The Homes and Communities Agency has announced the first 18 schemes to be taken forward to the next stage of the Get Britain Building Fund assessment process – the £420 million scheme aimed at unlocking stalled schemes.

The HCA said that there was a strong response to applications to the fund with 170 expressions of interest – most of these will now be assessed by HCA looking at value for money, deliverability and their fit with local priorities.

However the chosen 18, which could deliver 1,300 homes, will be fast tracked. They include two Miller schemes in Yorkshire, two Crest Nicholson schemes, in Bath and Ashford, St Modwen’s Locking Parklands Phase 2a and 2b in Weston super Mare and Redrow’s Devonport Vision in Devon.

Source: Housebuilder

Housebuilder Taylor Wimpey is anticipating a profits rise of over 80 per cent in the second half of 2011.

In a statement to the stock market, the firm expected operating profit for the final six months of last year to rise by approximately £40m from £49.1m for the same period in 2010.

It also anticipated a 75 per cent rise in full year profits from £88.3m in 2010.

The firm set itself up for an improved 2012. Orders also jumped nearly 17 per cent from £715m in 2010 to £835m. The number of homes in the order book is up 15 per cent to 5,379 with higher margins compared with orders in the same period in 2010 or completions in 2011.

However while the number of completions in 2011 were up 2 per cent on 2010 to 10,180, average prices lagged well behind inflation rising only £1,000 to £185,000.

Taylor Wimpey said it planned to hold its land for longer and said it had increased its financial return criteria for sites it bought in the year. It owned or controlled about 1500 more plots  with planning permission or resolution to grant it in 2011 than 2010.

The company said it was on course to make double digit margins in the second half of 2011 with a full year margin above the 9.3 per cent in made in the first half of the year.

The firm said it would prioritise margins over volume, but still expected to complete more homes in 2012 than 2011.

Taylor Wimpey said 2011 had been better than expected and the first weeks of 2012 had continued the “encouraging patterns” of the second half of 2011.

In a statement, the company said it maintained a “positive but cautious view of the short term trading environment” and was in a strong position should conditions weaken during the year.

Pete Redfern, group chief executive, said: “In 2011, we have taken the opportunity to focus on our strategy of driving value for shareholders through margin improvement and improving return on capital.  It is pleasing to have reached our double digit operating margin target ahead of schedule and to be well-placed to deliver further improvement, providing that market conditions remain broadly stable.”

The final results for the year ending 31 December 2011 will be announced on 29 February 2012.

Source: Construction News

Persimmon, the UK’s second-biggest homebuilder, said full-year profits before tax rose by 50 per cent last year on higher operating margins in spite of a dip in new home completions and prices.

The news sent shares in the York-based FTSE 250 company up by more than 5.3 per cent on Monday to 506.5p.

The company said it built 9,360 new homes in 2011 – two dozen fewer year-on-year – at an average price of £164,000, that was down down 2 per cent on the year before. Total revenues were off by about 2.5 per cent to £1.53bn despite strong autumn sales. The company said forward sales for this year were up 8.8 per cent to £615m.

The company said better margins and financing had helped pre-tax profits rise by nearly 50 per cent, and that full-year results would be near the top of analysts’ forecasts of between £130m-£148m.

Operating margins improved by 180bp, approaching 10 per cent in the period, the company said. Persimmon’s net cash holdings were £40m, up from £51m net borrowings the year before, even though it purchased 7,000 new plots of land in the second half of 2011.

Mike Farley, chief executive, said: “We’ve got a strategy in place to focus on operating margins and cash positions rather than chasing volume for volume’s sake. We want to get operating margins to 15-17 per cent in the medium term.”

Mr Farley said the company re-planned many sites, building more houses, which yield more per square foot than apartments. He added that the company now had a portfolio of 17,000 acres of strategic land which, along with cost controls, contributed to margin growth

Clyde Lewis, analyst at Citi, said that homebuilders are battling for the number two slot in the sector on who can deliver the highest margins behind Berkeley Group . “I think Persimmon is eager to show its them,” he said.

Take up on the government’s FirstBuy Scheme – a programme that provides low-income first-time homebuyers a 25 per cent equity loan – “has been encouraging”, but the availability of mortgage credit remained constrained, according to the company.

Mr Farley added that the government’s introduction of a 95 per cent loan-to-value mortgage product could further boost home sales in 2012, while acknowledging that the UK housing market remains challenging.

Separately, Jeff Fairburn, north division chief executive, was appointed to group managing director, the company said, effective immediately.

Source: FT

Barratt is expecting a 40 per cent hike in operating profits in the six months to 31 December 2011, it said today.

Posting a trading update this morning, the UK’s biggest house builder by volume said revenues are up 8 per cent to £950m, with total completions of 5,198 units, up from 4,832. Barratt reported a margin of 6.4 per cent, compared with 5 per cent last time around.

Average selling price has increased by 3 per cent to £181k, with the private sales segment up  4 per cent to £200k.

