Foxtons has blamed lower profits on the ‘challenging’ London property market

Pre-tax profits dropped 2.6% to £41 million on a 4.6% increase in revenues

Chief executive Nic Budden 2015 sales levels were well below those of 2014 because of factors such as higher stamp duty and the general election (Mary Turner/ Getty)

Foxtons profits have been hit by a challenging London house market – and the firm flagged up potential disruption from the Brexit referendum in June.

Pre-tax profits dropped 2.6 per cent to £41 million on a 4.6 per cent increase in revenues, the London-focused agency reported.

Chief executive Nic Budden 2015 sales levels were well below those of 2014 because of factors such as higher stamp duty and the general election.

In the sales market, we saw falling volumes in central London, where price and stamp duty pressures have deterred buyers,” Budden said.

But Budden also floated the potential impact of higher stamp duty on buy-to-let investors as well as the EU vote.

“Looking ahead, the London residential property market continues to be highly attractive both in terms of sales and lettings, although it is too early to predict how transaction volumes may be impacted by recent changes to the tax regime and the short-term political and economic uncertainty caused by the UK referendum on leaving the European Union,” he added.

Foxtons, seen as a barometer for the London market, said it expected some growth in the sales market in 2016 but that a recovery in volumes would be affected by a low level of stock.

However, Foxtons said falling sales were “more than offset by more active markets in outer London, where the group has been focusing recent expansion.”

Broker Peel Hunt, which has a “reduce” recommendation on Foxtons, said that opening new branches offset the impact of fewer house sales and a tight lettings market.

Peel Hunt believes that Foxtons will struggle to maintain its market share over the medium term, if it continues to charge fees higher than its rivals.