Good morning, everyone, thank you for joining the Foxtons 2025 full year results presentation. I'm joined, as always, by Chris Hough, our Group CFO. We will answer any questions at the end of the call. This morning, I will take you through some of the highlights of 2025, provide an update on the London property market. Chris will talk you through the financials. I will finish with an update on our operational progress in the year, followed by some detail on outlook for 2026. We delivered 5% revenue and EBITDA growth in the year, driven by incremental acquisitions revenue and operational progress in areas such as lettings, cross-selling and financial services. These higher revenues offset the challenging operating environment, including a volatile sales market and cost headwinds to deliver flat operating profit.
These results highlight the resilience of our business as a result of our strategy to position Foxtons firmly as a lettings-led business. Our portfolio now exceeds 32,000 tenancies, which is up over 50% over the last five years, these tenancies generate highly valuable reoccurring revenues. In 2025, these revenues generated over 2/3 of group revenue. We delivered 8% lettings market share growth through improved landlord attraction, retention to build on our position as London's largest agent. Impressively for a London-focused business, we are also the U.K.'s largest lettings brand. We continue to execute our strategy on acquisitions. In 2024, our acquisitions in Reading and Watford made a significant contribution to revenue growth. Recent acquisitions in Milton Keynes and Birmingham create strong platforms in high-value markets that complement our London base. Operationally, we haven't stood still.
The business has embraced a culture of continuous improvement, and that mindset is cascading through the organization. We're focused on unlocking the next stage of growth by driving revenue and improving productivity and efficiency right across the business. On Slide 6, you can clearly see our strategy in action. The business has made great progress since I returned in 2022. Over that period, we've reset the strategy with a focus on lettings-led growth, rebuilt our operational capabilities, and delivered significant market share gains. The result is consistent year-on-year revenue growth with an 8% CAGR over the last five years. With a sharp focus on costs, we've maximized operating leverage across the business. As a result, profit growth has outpaced revenue growth, delivering a 23% CAGR over the same period.
While profits were flat in 2025, I remain confident that we can return to our growth trajectory over the coming years. Turning now to Slide 8 and an update on the London lettings market. On the chart on the left-hand side, you can see the number of renters per property back to 2021, highlighting supply and demand dynamics in the market. The market was resilient in 2025. Tenant demand remained strong and supply levels were healthy. We did see a softening in supply in the run-up to the autumn budget, reflecting speculation around potential tax changes for landlords. With no major tax reforms announced, supply picked up in December, and we delivered a record December for both deal volume and revenue. Rental prices were broadly flat as the market balanced flat supply and demand dynamics with affordability limits for tenants.
Even so, the market has delivered a 7% CAGR since 2021, and over the medium term, we expect a return to inflation-linked rental growth. Over the next two slides, I will take you through an update on the Renters' Rights Act, one of the biggest changes in the lettings industry over the last 25- years. On this slide, we've outlined the key provisions in the act. The Renters' Rights Act will come into effect on the 1st of May and brings England broadly in line with the rest of the U.K., There are several key changes. Fixed term tenancies will end, meaning all existing and new rental agreements will move to open-ended periodic agreements. Rent increases will become available to landlords annually, although will require evidence that any increase is in line with the market.
This is a shift from the current system where rents are typically fixed for the duration of the contract. Local authorities will have stronger enforcement powers, including the ability to impose higher penalties for non-compliance. What does this mean for landlords? The vast majority of landlords who provide good quality homes and want to keep good tenants in situ for as long as possible, very little changes to their investment. What does matter is staying on top of the new compliance requirements and working with an agent who can manage those requirements on their behalf. It's incredibly easy to fall foul of the legislation, which is fragmented across local authorities and often overly complex. Even the Chancellor was caught out last year, a reminder of just how difficult it is for ordinary people to navigate the rules. Slide 10.
As these new requirements come into force, we expect to see some shifts in the market and opportunities for Foxtons. These fall across four main areas. The first is increasing the total addressable market for Foxtons as increasing numbers of DIY landlords opt to use an agent to let and manage their property. Over 50% of landlords fall into this DIY category today, highlighting the size of the opportunity ahead. The second is by increasing Foxtons' market share of the lettings market. We expect landlords will increasingly turn to high-quality agents who can protect their investments and navigate the growing compliance burden. As the leading agent in our markets, this creates significant opportunity to grow share and also the cross-sell of high-margin property management services. Thirdly, we expect more portfolio stability. With fixed terms removed, we expect longer occupancy lengths as tenancies become more stable.