The company said net debt is “lower than previous guidance”, but still at around £550m.

A number of the UK’s biggest house builders have been trying to replace the more expensive land bought at the peak of the market with new plots. Barratt saw £494.5 million in landbank writedowns and £17.5 million in restructuring costs in 2008/9. Last year it completed a £1 billion refinancing and saw a return to profit.

The house builder said today that recently acquired, higher margin land has contributed to more than a third of the year’s completions.

David Thomas, group finance director, said he expects this number to increase to half next year and two thirds in 2013/14.

“This gives us confidence that we will deliver further margin improvement going forward,” said Mr Thomas.

Barratt saw a take up of 900 of the 1,400 First Buy allocations – the government backed equity share product – and was issued another 437 allocations.  Those 1,837 allocations are worth £31.9m.

Mr Thomas welcomed the government’s mortgage indemnity guarantee scheme as a longer term solution to boosting mortgage lending and as a replacement to the First Buy scheme, which he said has a “limited life”.

Mr Thomas also put improved results down to the mix of properties, with 70 per cent of sales now houses rather than flats, and expected to rise to 80 per cent.

Total new reservations are also up 33 per cent. Total forward sales are up 8.1 per cent to £698.1m, with private forward sales up 29.8 per cent to £415.3m.

Group Chief Executive Mark Clare added:  “This has been yet another six months of good progress for our business despite the wider economic uncertainty.”

Persimmon, Galliford Try and private builder Cala have reported progress so far this week.

Source: Construction News

The Edinburgh-based private firm today reported a 12 per cent surge in volumes and 2 per cent increase in average prices in the six months to January. Cala has sold 322 houses since July at an average price of £290,000. Its consented land bank now stands at just over 3,000 plots with a potential value of £909 million.

Chief executive Alan Brown told Construction News that he is expecting further growth as the profits from new, higher margin land come through, with revenue expected to rise from £215m last year to £245m this year, and £300m the year after.

The house builder is majority-owned by Lloyds since a debt-for-equity swap in 2009.  That came after major restructuring and huge write downs the year before, which had resulted in £260m of losses.  In 2010 the group disposed of its commercial property arm.

Cala reported a return to profit in November 2011 for the first time since 2007, with home sales up 45 per cent to 649.

It announced this week that it has now completed another refinancing with Lloyds, extending its £180m credit facility by 18 months to 2014 on the same terms as the 2009 arrangement.

Mr Brown said the financing enables the company to focus on growth. But he told Construction News that all options remain open for the future of the firm, including a float on the Stock Exchange through an initial public offering, a private equity house takeover or a trade sale.

“They (Lloyds) will be looking to maximise their value at some point in the future.

“A listing might be a possibility, a private equity deal might also be a possibility – but it is not something that is on the agenda for the short-term.”

Cala – which became embroiled in a lengthy legal battle with Eric Pickles over regional housing targets – operates mainly in Scotland, along with the South east England and the Midlands.

While Scotland already has a presumption in favour of sustainable development, Mr Brown said he welcomed the government’s efforts to adapt the planning system in England through the draft National Planning Policy Framework, if approved in its current form.  He also welcomed the longer-term domino effect the government’s mortgage indemnity guarantee move will have on his market.

While remaining optimistic, Mr Brown said the eurozone crisis continues to cast a shadow over the future, with events abroad having the potential to impact the housing market in the UK.

Source: Construction News

McCarthy & Stone has become the latest homebuilder to see some green shoots of recovery following the housing crash of 2007, reporting a return to pre-tax profit for the full year.

The builder of retirement homes, which was taken private by a team led by HBOS in 2006, was hit particularly hard by the financial crisis owing to the high levels of debt taken on in the deal. It found itself unable to finance its debt and was forced to suspend construction activity for almost a year from the middle of 2008.

The group gradually restarted its construction activity and crept towards recovery. This started to bear fruit this year, when 24 newly built developments became available, helping total unit sales to rise 11 per cent to 1,264.

Pre-tax profit rebounded from a loss of £8.7m ($13.5m) to a profit of £5.4m in the year to August 31 and revenues climbed 13 per cent to £230.6m.

McCarthy & Stone was also upbeat about its future, forecasting a 58 per cent increase in the number of units to be sold annually by 2015 to 2,000. “The group is well positioned to benefit from demographic trends that will generate a rapidly increasing population of potential customers,” said a statement from the board.

This follows news earlier in the year that the housebuilding companies Barratt, Redrow and Berkeley have also enjoyed an increase in sales activity despite the fragile recovery and the reluctance of banks to offer mortgages.

But McCarthy & Stone was pessimistic about the wider market. “There were no material signs during the course of the last financial year to suggest that the poor trading conditions seen since 2007 were improving.”

The group said it still had gross term debt facilities of £486.8m, which are repayable in April 2014. It had cash of £153.2m at August 31, slightly up from £148.9m the year before.

