Housebuilder Bellway sitting on bumper £1.8 billion order book despite help-to-buy limbo

Bellway, the housebuilder with a string of developments in Scotland, said it had seen a short-term slowdown in customers using the help-to-buy scheme as it updated on recent trading.

Housebuilder Bellway has seen a short-term slowdown in customers using the help-to-buy scheme, due to a gap between the current programme ending and a new one launching.
Housebuilder Bellway has seen a short-term slowdown in customers using the help-to-buy scheme, due to a gap between the current programme ending and a new one launching.

The firm said a gap between the scheme ending and a new one starting had seen a “short-term hiatus” leading to “an understandable moderating effect on the reservation rate in recent weeks”.

But overall, bosses at Bellway remain confident and reconfirmed to shareholders that they will pay out a dividend this year, despite a drop in profits.

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Jason Honeyman, chief executive of the Newcastle-headquartered firm, said: “Bellway is in a robust position and notwithstanding the recent widespread lockdown restrictions throughout the country, sales demand is encouraging, and the order book is strong.

“We have substantial cash resources, considerable ability to continue investing in land and with our solid operational structure, we are determined to return the group to its strategy of delivering long-term and sustainable growth.”

The company revealed a 6 per cent increase in the overall reservation rate to 210 a week, compared with a year ago. It has an order book of 6,186 homes as of November 29, worth almost £1.8 billion, and housing completions for the full year to the end of July 2021 are expected to increase 25 per cent.

The new dividend will be 50p a share, although this is a 50 per cent cut on the 100p a share payment of a year ago.

On lending, the firm noted that record low interest rates remain attractive to borrowers looking to buy a home. However, the Covid-19 restrictions continue to see valuations and mortgage applications taking longer to process.

Fewer lenders are willing to offer high loan-to-value mortgages and those relying on the help-to-buy scheme can start applying for the new programme from mid-December.

Freetrade’s senior analyst Dan Lane said: “An order book heading towards £1.8bn through to next summer will be a shining light for investors but there’s a lot of fog to get through first.

“The help-to-buy scheme has been a real tailwind for all of the housebuilders so the current hike in deposit levels from the banks means those looking to put down 5 per cent are left in no-man’s land.

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“They thought they had the money, Bellway and co. had the houses to sell them and suddenly they can’t make it work because of the absence of higher loan-to-value lending.

“Buyers might just spend Christmas doing a bit of mental maths, weighing up the effects of the Chancellor’s stamp duty holiday with the recent increase in house prices.

“But there’s still the looming threat of unemployment as the economy gets back on its feet so a lot of would-be buyers might just take themselves out of the game this year.”

Earlier this week, Scottish housebuilder Stewart Milne reported a 30 per cent hike in sales and reservations in east and central Scotland as it secured planning consent for scores of new homes. The firm pointed to strong trading across Tayside, East Lothian, East Calder and Perthshire.

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Record completions as Bellway benefits from solid housing demand

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