Annual inflation-linked rent increases are also expected to become the norm, creating a more predictable income profile. Fourthly, we expect the estate agency sector to consolidate further. The industry is still highly fragmented, with 66% of the market made up of small independent agents. The new regulation will place real pressure on these businesses, requiring significant investment in people, training, technology, and compliance. Many simply won't be able to make these investments, accelerating consolidation. This dynamic plays directly to our strengths. We are well-positioned to lead consolidation in our markets and have a strong track record of delivering attractive returns on capital when we do so. Structurally, we anticipate little change in the size of the sector to remain broadly stable over the medium term based on the experience of similar legislation in Scotland. Turning now to Slide 11 and an update on the London sales market.
The sales market was highly volatile in 2025. Across the year, volumes in our London markets were up 2% in line with our own performance. Q1 volumes were around 30% higher than Q1 2024, driven by a large number of first-time buyers competing ahead of the Stamp Duty deadline. As expected, Q2 volumes were materially lower, reflecting the pull forward of the transactions into Q1. In the second half, activity was impacted by the delayed autumn budget. The wider economic uncertainty and weak consumer confidence was compounded by the intense speculation around potential tax changes, including the abolition of Stamp Duty and the implementation of mansion taxes for most properties in London, which really dampened the market. You can clearly see the impact on buyer demand on the bottom chart.
New offers agreed ahead of the budget were subdued, sitting at levels similar to those seen in 2023 shortly after interest rates spiked following the September 2022 mini budget. With the average transaction taking four to five months to complete, this slowdown in late 2025 will naturally impact volumes in the first half of this year. In the end, the actual policy changes were fairly limited. Stamp Duty remains unchanged and continues to act as a major barrier to improving affordability for buyers. The new mansion tax coming into effect in 2028 only impacts properties over GBP 2 million. While this may create some drag at the very top end of the market, that segment represents only a small share of transactions.
This change reinforces our strategic focus on the volume segment of the market, particularly properties priced below GBP 1 million, where Foxtons is strongest and where volumes are more resilient. Looking further ahead, it's worth noting that buyer demand in early 2026 is still being held back. For vendors looking to sell in this environment, pricing is absolutely crucial. There are buyers in the market, but they are focused on the right properties at the right price. When we see homes coming to market competitively priced, buyer interest and offer levels remain strong. I'll now pass over to Chris for a run-through of the financials.
Thank you, Guy. Good morning, everyone. 2025 saw the group deliver revenue growth despite a challenging operating environment, highlighting the financial resilience we've built into the business over the last four years. Financial highlights are set out on Slide 13. Incremental revenues from acquisitions and improved cross-selling of high-value lettings property management services drove a 5% or GBP 8.6 million increase in revenues to GBP 172.5 million. We delivered GBP 22.2 million of adjusted operating profit, which is flat on the prior year. This represented a robust performance in the context of a challenging operating environment due to a volatile sales market and external cost pressures, in particular from Employer National Insurance and Living Wage increases.
Adjusted operating profit margin decreased by 60 basis points to 12.9% as margin growth in lettings partially mitigated some of these external cost pressures. I'll provide more detail in the segmental reviews. Adjusted EBITDA, which is defined on the same basis used to calculate the group's RCF covenants, grew by 5% to GBP 25.3 million. Statutory profit before tax or GBP 16.9 million and net free cash flow grew by 14% to GBP 11.2 million. The board has declared a final dividend of GBP 0.93 pence per share with a full-year dividend totaling GBP 1.17 pence per share unchanged from the prior year. The group also bought back 5.5 million shares in the year via the buyback programs announced in April and September.
Turning to Slide 14, which provides an overview of the income statement and key changes. Group revenue increased by 5% to GBP 172.5 million, reflecting 5% growth in lettings revenue, 6% growth in sales revenue, and 10% growth in financial services revenue. Group revenue continues to be underpinned by lettings revenue, which represented 64% in the year. Lettings revenue is non-cyclical and recurring in nature and delivers high levels of consistency and earnings visibility. Direct costs were GBP 3 million higher, reflecting additional acquisition-related headcount, increased revenue linked staff commissions, and GBP 1.1 million of additional employment costs. Contribution margin was flat at 64%, including margin growth in lettings. Overheads were GBP 4.2 million higher, primarily driven by incremental acquisition operating costs, targeted marketing investments, higher employment costs, and GBP 1 million of non-recurring overhead costs.
Depreciation, amortization of non-acquired intangibles, and share-based payment charges were GBP 1.2 million higher. Together, these movements delivered adjusted operating profit of GBP 22.2 million. Profit before tax was GBP 0.6 million lower than the prior year, reflecting broadly flat adjusted operating profits and GBP 0.5 million higher amortization of acquired intangibles. Cost control continues to be high on our agenda. This included delivering a material cost saving by negotiating an early exit from the Chiswick Park head office lease and rightsizing head office space. This move unlocks GBP 1.5 million of operating cost savings from January 2026 onwards, providing some protection from cost pressures in 2026. Through 2026, we are redoubling our focus on costs to protect profitability in the context of current market conditions. Turning now to Slide 15 on performance in lettings.
