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Foxtons under threat as bail-out is rejected
Jonathan Prynn, Consumer Affairs Editor09.01.09
THE future of London's biggest estate agency chain Foxtons has been thrown into doubt by the unprecedented slump in home sales.
The chain, known for the fleet of liveried Minis used by its staff, has broken one of the terms of its £260million of bank loans following the collapse in its commission income. But its current owner, private equity firm BC Partners, has refused to inject more cash into the agency, leaving its fate in the hands of lenders Bank Of America and Japanese bank Mizuho.
Foxtons was sold for £360million by its founder Jon Hunt in May 2007, just as the frenzied property boom was reaching its climax.
BC Partners today admitted "we made a wrong call" in the price and timing of the deal. Managing partner Andrew Newington said: "As housing markets fall, so do estate agents, so we got that wrong. In hindsight, we made the wrong assessment of the market."
He added that when Foxtons was bought the new owners had "stress tested" its new highly indebted financial structure with a scenario in which the number of London property transactions fell by 30 per cent. In fact they are down by between 60 and 70 per cent.
Mr Newington said the ball is now in the banks' court. BC Partners will only put more of its investors' money into Foxtons if the lenders agree to write off some of their debt, a step they will be reluctant to take.
The banking terms, or covenants, that have been breached relate to profits and interest payments. This means the banks can now ask for their money back, in effect pushing Foxtons into administration, but they are thought unlikely to do so.
A City source said the banks would not force the company under because they believe it does not face an immediate need for cash and is expected to bounce back strongly once the housing market recovers.
It is most likely that a negotiated deal will be reached between BC Partners and the banks under which they share the financial pain of their investment in Foxtons.
One suggestion is that Mr Hunt will swoop back to buy up the business he founded for a fraction of the price he sold it for.
The financial crisis for Foxtons is a dramatic fall to earth for a business that grew to dominate London estate agency through its aggressive commission-driven tactics fostered by former Army officer Mr Hunt, who at his peak was estimated to be worth £700million.
He now lives in a grade II listed home in Kensington Palace Gardens, for which he paid £14million and which is now thought to be worth up to £50million. Mr Hunt founded the agency with a single branch in Notting Hill in 1981 and grew the chain rapidly through the boom years of the London property market.
Reader views (72)
Most of you are complete morons. Foxtons are probably one of the worst in terms of customer service and appreciation of any company, let alone Estate Agents. However, they are not all the same and is unfair to tarnish all with the same brush. The bottom line is that nearly all of you are greedy. As soon as the market is going well you all want the big money. I have seen it for years. It is one thing to over value, but if some idiot decides to pay im sure none of you would object. It is all about demand and supply. I am pleased Foxtons are going through this but unfortunately most of their staff are straight from Uni who know no better and are trained to behave in the way they do by their callous bosses
- Nick K, London
In my experience they are all as bad as each other. In this market they all seem to be quite desperate and will resort to any underhanded tactics.
Chestertons being one of the worst in North London
- C.A., London Uk
Surely if you were going to sell or let your house, you would want to get the best price for it? vis a vis use Foxtons.
If they do go under, I would employ as many of those several hundred employees as possible - willing to work 12 hours a day for a basic salary of 10K - should make for great sales people, Tony.
- Bob Cowan, New Jersey, USA
I agree Foxtons are a disreputable company and I would never entrust them with the sale or purchase of my home. Would I want to see them go in to liquidation though? No, of course not. I'm very troubled by the volume of comments gloating at the prospect of several hundred people in London(likeable or not) losing their jobs. You think Foxtons are hideous? You should be ashamed of yourselves.
Also, those who believe that estate agents have contributed to the "credit crunch" clearly don't have an understanding of the cause of this global economic crisis. Estate agents were selling properties, not lending money to people with no ability of repaying it.
- I C, Dubai
It makes me laugh how you use such sweeping generalisations for so many people!
- Lindsay, London
What will all those otherwise unemployable sloanes do when Foxtons folds?
- Tony Mcmahon, London, UK
This is the best news I've heard in ages. Foxtons are partly responsible for driving up house and rental prices to the point where it is near impossible to live in the capital so I am pleased to see them getting a taste of their own medicine.
And to Tarek who thinks we should pity them: it's livelihood. Not lively hood. And my pity is reserved for the former employees of Woolworths and their like. Not high powered bankers and estate agents who made a killing in recent years and lived a life of champagne and fancy skiing holidays while looking down their noses at the rest of us. If they didn't save any of their earnings then more fool them.
- Kate, London, UK
Surely no tears shed by most of your ex-customers. One fo the companies guilty as charged of the super-high prices in London. Most sales staff all ever wanted as a Mini upgrade...here you have it now!!!
- Rogerio Barros, London UK
These jumped-up double-glazing salesmen are jointly responsible for the housing bubble whose bursting has wrought havoc on our economy. Their greed and cupidity will not go unpunished.
