One of Britain’s biggest housebuilders, Barratt Developments, has hailed last week’s election result as a positive for the industry because of the Conservative party’s pro-housing stance.
The FTSE 100 company said the result signalled a “supportive” environment for housing, with the new majority government committed to its help-to-buy loan scheme and to encouraging more housebuilding.
Barratt said: “With the election now behind us, we anticipate a supportive environment in terms of a continuation of the help-to-buy scheme, and further improvements to the planning system.
“The new government has identified increasing housing as an important priority area, and we are committed to playing our part. We look forward to working with them to deliver this important objective, which will need to be supported through further releases of public sector land, and continued pressure on local authorities to deliver local plans.”
Shares in UK housebuilders and estate agents rallied when the surprise election result became clear on Friday. A Conservative victory spelled an end to Labour’s pledges to introduce a mansion tax on homes worth £2m or more, and to cap rent increases in the private sector to make housing more affordable for tenants.
However, Barratt’s chief executive Mark Clare said that a Labour victory would have been equally focused on delivering more homes in the UK, albeit with a bigger focus on affordable homes.
Barratt said in a trading update that it expected to complete on the sale of 16,100 homes in the full year to 30 June, up from 14,838 in 2014 and more than the 15,700 homes the company was previously guiding.
The company, which sells homes for an average of about £240,000, said it was benefiting from low mortgage rates, which were encouraging more people to buy a new home. “The strong consumer demand we are seeing for new build properties is supported by an improved mortgage market, with the range of mortgage products available to our customers increasing and borrowing rates remaining at very competitive levels,” it said.
“The help-to-buy scheme continues to be a very attractive opportunity for our customers and, in particular, is supporting first-time buyers.”
Clare said the issues facing the industry were on the housing supply side, not demand, “and that’s what politicians should be focusing on.”
As it stood on 10 May, forward sales were up 18% at £2.6bn compared with the same point a year earlier, helping to push shares in the house builder up 3.4% to 564p, making it the second biggest FTSE riser on Wednesday morning.
Clare added: “We are on track to deliver a further significant step up in our financial performance in 2015, making good progress towards achieving our 2017 targets of a gross margin of at least 20% and return on capital employed of at least 25%.”
Augustin Eden, research analyst at Accendo Markets, said: “Government policies such as the upping of tax thresholds for everyone and the extension of right-to-buy for social housing tenants will help to increase housing demand across the board rather than in one area only – so-called affordable housing. All housebuilders arguably stand to benefit from this.”