Lettings revenue grew by GBP 5 million or 5% to GBP 111 million as a result of GBP 5.2 million of incremental revenues from lettings acquisitions in Reading and Watford. GBP 0.6 million higher like-for-like revenues, which reflects property management revenue growth with a like-for-like increase in uptake of 7% delivered in the year. This progress will continue to benefit the group in 2026 as revenues annualize. GBP 0.9 million lower interest earned on client monies due to lower Bank of England rates. Revenue per transaction increased by 1%, reflecting the improved cross-sell of property management services, partially offset by the move into higher volume commuter markets and the lower interest on client monies.
Contribution grew 6% to GBP 82.9 million off the back of revenue growth, whilst the contribution margin grew by 100 basis points, which is primarily due to margin-accretive property management and cross-sell of related ancillary services. Adjusted operating profit grew 9% to GBP 29.8 million and adjusted operating profit margin grew 100 basis points to 26.9%, reflecting the strong contribution margin and the delivery of acquisition-related synergies. Moving to Slide 16, where we have presented detail on the returns from our lettings-focused acquisition strategy. We have an industry-leading operating platform that delivers high levels of returns from acquisitions by delivering high levels of landlord retention, organic growth from acquired databases and cost synergies. Our operating platform is highly scalable and can power a significantly larger portfolio than we operate today for limited incremental cost.
Historic acquisitions in London deliver EBITDA margins above 50% and return on invested capital above our 20% target rates as we maintain a tight focus on ensuring returns through a portfolio's life cycle. Acquisitions are a primary route into new geographies, combining acquired lettings income to underpin profitability with organic lettings and sales growth. Under our buy, build, and bolt-on strategy, we focus on acquiring platform businesses in high-value markets and enhancing them through high ROI bolt-ons, targeting aggregate returns of at least 20%. In October 2024, we acquired two leading businesses in Reading and Watford, completing the group's first acquisitions outside London. Both have performed well, delivering organic revenue growth and first-year returns on capital above the target level of at least the group's weighted average cost of capital. The Watford business was integrated onto the Foxtons operating platform in 2025, with Reading planned for 2026.
Returns are expected to grow as synergies are delivered in Reading and the analyze in Watford. In February 2025, we completed a bolt-on acquisition into the Watford platform. This bolt-on was rapidly integrated and is delivering annualized returns on capital above our 20% target, which highlights the growth we can rapidly deliver in new markets. In January 2026, we acquired leading businesses in Milton Keynes and Birmingham. Over the next 12 - 18 months, we'll focus on integration, deploying the Foxtons toolkit to drive organic growth, deliver synergies, and support further high ROI bolt-on acquisitions. Moving to Slide 17 and an update on the sales business.
Sales revenue grew GBP 2.7 million or 6%, reflecting GBP 3.4 million of incremental revenue from our Reading and Watford acquisitions and GBP 0.8 million lower like-for-like revenues. On a like-for-like basis, revenue was 2% lower, reflecting 3% growth in transaction volumes, broadly in line with the market, and 5% reduction in average revenue per transaction, primarily reflecting the high proportion of lower value first-time buyer properties transacting in Q1 ahead of the March Stamp Duty deadline. In total, volumes were 19% higher and revenue per transaction was 11% lower. The reduction in revenue per transaction primarily reflects the expansion into commuter markets, which typically display lower revenue per transaction, but higher volumes. The acquisitions in Reading and Watford delivered 9% revenue growth in the first year of Foxtons ownership, driven by market share growth.
Average market share across Foxtons London markets was robust at 4.8%. The adjusted operating loss in sales increased to GBP 5.7 million. As the profitable contribution from new commuter town acquisitions only partially mitigated increased operating costs and a strategic decision to maintain bench strength despite weaker H2 market conditions. Improving the profitability of sales remains a key priority for us, and Guy will provide more detail later in the presentation. Moving on to Slide 18 on financial services. Revenue in financial services was 10% higher at GBP 10.3 million. Specifically, volumes were 13% higher, reflecting the stronger refinance pipeline, higher estate agency cross-sell rates, and improved advisor capacity and productivity. 2% reduction in average revenue per transaction, reflecting the change in product mix towards refinance activity.
In the year, 42% of revenue was generated from non-cyclical refinance activity and 58% of revenue from purchase activity and other ancillary sources. Adjusted operating profit was broadly flat, primarily reflecting investment in fee and headcount in H1 as we scale up the business. New fee earners supported revenue growth in the year and typically break even around the 12-month mark. Moving now to Slide 19 on cash flow. There was a 14% increase in net free cash flow to GBP 11.2 million. The operating cash to net free cash flow bridge on the left-hand side shows the key items of note. Operating cash before working capital movements was GBP 36.4 million, 3% higher than the prior year, and including GBP 1.9 million of non-underlying cash outflows, primarily relating to closed branch costs.
