So, the truth finally revealed? ‘Sell fewer homes to improve margins’. Owl bets they are not the only developers thinking this, just the first to actually say it.
Louisa Clarence-Smith www.thetimes.co.uk
One of Britain’s biggest housebuilders has said that it will sell fewer homes this year as it focuses on improving margins.
Taylor Wimpey sold 16,042 homes last year, the most since it was formed in 2007 from the merger of Taylor Woodrow and George Wimpey.
It said that volumes this year were “expected to be slightly lower” and that it would be “targeting a slightly lower sales rate as we focus on capturing value”, despite reporting “improved” customer confidence since the general election.
Taylor Wimpey has the largest land bank of any listed housebuilder, with about 140,000 plots, of which 76,000 have some form of planning consent and about 36,800 have implementable consent and are being developed.
Pete Redfern, chief executive, said that the business had set out to accelerate delivery on sites “by as much as can reasonably be managed, both by the market in terms of building and building to quality”.
He said that the company could not deliver more homes as it needed to “build in a high-quality way . . . to get the resources and have the sites open and be able to deliver those homes properly and build the infrastructure”.
Taylor Wimpey’s profit margin fell to 19.6 per cent in 2019 from 21.6 per cent a year earlier as average prices remained flat — at about £305,000 — while build cost inflation rose from 3.5 per cent to about 4.5 per cent. Mr Redfern, 49, said that the inflation comprised a mixture of higher material costs and higher spending on labour, including introducing managers to oversee quality at each division and giving staff more time and resources to get things right.
The company expect its operating margin for the first half of 2020 to be affected by pressures from last year, including long-term investment in quality and business improvement, before improving in the second half.
This week Robert Jenrick, the housing secretary, said that builders that wanted to access the government’s Help to Buy loan scheme from April 2021 would have to sign up to a new homes ombudsman to ensure that buyers can seek redress for shoddy building work. About 34 per cent of Taylor Wimpey sales involved Help to Buy last year. The company’s shares fell 6½p, or 3 per cent, to 212½p, last night.