Taylor Wimpey - ‘Scots housebuilding set for jump’

THE head of the UK’s second-largest housebuilder is predicting a jump in sales north of the Border following a 42 per cent surge in first-half profits.

Pete Redfern believes it is "only a matter of time" before Scottish house completion match those in England. Picture: TSPL

Taylor Wimpey chief executive Pete Redfern told The Scotsman that the firm was employing more builders across more sites in Scotland, where the housing recovery has lagged that seen in the south of England.

However, the markets are “moving in the same direction”, which should translate into an increase on the 417 homes sold in Scotland during the first half.

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“You can see it in the order books,” Redfern said. “There is only a matter of time until that comes through in completions.”

In total, Taylor Wimpey’s completed sales edged up by 2 per cent to 5,191 homes in the first half. At the same time, its order book has surged to a record £1.3 billion, representing 7,378 homes.

Pre-tax profits during the six months to 30 June jumped to £109 million against £76.7m a year earlier, with revenues rising 11 per cent to £1bn.

Like other housebuilders, operating margins showed an improvement, rising two percentage points to 13.1 per cent.

Redfern played down the impact of government support schemes such as Help to Buy and the Mi New Home initiative in Scotland, which accounted for just 4 per cent of all first-half sales. These initiatives help buyers purchase properties with as little as a 5 per cent deposit.

“Actually most of those just replaced shared equity sales that we would have done anyway,” he said.

Support schemes for home sales have raised concerns about the fundamentals of the market, which has seen a significant boost since the launch in April of Help to Buy.

Critics, including Business Secretary Vince Cable, have warned that such interventions risk fuelling a housing bubble by driving up prices.

Redfern is predicting two years of buoyant activity as market conditions improve further, but said this should not in itself be alarming. The real threat of a surge in prices comes from the under-supply of homes caused in part by issues around planning permission.

“There are and there should be concerns about a bubble, but not for the next 12 months,” he said. “Where we should be concerned is in the medium to long-term, what happens over the next five, six or seven years.”

Taylor Wimpey has benefited from developing on cheap land bought in the aftermath of the financial crisis.

It has also gained from a 4 per cent increase in the average size of property sold, with larger homes commanding higher profit margins.

The company’s debts have been halved during the past year to £68.4m, while the interim dividend was raised to 0.22p from 0.19p.