There was a GBP 4.4 million working capital outflow reflecting the ongoing transition to annual billing across the lettings portfolio to improve competitiveness and landlord retention, and position the business ahead of the Renters' Rights Act becoming effective. We expect the portfolio to be fully transitioned to annual billing by 2027, with an estimated GBP 10 million working capital investment across 2026 and 2027. The group paid GBP 4.3 million of corporation tax and made GBP 13 million of lease liability payments in the period. GBP 3.5 million of CapEx spend, primarily relating to our new HQ fit-out costs and internally generated software developments. Looking at the opening to closing net cash bridge on the right-hand side. Net debt at 31st December was GBP 16.9 million.
This reflects GBP 11.2 million of net free cash flow, GBP 5.3 million of acquisition spend, and GBP 9.1 million of total shareholder returns. In the year, we increased the RCF to GBP 40 million and extended it by 12- months to June 2028. The interest cover and leverage covenants have remained unchanged, and at the year-end, the leverage covenant ratio was 0.7 times, which was below our covenant limit of 1.75 times. The interest cover ratio was 24 times, which was above our four times covenant. Finally, the board has declared a final dividend of 0.93 pence per share, with the full year dividend totaling 1.17 pence per share, which is unchanged from the prior year.
The proposed dividend will be paid on 15th of May 2026 to shareholders on the register at 10th of April 2026, subject to shareholder approval at the AGM. Moving to Slide 20, an overview of the Group's capital allocation framework. The framework aims to support long-term growth and deliver sustainable shareholder returns through organic growth, making accretive lettings-focused acquisitions, paying a progressive dividend whilst maintaining strong dividend cover, and delivering other shareholder returns, namely share buybacks. We continually evaluate the effective uses of capital, including comparing acquisition returns versus those achievable through share buybacks. We consider factors such as expected return on investment, earnings per share accretion, borrowing capacity, and leverage.
The group seeks to utilize its balance sheet and revolving credit facility to best effect, and to maintain a leverage ratio of net debt to adjust EBITDA of less than 1.25 times at the year-end position. I'll now hand back to Guy, who will take us through the operational update.
Thank you, Chris. Over the next two slides, I will lay out operational progress we've made in our business areas and our focus for 2026, followed by the operational upgrades we've delivered across the group. In lettings, we continued to make progress with our organic growth strategy, delivering against our formula of growing the portfolio and driving the cross-sell of high-margin services. Over the year, we increased our London market share by 8% and maintained high levels of stability across our tenancy portfolio. Revenue and margin growth were supported by a 7% increase in cross-selling property management, and the proportion of the portfolio that is actively managed now stands at 43%, up from 32% at the end of 2021. Our focus over 2026 is to continue delivery of our growth formula to continue to grow this highly valuable business.
Organic growth is complemented by acquisitive lettings growth. In the year, we delivered good returns from our Reading and Watford acquisitions, with returns above our initial targets. In Watford, we have integrated the business into the operating platform, rebranded to Foxtons, and boosted with a bolt-on acquisition that is delivering returns at our 20% target level. We are now the largest lettings agent in Watford, with more than three times the market share of our nearest competitor. In January 2026, we expanded into two new complementary high-growth markets in Milton Keynes and Birmingham. Milton Keynes is well-connected to London, home to a large number of corporate headquarters, and has one of the highest levels of GDP per capita in the U.K.
Birmingham has undergone a significant regeneration and continues to attract major investment, including a growing number of banking and professional services roles, a trend set to accelerate with the opening of HS2. Both cities have strong pipelines of build-to-rent and new homes developments, and we have already linked these businesses with our corporate customer base. These acquisitions are not part of a plan to become a national agent. This is a targeted strategy focused on markets where Foxtons can create real value. Our priority over the next 12-18 months is maximizing returns from these deals through the delivery of organic growth, cost synergies, and high return on investment acquisitions. Moving to sales, we operate through a highly volatile market last year, and our market share held broadly flat.
In November, we appointed a new managing director, James Stevenson, who has a fantastic track record of delivering turnarounds over his 20-year career at Foxtons. We now have an operational plan to reposition the business to reflect current market environments and, in doing so, improve profitability. It's worth remembering that while we are a lettings-focused business, sales is an integral part of our full service proposition and is highly complementary with lettings. Our offer is built around supporting customers through their entire property life cycle, and sales plays a critical role in helping landlords expand or reposition their portfolios. By delivering this full-service approach across sales and lettings, we significantly strengthen landlord loyalty, enhance revenue repeatability, and increase customer lifetime value. As Chris highlighted earlier, sales delivers a positive financial contribution before the allocation of shared costs.
