Revenue from protection and mortgage advice at LSL, the parent company of Primis network and The Mortgage Alliance club, is up 9% over the first 10 months of the year, while the company is also paying staff £1.4m to help with the cost of living crisis.
However, LSL noted that profit for this year would not be as high as expected – largely as a result of the political instability created in the second half of the year.
A trading update from the property services firm highlighted the significant harm of the disastrous mini-budget from Kwasi Kwarteng and Liz Truss in September.
“Since the mini-budget presented by the UK government in September 2022 there has been a marked slowdown in the market of purchase related front end sales activity, impacting new sales agreed in estate agency, mortgage applications in financial services and valuation instructions in surveying,” the firm said.
“Residential sales fall throughs have trended higher in the past few weeks, mainly from more recently agreed sales,” it added.
Resilient small advisers
The firm said the positive figures for its financial services networks represented the strength of smaller advisers as the results came in declining insurance and mortgage lending markets.
Of the two, it expected the protection market to be less volatile than the housing market in the coming months.
“Financial services network revenue grew by 9%, reflecting the highly resilient nature of the independent broker business model,” LSL said.
“This represents a strong performance in the context of smaller mortgage lending and insurance markets, with the group’s share of the total purchase and re-mortgage market increasing substantially from 9.0% to 10.2%.”
Supporting staff with £1.4m
LSL is also paying 2,000 staff an extra £1.4m – an average of £700 each – to help them through the cost of living crisis, the update revealed.
Around £600,000 in discretionary payments will be in 2022 with a further £800,000 in 2023 to cover the winter months “to help alleviate the impact of significant increases in living costs,” LSL said.
Overall, revenues at the property services firm for the 10 months ended 31 October were £276.1m, up very slightly from £275.4m over the same period last year.
Full year profit in both the financial services network and surveying and valuations businesses will be significantly ahead of the pre-Covid performance achieved in 2019, it noted.
However, the overall group performance is expected to be below prior expectations with full year profit now anticipated to be in a range reported in 2019, LMS added.
This included £1.4m from LMS and TM Group which were both sold during 2021.
LSL chief executive David Stewart noted that during the second half of 2022 market conditions had been more challenging than previously expected, “with the mortgage and housing markets being disrupted by political uncertainty and sharply increasing interest rates“.
“Across the market, this has given rise to a reduction in mortgage activity and new house sales, and an increase in fall-throughs of previously agreed sales,“ he said.
“This challenging background means that there is a wider range of potential outcomes for the full year than previously expected.”