Profits leap for LSL but group expects slowdown as regulations take effect

LSL Property Services, which also has a surveying arm, saw its pre-tax profit leap to £31.4m due to a strong housing market and investment gains in the six months to June 30.

The Newcastle-based firm said its estate agency unit turned in “an excellent performance” with income from residential sales lifting 27 per cent to £44.4m and average fees rising by 11 per cent during the period.

The group added that it arranged mortgage lending valued at £5bn during the period, compared to £2.9bn a year ago. Its surveying division traded “satisfactorily”, boosting revenues by 10 per cent in a market that also grew by 10 per cent.

But the business, formed in 2004, pointed out that house purchase approvals dropped from 35 per cent in the first quarter to 7 per cent in the second, as measures were brought in by the industry and the Bank of England to prevent a housing bubble. The housing market saw affordability checks introduced in April’s Mortgage Market Review, which were followed up in June by further checks by the Bank of England.

Under the Bank’s measures lenders must ensure no more than 15 per cent of new mortgages are given to people borrowing more than 4.5 times their income.

Also, lenders will have to stress test borrowers’ ability to repay loans if their mortgage rate is 3 per cent higher than the rate at the time the loan was approved.