McCarthy & Stone was restructured in 2009 in a debt-for-equity swap with a consortium of banks. In the deal, £200m of its £700m senior debt pile was written off in exchange for 100 per cent of its equity.

At the time, Michael Ball, the company’s chief financial officer, said that when the HBOS buy-out took place in 2006 the group had not expected such a severe housing crisis.

“The assumptions made about the housing market [at the time of the buy-out] in 2006 didn’t include the kind of scenario we’re now in,” he said.

Source: FT

Redrow, the housebuilder, has dismissed fears of further falls in property prices even as it appealed to regulators to pave the way for the return of 95 per cent mortgages.

In the wake of figures from both Nationwide and Halifax showing a surprise tumble in house prices last month, Steve Morgan, the group’s chairman, said a chronic shortage of housing would protect Britain from a property crash.

“It’s cheaper to buy than rent and that proves there’s an undersupply,” he said. “Unlike the US, where prices have dropped, this undersupply will prevent house prices from falling.” Prices are likely to remain broadly flat over the next few years, he added.

Despite this, the housebuilder conceded that parts of the country had not recovered from the 2008 slump. In a sign of the growing north/south housing market divide, Redrow has pulled out of Scotland and established a new London division as its seeks to capitalise on premium properties in the south-east.

The south now accounts for 36 per cent of its plots, up from 32 per cent last year, with construction due to start at a riverside site in Kingston-upon-Thames, and work already under way on six houses in Ealing in west London.

Sale prices for Redrow’s own homes rose 12.5 per cent over the 12 months to June 30, from an average of £154,800 ($247,208) to £174,100 as the group moved away from flats and towards more expensive houses.

In February 2010, the group launched A New Heritage Collection, a range of two- to four-bedroom houses that accounted for 41 per cent of total sales in the second half of the year. These drove pre-tax profits from £700,000 last year to £25.3m this year as the average selling price rose 11 per cent to £201,000.

The cancellation rate for purchases was 18 per cent, broadly in line with last year, as potential purchasers failed to secure mortgages. The housebuilding industry is locked in talks to find ways of persuading the banks to lend again at 95 per cent loan-to-value ratios, leaving buyers to fund deposits of 5 per cent.

Mr Morgan urged the government to introduce new legislation that would encourage the launch of mortgage insurance indemnity schemes. He said he himself took out a 95 per cent mortgage to buy his first home, as did his son.

While rival housebuilders Berkeley Group and Bovis have also recently reported strong profit improvements analysts cautioned that the next few months remain critical for the sector.

Aynsley Lammin, analyst at Citi, warned: “All eyes will be on the autumn selling season now to see how trading holds up in the face of continued macroeconomic uncertainty.”

Source: FT

The severe December weather didn’t dampen housebuilders’ spirits, as the last quarter of the year saw an increase in new home registrations, according to NHBC.

Figures from NHBC for new home registrations in December 2010 show an increase on 2009 figures, with just over 7,385 registrations during the month (compared to 7,149 in 2009). These, added to the previous 11 months, mean year end numbers look set to end approximately 30% higher than overall registrations reported in 2009 (115,458 in 2010 compared with 88,083 in 2009).

Month on month, December 2010 figures were down on November 2010 - a traditional trend for the industry, reflecting a shorter month over the festive season.

Imtiaz Farookhi, chief executive of NHBC, said: “No one is popping champagne corks but there is a growing belief that the worst is now behind us and we’re on the road to recovery.

“The pace and extent of that recovery really depends on factors out of the hands of the industry, such as mortgage availability and monetary pressures on consumers. These are the biggest obstacles that the house building sector now faces for the coming year.”

NHBC statistics for the rolling quarter October - December 2010 show that:

• Private sector registrations were up 1 per cent (to 18,551) when compared with the same period last year (18,393)
• Public sector registrations were 8,711 - 13 per cent higher than the same period a year ago (7,685)
• Registrations in the combined private and public sectors were 5 per cent up on the same period in 2009 (27,262, up from 26,078)

Full regional breakdown of new homes registered October 2010 to December 2010 by region / country:

Source: NHBC

Mortgage lending enjoyed some growth in November, according to the Council of Mortgage Lenders (CML).
House purchase lending rose 3% annually in November. It also climbed 4% monthly, also increasing 5% in value from October 2011 to total 47,000 (worth £6.9 billion).
The number of first time buyer loans increased 4% by volume and 5% by value against October 2011 and November 2010, to total 17,300 and £2.1 billion in worth. CML noted that in November, first time buyers took up the same percentage of the house purchase market as in October at 37%.
“A rise in mortgage lending towards the end of 2011 is a welcome indicator for the industry, considering confidence has been weak due to fragile economies both at home and in the Eurozone,” commented  CML director general Paul Smee. “We should expect a further increase in first time buyer activity over the next few months as they push through their purchases to take advantage of the stamp duty concession before it ends in March.”

Source: Housebuilder