LSL feels property pinch as profits tumble

LSL PROPERTY Services, which operates under the Your Move and Reeds Rains estate agency brands, today said a major drop in mortgage approvals had contributed to it posting a half year loss.

The group said income generated through exchanges under its Your Move and Reeds Rains arms had been reduced by 48% over the first half of the year and said its estate agency and financial services operations had been “impacted by unprecedented market conditions”.

LSL, which is registered in Newcastle but has its executive management team based in York, saw pre-tax profits tumble from £12.1m for the six months to June 30 2007, to a loss before tax of £0.8m this time as mortgage approvals were reduced by 54%.

Group profit before tax, amortisation and exceptional items also slumped from £14.7m to £7.8m. The group paid exceptional restructuring costs of £3.4m over the period, while revenue was down by 10% to £93.1m.

Chairman Roger Matthews said the group, which has customers including mortgage lenders as well as buyers and sellers of residential properties, would continue to review its cost base in relation to market activity and said further one off costs were possible in the second half of the year.

LSL has axed more than 300 staff and closed 12 branches across its surveying and estate agency businesses in recent months following the dip in house sales as it looks to become more efficient.

 LSL issued a profits warning in its estate agency division in May.

However despite problems in the housing market as first time buyers find it more difficult to find a mortgage, LSL said its surveying division had seen its profits increase by 32% to £15.4m.

Mr Matthews said LSL’s surveying business had been boosted by two contract gains with Barclays and Cheltenham & Gloucester.

Mr Matthews said: “The group has reported a satisfactory first half result in a very difficult market. Although house purchase activity levels have stabilised in recent weeks (albeit at a very low level) after nine months of declines, we expect market conditions to remain challenging for some time.

“Our surveying division is proving to be resilient and we expect to make further progress over the year as a whole.

“This resilience, together with the continued investment in other counter cyclical growth opportunities, such as lettings and repossessions, leaves the group well placed to trade satisfactorily through the remainder of 2008 and deliver significant growth when the market improves.”