In Alexander Hall, our financial services business, we delivered a 10% revenue growth driven by increasing the operational productivity of our advisors and improving the efficiency of our processes. This included a 13% uplift in mortgage deals per advisor and a 5% improvement on the conversion of leads to mortgage applications. Continuing to build on these upgrades will support further growth. Underpinning all of this is a consistent focus on costs and productivity to maximize the operational leverage across the business. As Chris mentioned, we forensically review our cost base on an ongoing basis, taking costs out wherever we can, including our recent HQ move, which generated GBP 1.5 million of annualized savings. We're focused on leveraging our technology stack and data capabilities to drive efficiency right across the organization. Turning now to Slide 23.
Over this slide, I will present the key group-wide operational upgrades we're delivering to support our growth plan. Customer lifetime value is a key focus for the business. We aim to support customers through their property life cycle, becoming their trusted property partner. In doing so, we can generate high-quality, recurring revenues and earnings. To do this, we need to deliver best-in-class service. We've made significant progress in this area, and I'm pleased to say that we now achieve customer satisfaction scores of over 80%, a double-digit uplift since we launched these programs. In 2025, we continued to enhance the customer experience by further embedding our real-time feedback system across the full customer life cycle, enabling us to measure service throughout the journey and resolve any issues quickly. Combined with AI-powered sentiment analysis, this allows us to identify the drivers of exceptional service.
It embeds insights into training and delivers consistently high standards. Supporting this focus on service are our brand and marketing initiatives. Our focus this year was on strengthening customer attraction and retention in a competitive market. Foxtons has always had a distinctive level of brand awareness. We do things differently. In 2025, we built on that by launching an exclusive partnership, which makes us the only U.K. estate agent where customers can earn Avios points. It's a differentiated position designed to attract new customers, reward loyalty, and drive uptake of our higher margin services. Turning now to our technology and data capabilities. Our in-house technology and data stack creates the flexibility to develop and deploy AI and data solutions at pace without the constraints of an off-the-shelf system. Our approach is very clear. We only invest in AI where it makes a meaningful difference to our financial results.
It's not AI for AI's sake. In 2025, we made strong progress. We expanded our AI-driven sentiment analysis, giving us far deeper insight into customer interactions. We also advanced our data-led lead scoring models, ensuring our people focus their time on the highest value opportunities. We introduced AI-powered training tools that help new agents reach their full performance faster. Together, these improve efficiency, drive higher productivity, and ultimately enhance profitability. We will continue to identify areas across the platform where embedding AI can deliver an operational and financial impact. These upgrades are a key part of the continuous improvement culture that now runs throughout the entire business. Most importantly, our people and culture. It is my fundamental belief that estate agency is a people business. Having the right talent, developing great leaders, and embedding and really demonstrating our core values is critical to our success.
This year, we worked with external partners to assess our strengths and opportunities, enhance our employee proposition, and introduced our Getting It Done. Together. framework to align recruitment, development, and well-being across the organization. The response from our people has been really encouraging. 81% believe Foxtons is well-positioned to succeed over the next three years, and 85% believe we truly value diversity and build diverse teams. We remain committed to building a collaborative culture that enables our people to deliver exceptional service for our customers. Finally, to Slide 25 and the outlook for 2026. In lettings, we expect the market dynamics we saw throughout 2025 to continue with consistent levels of stock and strong tenant demand. The Renters' Rights Act represents a significant growth opportunity for Foxtons as landlords increasingly need professional support to navigate the new regulations.
In addition, the two acquisitions we completed in January 2026 will generate incremental lettings revenues. Our plan for 2026 is focused on maximizing the returns from the deals we have completed over the last 18- months, driving organic growth, delivering cost synergies, and progressing targeted bolt-on acquisitions to strengthen our market positions. Turning to sales, buyer activity continues to be held back by weak consumer confidence, macroeconomic concerns, and policy decisions. In response, we are repositioning the business for the current market conditions to improve profitability. Overall, despite the softer backdrop, we are targeting year-on-year revenue and profit growth, supported by a clear mix of organic initiatives, earnings accretive acquisitions, and continued cost discipline.
Importantly, profitability across the group remains underpinned by our substantial base of non-cyclical and recurring lettings revenues, giving us confidence in our ability to deliver against our growth strategy. That concludes the formal presentation. Thank you all for joining us today. Chris and I look forward to meeting with many of you in the coming weeks. I'll now pass to the operator for any questions you may have.
If you wish to ask a question, please press star followed by one on your telephone keypad. If you change your mind and wish to remove your question, please press star followed by two. When preparing to ask a question, please ensure that your phone is unmuted locally. To confirm, that's star followed by one to ask a question. In the interest of time, please limit yourself to three questions. Your first telephone question today is from Robert Plant of h2 Radnor. Please go ahead.
