Renters Rights Act reduces Foxtons lettings revenue in Q3 2026

Renters Rights Act reduces Foxtons lettings revenue in Q3 2026

Foxtons reported a 7% decline in lettings revenue during the third quarter of 2026, attributing the drop mainly to tenant-led early terminations following the Renters Rights Act introduction in May 2026.

Foxtons’ latest trading update reveals that lettings revenue fell by £2.3 million to £31.1 million in Q3 2026, impacted by £2.7 million from increased tenant-led early terminations after the Renters Rights Act (RRA) came into force on 1 May 2026. The company noted that before this effect, lettings revenue was slightly ahead year-on-year, including £1.0 million from recent acquisitions.

The highest level of early terminations occurred in May and June, with activity easing through Q3 and October, suggesting a transitional period following the RRA’s implementation. Year-to-date lettings revenue declined by £2.2 million, or 3%, to £85.8 million, with a £5.7 million impact from elevated early terminations. Excluding this, revenue increased by £3.5 million, driven by acquisition growth, Build to Rent revenues, and cross-selling property management services, partially offset by lower interest on client monies due to reduced Bank of England rates.

Foxtons’ sales division faces market challenges amid economic uncertainty

Foxtons also reported a 5% decline in sales revenue in Q3 2026 to £12.0 million, with an 8% drop in average revenue per transaction. The company attributed this to a shift towards lower-value properties as higher mortgage rates reduced buyer affordability at higher price points. Year-to-date sales revenue fell by 10% to £35.5 million, despite £1.1 million from acquisitions, reflecting weaker consumer confidence and economic uncertainty affecting London’s buyer activity. Regional markets showed more resilience, supporting Foxtons’ strategy to expand in higher-growth areas.

To protect profitability, Foxtons downsized its sales business in the first half of 2026, maintaining market share while achieving £4.5 million in annualised cost savings. Operational improvements have enhanced productivity and efficiency, helping the company manage a leaner cost base.

Understanding the Renters Rights Act’s impact on lettings revenue

The Renters Rights Act, effective from 1 May 2026, introduced significant changes to tenant rights, including provisions that have increased tenant-led early terminations. This has directly affected lettings agencies like Foxtons, as tenants exercise new rights to end tenancies early without the previous financial penalties or notice restrictions.

For landlords and letting agents, this shift means a higher risk of unexpected void periods and lost rental income. Agencies must now factor in these changes when projecting revenue and managing tenancy agreements. The transitional spike in early terminations seen in May and June 2026 suggests an initial adjustment period as tenants and landlords adapt to the new legal framework.

Foxtons’ experience highlights the financial consequences of the RRA on lettings income streams, even for large, diversified agencies. Smaller landlords and agents may face more acute challenges due to less operational scale and fewer resources to absorb revenue fluctuations or invest in acquisitions and new services.

Practical implications for landlords and letting agents

Landlords should review their tenancy agreements and management practices to align with the RRA’s provisions. Early termination clauses and notice requirements have changed, requiring clear communication with tenants and careful handling of tenancy breaks to minimise income loss.

Letting agents need to prepare for increased tenant requests to end tenancies early and consider strategies to mitigate void periods, such as flexible re-letting processes or offering shorter-term tenancy options. Monitoring tenant behaviour closely and maintaining good tenant relations will be crucial to managing turnover effectively.

Foxtons’ strategy to diversify income through acquisitions, Build to Rent growth, and property management services offers a model for resilience. Smaller operators may need to explore similar diversification or enhance service offerings to offset lettings revenue volatility caused by the RRA.

Ongoing uncertainties and future considerations

The full long-term impact of the Renters Rights Act remains uncertain. While early termination rates appear to be stabilising, further legislative adjustments or enforcement practices could influence tenancy dynamics. Landlords and agents should stay informed of any government updates or regulatory guidance related to the RRA.

Economic factors such as interest rates and consumer confidence will also affect the rental market’s stability. Foxtons’ report underscores the interconnectedness of regulatory and economic influences on lettings and sales revenues.

It is advisable for landlords and agents to regularly review official guidance and seek professional advice to ensure compliance and optimise tenancy management under the evolving legal environment.

What landlords should do now to manage RRA impact

• Review tenancy agreements to ensure they comply with the Renters Rights Act provisions on early termination and notice periods.
• Prepare for potential increases in tenant-led early terminations by planning for void periods and adjusting financial forecasts accordingly.
• Consider diversifying income streams through property management services or Build to Rent opportunities to reduce reliance on traditional lettings revenue.
• Maintain clear communication with tenants about their rights and responsibilities under the new legislation to reduce disputes and misunderstandings.
• Keep abreast of government updates and regulatory guidance on the Renters Rights Act to remain compliant and informed.

Supporting landlords through regulatory changes with TLA

The Landlord Association (TLA) offers members access to comprehensive compliance resources tailored to the evolving rental sector regulations, including the Renters Rights Act. Through TLA membership, landlords and letting agents can access up-to-date guidance on tenancy law changes, model tenancy agreements, and best practice advice to manage early terminations effectively.

TLA’s new property management and compliance platform, ORBIT, currently in BETA testing, is designed to help landlords organise tenancy documentation, record key actions such as tenancy terminations, and monitor compliance with new legal obligations. ORBIT’s tools aim to streamline property management workflows and provide a central hub for regulatory updates and record-keeping.

Exploring TLA membership and ORBIT BETA access can support landlords and agents in adapting to the Renters Rights Act’s requirements, helping to mitigate risks and maintain efficient portfolio management.

Looking ahead, landlords and agents should prioritise reviewing tenancy documentation and tenancy management processes to align with the RRA and use available resources to stay informed and compliant.

Sources: Letting Agent Today