LSL shines despite weak housing market

ESTATE agency group LSL Property Services said it has made good progress amid a worsening housing market.

The York-based group, which owns the Your Move and Reeds Rains estate agency brands, posted a higher turnover for the first 10 months of the year, driven by growth in its estate agency unit, and said it was on track to have minimal debt at the year-end.

Group turnover for the period was up 33 per cent, or 17 per cent on a like-for-like basis. Net debt at end of October was 13.7m, compared with 33.7m a year ago.

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LSL, the UK's second-biggest estate agency group behind Countrywide, said the housing market has weakened since July, with mortgage approvals for the third-quarter down 12 per cent compared with the same period a year ago when mortgage approvals were down 10 per cent.

Based on this run rate, it expects total mortgage approvals for 2010 to fall three per cent to about 575,000, compared with 593,000 in 2009.

"However, despite this backdrop the group has performed well and made good progress," it said. "The group's current performance underpins the board's confidence in meeting expectations for the 2010 full-year outturn."

LSL said it has a "cautious view" of 2011 and does not expect much market improvement. Despite this, the group believes it can continue to gain ground, both in estate agency and surveying, plus through its counter-cyclical asset management business.

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"LSL remains profitable and extremely cash generative at market levels which have been at or around half historic levels for some time," it said.

Turnover in its surveying division was up 18 per cent as the group gained market share.

Sales in its estate agency and financial services arm soared 45 per cent, or 17 per cent on a like-for-like basis. LSL took advantage of the financial crisis to buy the Halifax chain of estate agencies from Lloyds Banking Group for just 1. It said the Halifax business has significantly improved and is expected to be profitable in the second half of the year.

Last month the group also bought a loss-making mortgage distribution company from Skipton Building Society for 1.59m.

It acquired Advance Mortgage Funding (AMF) – which trades as Pink Home Loans – and its subsidiary BDS Mortgage Group "to create a formidable new force in the intermediary sphere".