Morning, Guy and Chris. three questions, please. Post the acquisition in Birmingham, the acquisition is in the center of Birmingham. How much of the Birmingham market are you targeting geographically? Secondly, the period of repositioning in sales, how long do you think that will take? Lastly, what are the working capital implications of the Renters' Rights Act? You mentioned investment in working capital. I'm sure there's a difference between when you collect and when you bill for sales. Can you just talk us through that, please? Thank you.
Morning. Well, look, thank you very much for those questions, and welcome everybody. Thanks for tuning in. Firstly, if I talk about Birmingham, the business that we bought, as we do when we're targeting new locations, we always use data to lead the decision. We look for high volume, high value, rental markets, and obviously Birmingham is a superb area for this. There's also still, we believe, good growth left in the Birmingham market, both for sales and for lettings. Really highlights the reasoning behind looking outside of London as well in conjunction with our continued focus on talking to businesses within London that would be bolt on. The business that we bought is a central Birmingham specialist with leading market share within that, within the city center.
We are talking already to other agencies in the nearby vicinity that would allow us to continue our bolt-on strategy to quickly grow revenues and continue to grow that portfolio of Birmingham properties to give us a slightly larger geographic area. Yeah, always we look to buy the hub, which is the business that we bought, FleetMilne. We are, you know, wanting to add to that, to turbocharge the growth as quickly as possible, and that helps us, you know, really drive those profits in the years after. Second question was around repositioning of sales and how quickly does that happen. We're fortunate, as you know, to have huge amounts of data, huge volumes of data.
Using the data platform that we've built over the last couple of years, Chris and I and the rest of the senior leadership look at this data on a daily basis to really give us a view of where we think the sales market is heading, and allows us to be able to dial up or dial down resource in certain areas. Last year was a great example of that. Prime central London, the volumes were considerably subdued. However, in our southwest offices, the market was actually really quite buoyant, and that allowed us to be able to apply resource meaningfully to grasp the opportunity in those higher volume areas.
That's really what our plan will be across this year as we sit here looking at the outlook today for what we feel the rest of the sales market will look like in London is different to how it looked six months ago and different to how it looked three months ago. That is an always on process. We're perhaps a little bit less excited, you know, certainly looking with some of the things that are happening in the Middle East about what may happen around inflation and interest rates. We're just making sure that we're always ahead of that. I'll pass on the RRA the Renters Reform Act question over to Chris.
Yeah. The question was around our working capital changes in this area. Renters' Rights Act, that will see the removal of fixed terms tenancies, and what we'd expect to see there is an average reduction in the billing period that starts those tenancies. We're making a change here to improve our competitiveness and indeed increase landlord retention. We've been reducing our billing terms since 2023 as it happens. We estimate that over the course of 2026 and 2027, there's a GBP 10 million investment in working capital required as we fully transition our portfolio. Transitioning portfolio takes time, hence why there's a two-year period there.
Very clear. Thank you, guys.
The next question is from the line of Greg Poulton from Singer Capital Markets. Please go ahead.
Morning, guys. Three questions from me, please. firstly, obviously the move to more fully managed tenancies has been an important trend for the lettings business. Could you just talk about the level of uplift in fees you see from a fully managed versus a letting-only tenancy? Second, could you talk about the expected cadence of acquisitions for the rest of the year? I'm not asking for a forecast on that, but just a sort of guide as to what we could expect to see throughout the remainder of the year. Thirdly, linked to that, how much capital expenditure do you think you will allocate to acquisitions in the remainder of the year?
Morning, Greg. Thanks for those questions. Yeah, look, we're really proud of the improvement that we've seen over the last two or three years with the upsell of our property management service, that really has come from a fantastic cross-business effort, particularly driven by the head of letting working very closely with the head of property management. That means that we've seen a 7% uplift in that cross-sell of property management services, which ultimately delivers around about a 6% additional fee, which is charging for that premium, fully managed service.
Of course, as we extrapolate that over a longer period of time, that 7% uplift of the volume of services that we're transferring into that premium service for new deals over time massively helps us grow the overall number of properties that we have under management. That really is a key KPI that we drive within the business. You know, lots and lots of remuneration is linked to that. Lots of the KPIs we talk about across the businesses is focused on it. We're proud of that, of that movement, and it's certainly a very big focus across the business.
I think that, as we've mentioned, the change into the Renters Reform Act does, we believe, increase the likelihood of non-managed landlords wanting to take the fully managed service. As we saw and we mentioned in our presentation, you know, it's really easy to fall foul of some of the rule changes, and you need a very capable agency who's got, you know, large teams of compliance, making sure that your property is fully compliant and looked after at every stage along its journey. That's why we are seeing more people choose that service through Foxtons. Acquisition cadence. Look, we've made two great acquisitions at the start of this year.
