Capital Markets, Financial

BGC Partners eyes new platform to trade US Treasuries

BGC Partners plans to launch a new platform to trade US Treasuries early next year, in a bid to return to a market in the middle of evolution, according to people familiar with the plans.  The company, spun out of Howard Lutnick’s Cantor Fitzgerald in 2004, sold eSpeed, the second-largest interdealer platform for trading Treasuries, […]

Continue Reading


Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

Continue Reading


Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

Continue Reading


Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

Continue Reading


Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

Continue Reading

Categorized | Property

UK estate agents reel from letting fees shock

Posted on November 24, 2016

As this week’s Autumn Statement approached, UK estate agents were hoping for changes to a stamp duty regime they say has unnecessarily clogged up parts of their market.

Instead, they received a shock: chancellor Philip Hammond announced a ban on fees charged to tenants, which had been developing into a highly profitable business line. 

Tenant groups cheered the move. But investors in listed estate agencies fled, sending shares in Foxtons, the London group, down 13 per cent in an hour. 

The blow was especially hard because estate agency chains such as Foxtons, Countrywide and LSL had been relying on lettings as an expanding part of their businesses in an era of low sales transactions.

“Pretty much all of them have increased their exposure to lettings for that reason,” said Anthony Codling, an analyst at Jefferies. 

In the 10 years before the credit crunch in 2008, 1.65m homes changed hands each year in Britain, according to Savills. Since then the figure has peaked at 1.33m and is falling again. Meanwhile, the number of households renting privately has more than doubled since 2001 and is a growing market for estate agents.

Fees charged to landlords make up the majority of agents’ revenues from lettings, especially if they are hired to manage the properties as well as arrange new rentals. 

But fees to tenants, in theory charged for administrative services such as contracts and referencing, are a high-margin business. They have risen 60 per cent on average in five years, according to research by Citizens Advice.

Analysts at Peel Hunt said tenancy agreements, in particular, carry margins of about 80 per cent, with fees averaging £300 to £350. 

“Credit checks and inventory checks and references will remain an essential part of the lettings process,” they said. But tenancy agreements are “where the most pressure is likely to be applied by the government”. 

The Department for Communities and Local Government is set to consult on details of the ban, which Mr Hammond said would be brought in “as soon as possible”.

If it were introduced immediately and banned all fees to tenants, Peel Hunt said it would reduce Foxtons’ 2017 pre-tax profits by an estimated 11.4 per cent.

Foxtons said: “This was an unexpected announcement and the details and timing of the new policy are not yet known. As we get more clarity, we will review the impact to our customers and on our business.”

Countrywide and LSL, which have less specialised business models, face profit hits of an estimated 8.3 per cent and 9.1 per cent respectively, Peel Hunt said. The UK’s non-listed estate agencies face a similar problem, as does Aim-listed lettings agency Belvoir.

Savills, which has large commercial and overseas arms, is seen as less at risk, with its share price falling only 0.87 per cent on Wednesday.

11.4 per cent

Hit to Foxtons’ 2017 pre-tax profits if ban on letting fees immediately introduced, according to Peel Hunt

Potential winners from the ban are the digital-first estate agencies, which already compete on the basis of fees lower than their traditional competitors. Purplebricks, the largest of these, said it “does not expect the proposed abolition of tenant fees for letting … will have any meaningful impact on the business”.

Announcing the change on Wednesday, Mr Hammond said: “Landlords appoint letting agents and landlords should meet their fees.” Lobby groups have suggested that if the fees are passed to landlords, the burden would return to tenants in the form of higher rents.

Charging landlords the full sums previously levied on tenants may prove difficult, given the fees landlords already pay, their power to switch agents and a series of tax changes that have already reduced their returns.

“It’s going to be interesting to see how successful or not agents are at passing these costs on to landlords,” said Mr Codling. “In theory, you could ask landlords to pay everything — I don’t think that’s impossible, but I think it’s unlikely.”

Dominic Agace, chief executive of estate agency group Winkworth, said: “Where there’s plenty of supply of rental properties, as in London, I imagine agents will pass the charges on to landlords as and when they can.” 

Others are hoping that rather than a total ban, the consultation will result in certain fees being permitted, perhaps with a closer link to costs. The Fair Fees Forum — a group including government, campaigners and agencies that had been seeking a compromise on the issue — is continuing to examine the issue.

Scotland banned tenant fees in 2012, but evidence as to the effects is inconclusive; agents passed some costs on to landlords and rents did rise, but some analysts said that was down to other market factors.