The property sector continues to feel the impact from Chancellor Philip Hammond’s Autumn Statement with a ban on letting agent fees hitting the listed estate agency contingent and investors and housebuilders disappointed at a lack of positive surprises in the announcement.
Countrywide (CWD) is down 10.1% to 174.2p as it warns of a Brexit vote impact on 2016 earnings, now expected to be at the lower end of analysts’ £85m to £100.2m expectations. The company gave no explicit guidance on the impact of the ban on lettings charges.
MODEST IMPACT
Lettings specialist Belvoir (BLV:AIM) pares earlier heavier losses to trade down 4.6% at 114.5p as it says the impact on gross profit from any ban is anticipated to be less than 8%.
House broker Cantor Fitzgerald which has a ‘buy’ recommendation and 165p price target comments: ‘That's low relative to independent agents which could see up to 20%-25% from similar fees giving Belvoir a relative advantage vs competitors.
'We believe the final impact could be significantly less as Belvoir and the industry passes on the costs to landlords as higher fees, and to tenants as a small increment to rent.
‘Furthermore, Belvoir has been through it before with the restriction on similar fees in Scotland from 2012 onwards and notes it did not lose a single franchisee as a result and income from Scottish franchisees continued to increase.’
HOUSEBUILDER RELIEF
Housebuilders remain under pressure after suffering falls yesterday afternoon in the wake of Hammond’s statement. For example, Taylor Wimpey (TW.) is down 0.8% at 147.9p.
Canaccord Genuity believes that, on balance, the sector should be breathing a sigh of relief.
‘The most reassuring takeaway from the Autumn Statement is that there were no changes made to recently implemented supportive policies such as Help-to-Buy and planning changes.
‘The Government appeared to confirm its focus on housing delivery and seems to understand that the major listed house-builders are key to this provision. Investment in infrastructure and freeing up public land will be supportive for building more homes over the medium term.’