We're watching very carefully what the outlook looks like and of course, our capital allocation is always very much under review, both with our board and internally. I'll perhaps let Chris talk to that a little bit later. You know, acquisitions very much are a function of opportunity. We're talking to agencies both inside London and outside London. Really we want to make sure that we make the right acquisitions, not just any acquisition. We're pleased with the two acquisitions outside of London in Milton Keynes and Birmingham that we've made at the start of this year in January.
Really, I suppose my preference now is to try to make sure that those new acquisitions are settled in, that we can drive the synergies, that we can make them more profitable, and hopefully find some bolt-in acquisitions to make in the near future.
Finally, Greg, from a quantum perspective on CapEx and acquisitions, we've done 10 already. I'd be thinking about that 15 number that we put out there previously. Expect that additional quantum being the target and the ambition for the remainder of 2026.
Very clear. Thanks, guys.
Ladies and gentlemen, as a reminder, if you would like to ask a question, please press the star followed by the one on your telephone. The next question comes from Adrian Kearsey from Panmure Liberum. Please go ahead.
Morning, guys. Thank you for the presentation. Thank Rob and Greg for asking the questions I was initially going to ask. In terms of sales, you've got an average property price last year of GBP 574. Can you perhaps sort of give us an indication of the range of the types of properties that you sell to give us a sense of, you know, how broad or how narrow your market focus is? Back to also to the second question, back to Birmingham. Currently one site. In order to take advantage of that huge opportunity in Birmingham, when you make further acquisitions, do you think you'll end up having multiple offices in Birmingham, or will you have a single office in the center?
Super. Thank you for that. For that. I'll take first question around sales. Our average price around GBP 574, look, we want to be in the volume market across the markets that we operate in. The reason for that is we know that they're more resilient, and we are a volume efficiency machine at Foxtons, in sales and particularly in lettings as well. The spread of properties that we sell, well, we actually have a minimum fee of GBP 6,000 in London. That means that we don't end up selling many, you know, short lease, garage spaces, which we were doing a little bit of, prior to my arrival. We do cross all price points.
I mean, we've just agreed something, a bulk deal in an area in the east of London that's nearly GBP 10 million. We're operating in all markets. Absolutely our sweet spot is that volume piece right in the middle of where the average pricing is across London. That's really by design. Now, we have been making some efforts to try to increase over time the average. When I say increase, you know, just a very small increase in that average sales price does make it a meaningful difference to us. We don't want to ever turn our back on that volume market. The second question with Birmingham one site or multi-sites?
Well, I think certainly today we view the value, the biggest opportunity is to continue to grow from the center to the more affluent areas of the residential areas around Birmingham. As I've mentioned, we're talking to multiple agencies around those locations at the moment already. We can also bring, of course, the Foxtons operating platform, which really does help grow the businesses, and we've seen fantastic examples of that in both Watford and Reading last year, where we've actually delivered some really solid growth once we layered in the kind of Foxtons toolkit of, you know, marketing, brand, productivity, and operational excellence. That doesn't happen overnight.
You know, that takes a little bit of time to bed in, and that's what we're very busy doing with both our business in Birmingham and in Milton Keynes at the moment.
Great. Thank you very much.
Thank you.
There are no more questions from the telephone anymore. We can now read the questions from the webcast.
First question is from Robin Savage at Zeus . It says, "The impact of the Renters Reform Act this year is interesting. Are there any early market signals that we or any other lettings agencies are seeing that might indicate an uptick in DIY landlords moving towards professional lettings management?
Great question. Thank you, Robin. Yeah, absolutely. Look, we've seen this trend starting to kind of infiltrate the London market over the last 18- months really. We've seen, obviously market share increases for Foxtons, and we've seen this increase in our property management cross-sell. As I'd mentioned at the start, that's been a major focus of what I wanted the business to deliver over the last two or three years, and I'm really proud of the delivery of that. I don't see it slowing down. You know, we really do offer and believe the offering of the service that we can give to our landlords is best-in-class.
What we are trying to do is deliver the very best service for our landlords, but also making sure that they remain fully compliant, and clear of any issues that may be happening. And being ahead of those legislation changes, as we know, they can come in very quickly, and catch people out. Very pleased with what that looks like, and definitely are seeing that within London.
Second question from Robin. "Foxtons has built a significant competitive advantage through decades of structured proprietary data and a highly analytical approach. How do you see advances in artificial intelligence and Large Language Models further strengthening that advantage, both in how Foxtons generates market insight and how it manages the business and delivers differentiated services, relative to competitors with less-developed data capabilities?
