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Rettie brushes off pre-tax profits drop

UPMARKET estate agency Rettie & Company has seen its profits tumble almost 40% but suggested it is now seeing a sustained rise in activity across the housing market.

LOOKING AHEAD: Simon Rettie said the lower profits at Rettie were a result of reinvestment. Picture: Stewart Attwood
LOOKING AHEAD: Simon Rettie said the lower profits at Rettie were a result of reinvestment. Picture: Stewart Attwood

Accounts just filed at Companies House show turnover fell 7% from £5.2 million to £4.85m in the 12  months to April 30 last year. That led to pre-tax profits dropping from £448,484 to £270,288.

However, Simon Rettie, founder and managing director, was keen to point out the accounts do not include the financial results of separate limited liability partnerships (LLPs) which include much of its operations in Glasgow.

The decline in turnover was attributed by Mr Rettie to "accounting policies" related to the treatment of the LLPs and said in real terms, revenue was flat. The accounts noted a 15% drop in estate agency fees but increases in property management and new development fees.

Mr Rettie said the lower profits were a result of reinvesting in growing the company's services.

He said: "We have invested heavily through the recession to be where we want to be, which is in a strong position to take advantage of this upturn we are currently enjoying.

"Right through the recession, we have continued to build and worked without any debt and will continue to do that."

When asked about the current trading year, Mr Rettie was bullish about prospects.

He said: "It has moved on significantly in the nine months since [the accounts], with sales considerably higher by about 20% to 30%.

"Volumes and fee incomes will be significantly higher in the current year directly as an improvement in market conditions."

According to Mr Rettie, popular locations in both Edinburgh and Glasgow are starting to see a return to closing dates for sales. One example he highlighted has 13 notes of interest for a closing date this week.

Alongside the upturn in city properties, Mr Rettie indicated that confidence in the property market is now also spreading to more suburban locations.

He said: "Prime Edinburgh and prime Edinburgh are both performing in an equally positive manner. In the west end of Glasgow, turnover has been very strong, as it has been in central Edinburgh.

"That confidence is now coming to the more suburban areas, like Bearsden and popular residential areas in Edinburgh.

"In the past, when things were difficult, people were getting 90 pence in the pound or below the home report valuation. Now we are getting full valuation and closing dates quite regularly."

Recent months have also seen a big pick-up in interest in country estates.

Mr Rettie said: "The country market has been last to react but we saw a very positive response at the higher end of the market in November and December last year. Already in January this year, the number of £2m sales agreed is way up on where it has been for many years."

The Rettie office in Berwick-upon-Tweed has seen a "marked upturn", while Mr Rettie said areas such as Melrose and Perthshire are "starting to wake up".

He said: "The heavy lifting we did in the last few years is now paying dividends.

"Our business is research-driven and is about telling people what they need to know, not what they want to hear. The research says that the level of transaction volume is increasing.

"No one wants to be the person who sells at the bottom or buys at the very top but we are back on a positive footing and people can move forward with a degree of confidence."

However, in spite of the increasing activity, Mr Rettie suggested there was little threat of another property bubble.

He said: "It is not back to its peak yet and in real terms, values aren't either. The basis is there for prices to move forward a little bit more than inflation, possibly 4% to 5% this year.

"The foundation is there for a steady growth which is sustainable. I am excited as I think the next five to 10 years will be rewarding for those who are working in this sector."

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