Foxtons, the letting agents landlords and tenants seem to love to hate, is trying to navigate some stormy waters.

Recent results for the Foxtons Group revealed a 2.6% drop in profits thanks to what the firm described as ‘challenging’ trading conditions in Central London dragged down business in other areas.

Pre-tax profits were down £40 million while revenues increased to almost £150 million.

Chief executive Nick Budden said: “Home sales in London in 2015 were down on the year before while price rises and increases in stamp duty have restricted the cost of moving in Central London.”

The company also dropped out of the FTSE 250 index in December as share prices slipped in the wake of tax changes for landlords and a general slowdown in the property market nationwide.

Some analysts suggest Foxtons may face a war over fees with rival property agents who are ready to take a smaller cut from home sellers and landlords in return for their instructions.

Meanwhile, a group of more than 50 London landlords have threatened a £2 million legal challenge against Foxtons claiming the company failed to tell them about management fees.

The claim has arisen from an incident when one landlord was charged more than £600 to change a light.

The bill included 33% commission skimmed off by Foxtons for arranging a contractor to carry out the work.

Buy to let landlords are arguing that the charges are unfair because they were not pointed out when they signed management contracts with the agents.

A Foxtons spokesman said: “We believe our fees represent good value and are clearly communicated to landlords and detailed within the terms of each contract. This case reflects a small minority of landlords and we believe is entirely without merit.”

The contractor told the landlord Foxtons were billed £412.50 for the job, but the agents added £137 commission plus VAT to the invoice and a management charge of 10% plus VAT.

A letter has been served on the company demanding commission refunds adding up to more than £2 million – and threatening to take the case to the courts if settlement talks fail to resolve the dispute.