The UK’s largest estate agency group, Connells, and London’s largest agency, Foxtons, both reported first half results in the past week, and both were bad. The obvious conclusion is that the Renters’ Rights Act is driving landlords out and taking the agents down with them. The numbers underneath say something more specific, and for anyone buying rather than selling it is the more useful reading.
What landlords are actually doing
Foxtons reported pre-tax profit down 57% to £4.4 million for the six months to 30 June 2026, in half year results published on 30 July 2026. The company attributed roughly £3 million of reversed lettings revenue to elevated tenancy terminations after the Renters’ Rights Act’s core tenancy reforms, the end of Section 21 and the switch to periodic tenancies, took effect on 1 May 2026. Management said on the results call that terminations were concentrated in the roughly 15% of its portfolio let entirely to students.
Connells Group, owned by Skipton, reported a statutory pre-tax loss of £0.5 million for the first half of 2026, against a £28.4 million profit in the same period a year earlier, in Skipton’s half yearly financial report. On an underlying basis the same report shows £2.0 million against £24.9 million, so the direction is identical on either measure. Skipton attributed the fall to a weak sales market, citing a later than usual Budget, political uncertainty and a conveyancing process taking longer to move a sale from offer agreed to exchange. Exchanges were down 7% year on year and the opening sales pipeline down 5%.
Both figures are drawn from the companies’ own reporting, so the numbers are firm. The attributions are the companies’ own explanations of their results, which is a different kind of claim and worth holding more loosely.
Lettings held, sales did not
Read the two sets of results together and the pattern is not the one the headlines suggest.
At Foxtons, lettings revenue was flat year on year, helped by a £1.7 million contribution from acquisitions and held back by the £3 million reversal, so organic lettings revenue was down modestly rather than genuinely flat. Recurring activities still rose to 69% of group revenue from 65%. Sales revenue fell 13%. At Connells, lettings was the bright spot, with improved fee income and the managed portfolio edging up to 122,872 properties, while the collapse came from transactions.
So the lettings books at both businesses held up. What fell over was the sales market. That distinction is easy to lose, because the Renters’ Rights Act is the story everyone is writing about and a bad agency result is an easy peg to hang on it. Foxtons did take a real and specific hit from the Act, and said so. But a £3 million revenue reversal at a business whose lettings revenue was otherwise flat is a one off adjustment, not a structural exit.
Foxtons says so itself in the same report, describing the termination spike as “a tenant-led trend and does not reflect landlords exiting the sector”. If landlords were leaving in the numbers the commentary implies, lettings income at the country’s largest agency network and at London’s largest agency would be falling. It is not.
Where supply actually fell
Supply has tightened, but unevenly, and the geography is the useful part.
Data from SpareRoom, whose own room listings form the basis of this supply measure, published in its Q2 2026 London report, shows flatshare supply in inner London fell 5% in the second quarter of 2026, ending three years of growth. North west and south west London fell by almost 10% year on year. East London was broadly unchanged over the same period.
The rent pattern tracks it. West London, with the lowest supply of available rooms, carries the highest average room rent at £1,043 per month. East and north London, the most affordable areas, average £933 and £937, and east London had more than twice the rooms available of north London in the second quarter.
That is a clean illustration of a market working normally. Where supply is squeezed, rents are higher. It is also a caution against reading a national narrative into local data, because the same city produced a 10% fall in one quadrant and no change in another over the same three months. We looked at the national picture when rental supply fell for the first time since 2022, and the same qualification applied then.
What this means for property investors
The exit narrative is real but smaller and more specific than the coverage implies, and that gap is where the opportunity sits.
The clearest signal is that the sales market, not the rental market, is where the distress is. Slow conveyancing, weak transaction volumes and a nervous vendor base are a buyer’s conditions, not a seller’s. A vendor whose sale has been sitting between offer agreed and exchange for months is a vendor with a reason to negotiate. That is a very different environment from one where rents are collapsing, and rents are not collapsing.
The second point is that the tightening is local. A 5% fall in inner London flatshare supply tells you nothing reliable about a block in the north west, and a fall of almost 10% in south west London is a rent argument for that submarket alone. Underwrite the postcode, not the headline.
The third is a warning about the source of the story. Agency results are a proxy for transaction volumes and fee income, not for landlord returns. Foxtons and Connells having a bad half does not mean rented property performed badly over the same six months, and the evidence in their own reporting is that lettings was the part that held. Whether the underlying investment case works is a separate calculation, and we set that out in the honest numbers on buy to let in 2026.
If you want to act on a slow sales market rather than read about it, see the stock we currently have available.