- Neil, london uk,
About time too - nothing like a bit of Karma being smothered about. Personally I love seeing Estate Agents queue outside the DSS. Trained for nothing, skilled at nothing - it's what happens when you chase the quick buck.
- Tonto Brisbane, Sunshine Coast, Queensland
Sorry no sympathy, when I worked in RE in London, Foxtons had the worst reputation for poaching properties and over-inflating prices and rent returns.
Good ridance to bad rubbish
- Chaz, Perth, Australia
The worst estate agents I've ever experienced, we're better off with them out of the gene pool
- Gavin, Sydney Australia
Mr Hunt is a clever man with impeccable timing. The sales people who have lost their jobs might have been unpopular or arrogant but they do not deserve to be without lively hood. Before everyone gets too smug a lot of people who are currently gloating will be joining them. The old chinese proverb "may you live in interesting times". You all will be.
- Tarek Saber, SW7
Good.
In my experience, the most arrogant estate agent chain I have come across.
- Nicola, Tunbridge Wells
Nice to see that schadenfreude is alive and well, I'll raise a glass to Foxtons demise too.
- Peter W7, London
This has made my day - Foxton's and the people who work for it are just awful, arrogant, talentless people. Good riddance!
- Mb, London
The best news to come out of the credit crunch so far. Lets hope this closure will complete.
- Sans, London WC2
Hallelujah! Anyone know where I can get cheap, ugly Mini Coop??
- Andy, North London
Absolutely brilliant news!
- P, London, England
I am so heartbroken (not!!!). I worked with lots of ex Foxtons people in a dodgy buy-to-let company and a worse lot of greedy people could not have been found in the world.
- Linda, London
I'm certianly no fan of Foxtons as much as the next person, but we live in a sad society when we gloat over people losing their jobs.
- Nj, London
Fantastic, let's see how many of those Chavs can find work that actually requires a skill. I hear Maccy D is offering apprenticeships.
- Amir, London
What goes around comes around!
- Clare, London
wont miss those silly 16/17 yr old driving those minis around, what do those kids in those cars know about life yet anyway and they are to deal with general public on such big decisions they have to make,advice from them , no, . good ridance.
- Kevin, wimbledon
Was there ever a more hated company?
- Dan, East London
What wonderful news to end the week with.
Sterling is on the rise again, interest rates are down, Sainsbury's sales are up, bye bye Foxtons.
The reputable established Estate Agents who are often Chartered Surveyors will continue as the most buyers and sellers have respect for them.
- John, London
I always think the staff at the Notting Hill gate branch seemed to flashy and bereft of charm. Trying too hard to be hip but failing.
- Karim, london w8
This piece on news could see me ride out this recession with a smile on my face!
- Joe, london
Surely the finest piece of business in the last 20 years was done by Jon Hunt back in the spring of 2007? Who's the spokesperson for BC Partners? "We made a wrong call" - priceless!
- Paul Hitchcock, Chiswick, London
I wonder how many people Foxtons employ. I don't have any particular like or dislike of estate agents but I really can't see why it is good news to hear that another company may be on the verge of administration. Surely this just means more people entering the already difficult job market.
- Bb, S.E London
What value did estate agents add to a property transaction in the first place? They just seemed to charge money for old rope, talk annoyingly loudly into mobile phones and swagger around like Gordon Gekko in "Wall Street"! Then they would get down to the serious business of distorting offers to try and finesse a bit more commission out of the deal. It's an overstaffed sector undergoing a long-overdue shakeout. Bring it on!
- Edward Thompson, Bedfordshire
The roads will be a lot safer.
- Ted, London
Any chance of buying one of your Minis? Low mileage of course.
- Mis Anthrope, London
This lot colluded with the banks and the Government in creating a 'housing bubble' from which they profited from so greatly that actually felt emboldened to flaunt their profits with their silly little fleet of cars.
- Roz, Chamonix, France
Every cloud, including the credit crunch crisis, has a silver lining. Happy day!
- Max, london
Couldn't have happened to a more objectionable bunch of sharks!!!! Lol
- Gill Houghton, London
I really do hope they go under - Foxtons all about the cash and never the service (as they didnt offer any!) what a shame all of the teenage staff will be saked, still i hear sainsburys needs some shelf stackers and Macdonalds always needs burger flippers. Truely a time of celebration.
- Alicia, N1
Sales of shiny suits and hair gel will PLUMMET if Foxtons goes under.
PS -- Jon Hunt: Smartest guy in the room, or what?
- M, London
Why do they need these cars anyway, some of them can't drive!
I wonder how much they are selling the cars for?
- Adrian, london
Some of the best news to come out of the economic downturn is Foxtons going bust.
- Matt Smart, Putney
"Mini for sale. 1 lovable owner. May need re-spray...."
- Tim, Brixton, London
I am still in the dark about what purpose estate agents serve, or what value they add to a transaction between a property buyer and seller. What did they ever do to actually justify their 2% commission except speak in annoyingly loud voices into their mobile phones? More useless than investment bankers - that's saying something!
