Real estate firm Foxtons focuses on commuter towns for expansion endeavors

Real estate firm Foxtons focuses on commuter towns for expansion endeavors

Bustling London and Beyond: Foxtons Betting Big on Rising Rental Demand

London's top dog in estate agency, Foxtons, is gearing up for a profit surge in the coming years, driven by soaring demand for rental properties in and around the capital.

This bustling market has caught the attention of Foxtons, which aims to double its profits to a whopping £50 million over the medium term. The company's plan includes strategic moves such as acquiring estate agents in commuter towns, integrating AI, and enhancing customer loyalty.

Foxtons' CEO, Guy Gittins, is no shy stranger to ambition. Under his leadership, Foxtons reclaimed its crown in London's rental market last year, boasting more property sales than any other agent in the city. In terms of overall size, Foxtons was also the capital's largest estate agency, according to industry source Twentyci.

The company's market share increased by a substantial 20% last year, mainly due to its innovative use of technology and commitment to expanding its property portfolio. The lucrative London market has acted as a catalyst, propelling Foxtons' growth far beyond its peers. The influx of renters from both the UK and abroad, coupled with escalating rent prices, has sent rental costs skyrocketing by more than a third since 2020.

Commuter Towns: The New Frontier for Renters

Londoners are now shelling out an astonishing 50% of their income on rent, a figure that continues to climb as rental rates outpace wage increases. This escalating cost of living in the city has forced many to move to commuter towns to avoid breaks to their wallets.

These outer neighborhoods or towns further afield, such as Reading, offer cheaper rents compared to boroughs like Hackney or Lambeth. However, even these areas see rent prices rising at a rapid pace. The arrival of transport links like the Elizabeth line has further bolstered the popularity of commuter towns, making them highly attractive to renters seeking an affordable alternative to life in the city.

Foxtons has seized this opportunity, marking its territory by acquiring two small estate agencies in Reading and Watford last year, and another lettings business, Marshall Vizard, in Watford at the tail end of February 2025. The agency's strategy centers around expanding into "new, high-value commuter markets," in addition to exploring "bolt-on acquisition opportunities" within its core London market.

Tighter Supply: A Challenge for the Rental Market

The burgeoning demand for rental properties is meeting with a significant shortage in supply. The UK's largest landlord, Grainger, has issued a cautionary note, stating that the current supply hardly suffices to match blooming demand, and stringent regulations are even pushing smaller landlords out of the sector.

The forthcoming Renters' Rights Bill, which is slated to take effect later this year, will add to the complexity and costs associated with being a landlord, particularly a private one. Smaller landlords may struggle to adapt to the new regime, ultimately exacerbating the supply shortage.

Stricter energy requirements also mean landlords will have to invest hefty sums in upgrading their properties or face the prospect of selling up. Despite numerous proposed solutions, including the much-touted 'build to rent' sector, any substantial increase in supply is unlikely to materialize until well beyond 2026.

"Any significant increase in stock in the sector will be delayed until [beyond 2026] when interest rates have fallen more substantially," Emily Williams, director in Savills' residential research team, stated. As the rental market in and around London continues to sizzle, the challenge lies in finding ways to meet the unrelenting demand while keeping the dream of a roof over one's head within a reasonable reach.

1. Foxtons, the leading estate agency in London, is aiming to capitalize on the rising demand for rental properties in commuter towns, such as Reading and Watford, as a means to double their profits to £50 million over the medium term.
2. The escalating cost of living in London, which forces many residents to move to commuter towns to avoid financial strain, has presented a new opportunity for Foxtons to expand its business.
3. In order to penetrate these high-value commuter markets, Foxtons has acquired two small estate agencies in Reading and Watford last year, as well as lettings business, Marshall Vizard, in Watford at the tail end of February 2025.
4. Despite the booming demand for rental properties, the UK's rental market faces a significant challenge due to a shortage in supply, as stringent regulations and increased costs associated with maintaining properties are causing smaller landlords to exit the sector.
5. Emily Williams, director in Savills' residential research team, mentioned that any substantial increase in supply in the rental market is unlikely to occur before well beyond 2026, as interest rates still need to fall more substantially.

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