Great question. Thanks, Robin. Well, you've been a beneficiary of coming and seeing the operation in person here at Foxtons, and I'm sure that you'd agree that, you know, there isn't another data system, there isn't another database like Foxtons has across the London market. As far as we're aware, across the whole of the U.K. market, and we've been really utilizing that database. Cross-referencing it already with early machine learning over the last 12- months, and some AI functionality to help us improve productivity. Great example of that is, you know, we have 100 people who sit at Foxtons head office who are calling into a huge database of nearly 4 million people to drive new listing opportunities.
The old way of doing that would be just randomly picking a street and calling from A - Z, but our new system uses AI and has machine learning so that it filters up to the top and surfaces the most likely leads that we think will convert in the next three months. That's had a meaningful impact on the productivity of that team. We're also using AI to help us improve the speed of new recruits under training to get them to be able to bill for the business quicker by helping them through the training flow, where we've got AI platforms that have really improved that speed of service during that initial training period. We're using AI in other areas as well.
As we said in the presentation, we're not, we are definitely not using AI for AI's sake. It has to have a meaningful impact to the bottom line. We keep a very, very close eye on lots of technologies that lots of people are working very hard to try to deliver across the industry. Because of our structure of that data, and the way that we've built the database, we're able to, you know, loop in these functionalities very, very, very quickly. Thanks for that question, Robin.
One from Andy Murphy at Edison. "Given the number of recent deals outside London, are you no longer focusing on London M&A?
Great question. We absolutely are still very focused on London opportunities, but given where we've seen the growth in the marketplace, when we were presented with the deals that we could have done this year and last year, it just totally made sense to look at the Birmingham and the opportunities in Milton Keynes. It doesn't stop us from looking and continuing to speak to other agents as roll-ins within the London environment. As I've said before, they need to be the right deal for Foxtons and we need to be paying the right prices for them. Yeah, that search is still and always on. Certainly not turning our back on London focused acquisitions. Thanks, Andy.
One from Robert Sanders at Shore Capital. "What are the multiples in the market at the moment for lettings portfolios, and how much consolidation do we see likely in the sector after RRA?
Yeah, I think the RRA opportunity is more likely to create even further consolidation, but actually, I'll let Chris take the questions on multiples.
Yeah, the multiples really depends where we're buying, what we're buying, the balance of sales versus lettings. Broadly speaking, a range from two times to three times lettings revenue is a sort of multiple we're seeing, which is actually pretty consistent with what I was seeing in both 2024 and 2025. There's been no significant change there. For us, now we've got two new platforms which we're building into, i.e., Milton Keynes and Birmingham. That gives the bandwidth and the opportunity to launch into new areas, which is really exciting for us.
A question on the sales market from Donald. "How impactful is the lack of overseas buyers in London and the alleged exiting of high-net-worth individuals from the London sales markets?
We touched on earlier, you know, our average sales price across London is GBP 574,000. The super-prime market, we know very clearly, particularly last year, felt the pain of the exiting of high-net-worth individuals, and certainly lots of reports, as I'm sure you will have read, from the super-prime agents really having a torrid year last year. Did that impact our volume market? I mean, ultimately it does have a very small effect on the movement up and down the chain, but the reality is that's why we're in the high-volume market because we know that those transactions overall are less impacted by these big swings of where, you know, net wealth may decide to spend their money this summer versus the next summer.
Yeah, we haven't been impacted by it, but certainly super-prime agencies we know have really felt the pinch last year.
The following question, essentially, what are the catalysts that are required to drive volumes in the sales markets?
Well, ultimately, the biggest barrier to returning back to those 145,000 sales transactions that we historically used to see going back before the financial crisis is statutory. You know, last year we think there were somewhere in the region of 90,000 sales transactions. The year before that, probably 85,000 sales transactions. We always believed that the market would return to its five or six year average of around about 100,000 sales transactions, but that looks very unlikely this year. That's a reason that we are, you know, ahead of the market really thinking about what we want to do with the sales business this year so that we are right-sizing everything across all of the different regions that we're in.
You know, you also look at that sales being agreed this year already, we know that year to date, the number of sales in London is circa down in total around about 6%, whereas pretty much the rest of the U.K. market is up year-on-year on sales agreed. Hopefully another good reason to point to our acquisitions outside of these locations.
That's the end of the questions from the web.
This concludes our question and answer session. I would like to turn the conference back over to Guy Gittins for any closing remarks.
Firstly, thank thank you for joining us this morning. As you know, Chris and I will meet many of you over the coming weeks. We are really focused on continuing to deliver the medium-term targets that we set out in our CMD last year. We've got a very good business. We've taken a lot of costs out last year, and we're laser-focused on making sure that we can continue to pull all of the different growth levers to achieve those targets in the medium term. Appreciate everybody joining the call this morning and look forward to seeing you all soon.
This presentation has now ended.