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Foxtons falls out of FTSE 250 as London market wobbles

Despite the relatively strong housing market in central London, Foxtons has been demoted from the FTSE 250 and has been replaced by luxury shoe manufacturer Jimmy Choo.

Investors and property analysts had a strong indication this may happen when the agency, which has over 50 branches across the capital, issued a profits warning six weeks ago saying it has endured a "sharp and recent" slowdown in sales.

It said that while it had performed exceptionally well in the nine-months to June, the market had cooled dramatically more recently with quarterly sales commissions down 7.8 per cent on the same period last year as reduced sale volumes offset price increases.

The latest deterrent for the firm appears to have been the Chancellor’s stamp duty reform. Despite 98 per cent of buyers apparently having to pay less duty, the two per cent clobbered with having to pay more are almost exclusively in central London. It was shortly after the Chancellor’s speech that the demotion occured.

An analysis by financial daily City AM says that this is not the first time the agency has had major problems - and in the past, it has shrugged them off to return even stronger than before.

“In 2007, founder Jon Hunt made what has since been seen as one of the most sweetly-timed pre-recession deals, selling a 75 per cent stake to BC Partners for £360m, just as the sky began to fall on the property sector. But the story had a happy ending: BC Partners raised £335m during Foxtons' IPO, and another £47.6m when it sold off half its remaining 14 per cent stake in September.” notes City AM”s Emma Haslett.

It was as recently as mid-August that Foxtons announced that it would be paying another special dividend of £12.8m after revenues jumped up by £29m to £72.8m in the first half of this year.