- Edward Thompson, Bedfordshire
I suspect anyone who has been priced out of their first home purchase in London over the last 15 years will be over-joyed at the demise of Foxtons. Good riddance to them.
- St, UK
They made a wrong call on the property market? ..... LOL
- Adrian, London
Great news, I can now park my car outside my London flat.
Their arrogance and attitude is behond believe.They give estste agents a shocking reputation.
That's from first hand knowledge.
- Davi Patterson, glasgow
Good!
I just HATE those minis, especially when they arrogantly park in bus stops.
- Anthony, Esher, Surrey
and why not
- Apd, tooting london
expect to see loads of bargain green mini ones for sale soon...
maybe foxtons could sponsor the new channel 4 show...
"forclosure, forclosure, forclosure"...
"This week the bailiffs visit a handy London pied a terre and a lovely south coast cottage in need of some work" lol
- Andrew, kensington, london
Maybe M&S could offer the wooden Sales reps another job as manequins.
Makes sense, saves money and cleans the streets of dangerous drivers.
- Andrew, Hounslow, London
Please God, let this be true! Please, please, please.
- Steven, London
So the greedy, nasty and arrogant sales negotiators will get their comeuppance?
Because of the commission payment system coupled with staff greed is one reason why house prices rose in London so rapidly.
If they go, I will be over the moon, Brian.
- Simon Swift, Earl Shilton, Leicestershire
This is typical of many businesses today. Too much money is taken out of the business in the good times and then when there is a downturn they go bust. I know of one property developer who has gone under owing over £10,000,000. He lived a millionaire life style for over ten years and is now a bankrupt. No tears from me.
- Michael, London
If it means the end of those flipping Minis and the ridiculously over-inflated valuations then WAHAY!
- Lewis, London
The other London estate agents must be rubbing their hands with glee - Foxtons are the rudest, most aggressive people I've ever dealt with. Good luck to the smaller agents!
- Andrea, London
If any estate agency chain had to go I'd vote for them. No personnal bad experience but they somehow managed to survive and prosper with higher commision rates and an appalling telephone manner. The previous owner has the last laugh here!!
- John, Surrey, Esher
Bahahahaha.
That is all.
- Sp, Edgware
I wonder how people feel about Mr. Hunt, do they admire his savvy market timing, outwitting the private equity guys and selling his business at the right time, or do they hold him up to be the villain of the piece, guilty for all the woes of society's housing greed. I would like to read a well written article about this, making the case for both sides. It is Sooo ironic, couldn't make it up !!
- Michael, Switzerland
Their arrogant swagger and high fees mean that we shall be happy to see them collapse.
- Neil, london uk,
Much as I dislike to gloat in the demise of a company I can't think of a company I'd more like to see go down the tubes.
- Bob, Cheam
Remember the TV expose on the working practices in Foxtons - and the relationship that existed between their mortgage broker and the esate agent staff?
This is just reward.
Another Yipee!!!
- Pete - London, London
What happens to us poor suckers who have our tenancy deposits sitting directly with Foxtons when they go bust?!
- Charlotte, London, UK
Every time I've looked at property in london, I've loathed having to deal with Foxtons. If they go bust, London's real estate business will improve overnight.
- Claire, Maida Vale, London
"private equity firm BC Partners" - these companies usually stump up a couple of quid to take control of their victim, whilst saddling the taken-over business with a mountain of debt. Any profit is returned to the equity partners, little tax is paid to the Treasury and the employees of the unfortunate company are ultimately left without a job.
Much as I loathe estate agents, especially Foxtons for making the Mini the most un-cool car on the planet, Gordon Brown should be held accountable for his "masterful stewardship" of an economy that allows companies to be taken over and run into the ground, while a minority of financiers make millions in profit, all of which is banked abroad.
- Nobby Clark, Perth, Scotland
Ding Dong, the witch is dead.........
So long, farewell, adieu!!!!!! Sympathy - nah - couldn't happen to a nicer company. I will forego the bad karma - but really these guys represented the worse of "rip off britain".
- Jc, se1
Happy days. Woo says the recession is all doom and gloom?
- Dan Libert, London
Whooopy,A more useless occupation for a grown man or woman i cannot imagine,a estate agent.Now i can look forward to the disappearance of that hideously garish show room thay have at the Angel.
- Kev, London-UK
All I can say is: YIPEE!!!
- Simon Ellis, London N10
The demise of Foxtons will be no loss to the public.
- Fraser, Telford Park
Too good to be true. Champagne!
- John, London, UK
Ha Ha absolutely brilliant, all those arogant estate agents who use to think they were superstars are being cained by the market. glad to see foxtons is having problems, hopefully some of their bar like offices may turn into nice real wine bars in the future. And thank goodness to see less of their minis on the roads!!!
- Phil, Windsor
Maybe the directors should cut down on their Mayfair dining habits and vacate their Park Lane office and then they could carry on for a few more years.
- Kathy Doyle, London
Thank God, finally some good news!
- Mike, London
