Estate agents Reeds Rains enjoy soaring profits
The owner of Reeds Rains estate agents – which has offices in Northern Ireland – has reported a three-fold jump in profits but said it expects the housing market to slow as regulatory changes kick in.
LSL Property Services, which also owns Your Move and has a surveying arm, saw its pre-tax profit leap to £31.4m due to a strong housing market and investment gains in the six months to June 30.
The Newcastle-based firm said its estate agency unit turned in "an excellent performance" with income from residential sales lifting 27% to £44.4m and average fees rising by 11% during the period.
The group added that it arranged mortgage lending valued at £5bn during the period, compared to £2.9bn a year ago. Its surveying division traded "satisfactorily", boosting revenues by 10% in a market that also grew by 10%.
But the business, formed in 2004, pointed out that house purchase approvals dropped from 35% in the first quarter to 7% in the second, as measures were brought in by the industry and the Bank of England to prevent a housing bubble.
The housing market saw affordability checks introduced in April's Mortgage Market Review, which were followed up in June by further checks by the Bank of England.
Under the Bank's measures, lenders must ensure no more than 15% of new mortgages are given to people borrowing more than 4.5 times their income.
Also, lenders will have to stress test borrowers' ability to repay loans if their mortgage rate is 3% higher than the rate at the time the loan was approved.
LSL said that lenders remained positive and it expected the market to grow.