 for changing a light fitting.

This could be the most expensive light replacement ever, which could lead to the stock market listed agent being sued by thousands of landlords.

Foxtons Could Face £42m Legal Bill for Charging £616 for Changing a Light

Foxtons Could Face £42m Legal Bill for Charging £616 for Changing a Light

Foxtons used a subcontractor, Maintenance1st, to conduct the work at Dr Chris Townley’s rental property. He was billed £550 plus £66 VAT, but later discovered that Maintenance1st had charged much less.

Dr Townley is a law lecturer at King’s College London and signed up to Foxtons to let and manage his London investment in 2011.

In 2013, he received a bill for the repair but demanded a refund after finding that the work was substandard. Maintenance1st disputed this and did not offer a refund.

Foxtons then grudgingly put Dr Townley in touch with Maintenance1st, which revealed that its charge was £412.50.

When Dr Townley challenged the agent on the price difference, it admitted to adding £137.50 commission, 33% of the subcontractor’s charge. Dr Townley then found out that Maintenance1st had paid Foxtons an undisclosed commission for carrying out the work.

Furthermore, Foxtons charged Dr Townley an ad hoc management charge of 10% + VAT, as the invoice was over £500. However, the bill only exceeded this amount because of Foxtons’ 33% fee.

In total, Dr Townley paid Foxtons £203 in fees, a 49% mark-up on the original £412.50 bill.

Leigh Day solicitors has sent Foxtons a letter of claim, which is served before legal proceedings. The claim states that the hidden commission was not covered in Dr Townley’s contract.

The firm believes that thousands of other landlords will also be entitled to compensation from Foxtons, with the claims reaching £42m.

Dr Townley comments: “When I first heard there was a commission I was not happy, but thought it may be 2% or 3%. When I found out the real amount I thought it was shocking.”1

Solicitors think Foxtons is wrong for failing to declare a conflict of interest, as it receives commission from contractors as well as from landlords. Foxtons says its charges are clear and Maintenance1st is not involved in the legal dispute.

1 http://www.thisismoney.co.uk/money/news/article-3113604/Estate-agent-Foxtons-risks-huge-legal-bill-charging-616-fix-light.html

Broker says Future is Bleak for Agents

Published On: June 4, 2015 at 1:29 pm

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Categories: Landlord News

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Foxtons estate agent experienced falling shares and was given a sell rating by a broker, which has begun covering the UK estate agent market.

The broker, Peel Hunt, also issued hold ratings to Countrywide, LSL Property Services and Savills.

Broker says Future is Bleak for Agents

Broker says Future is Bleak for Agents

It says the long-term outlook for agents is bleak, as fees will start to drop due to competition from online agents.

Peel Hunt said the main issue is when commissions will decline and by how much: “Estate agents operating in London potentially face the greatest downside to commission rates, given the absolute savings that vendors can make using a fixed price agent.”

It also claimed that the general election was generally positive for the housing market, as the result ended uncertainty around mansion tax, rent controls and banning tenant fees.

It adds: “While the near term news is positive and the listed players have diversified into areas with more stable revenue streams, we believe the sector faces longer term headwinds.

“It is still largely exposed to the highly cyclical nature of housing transactions and the growth of fixed price online estate agents is likely to lead to downward pressure, possibly significant, on industry fees and profits.

“The key issue is the pricing structure offered by the online estate agents, which have been expanding rapidly and where the difference in fees is material – especially in higher value areas of the South East and London. The big debate for us is how far and how rapidly will fees fall.”1 

Last year, Foxtons charged an average commission rate of 2.4%.

Yesterday, Foxtons shares closed at 270p, down from their 315p high last year, but up from November 2014’s low of 142p.

1 http://www.propertyindustryeye.com/high-street-agents-are-under-pressure-from-onliners-and-fees-will-fall-says-city-analyst/?utm_content=buffer26e8f&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

 

 

 

 

 

Foxtons Sees Profits Drop Ahead of Election

Published On: May 3, 2015 at 4:16 pm

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Categories: Finance News

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A slowdown in the property market approaching the general election has affected revenues and profits at London estate agent Foxtons. Buyers and sellers are awaiting the result of next week’s poll.

The chain made revenues of £33.1m in the first three months of the year, a 3.1% drop on the first quarter (Q1) of 2014 when the sales market was its strongest since 2007.

Sales commissions also fell almost 12% to £15.5m in Q1, but lettings were up, with a 5.4% increase to £15.9m. Mortgage broking also rose by 13.5% to £1.6m. Foxtons made underlying profits of £8.3m, which is around a quarter less than the same period in 2014.

Foxtons Sees Profits Drop Ahead of Election

Foxtons Sees Profits Drop Ahead of Election

Chief Executive of the firm, Nick Budden, says: “As expected, property sales transactions in London have remained relatively flat since the end of last year with many potential buyers and sellers apparently delaying their decisions until the outcome of the general election is known.

“Encouragingly, growth in our lettings business has continued from the momentum we saw at the end of last year.”1

Foxtons is not anticipating a market boost until there is security after the election. Rival company Countrywide, Britain’s largest estate agent, cautioned this week that market transactions in the first six months of the year would be substantially down on last year’s levels due to the election. However, it is predicting a recovery in the second half of 2015.

The outcome of the election is unclear. Nate Silver, who correctly predicted the results in every state of the US 2012 election, expects a “messy outcome” for the UK, resulting in a possible coalition.1

The sudden drop in profits caused Foxtons to reduce its staff, after hiring more last year for the anticipated long-term improvement. Currently, the firm employs 1,270 people.

Despite the dip, Budden thinks that the long-term fundamentals of the London housing market are secure. Many of Foxton’s branches are situated in less central parts and have reported better levels of volume growth recently.

Foxtons has continuously expanded, opening five new branches in areas such as Walthamstow, northeast London, and Bromley, southeast London. It now has 56 offices. Another two are scheduled to open this year.

Shares in Foxtons increased by 6% to 312p.

1 http://www.theguardian.com/money/2015/apr/30/foxtons-blames-election-for-slowdown-in-london-property-market