House builder Persimmon is gearing up its site opening plan to deliver 400 active sites this year as it eyes its 15,000 completions target.
Announcing another year of strong profit growth on the back of a 17% rise in completions to 13,509, Persimmon said it was now building on every available site with planning.
The increase meant the volume of new homes brought to market over the last two years was up 36%.
Over 2014, the average selling price increased by 5.3% to £190,533, and helped to deliver a 44% increase in underlying pre-tax profit to £475m. Group turnover rose 23% to £2.6bn.
Persimmon’s operating margins steadily improved over the year with the second half performance peaking at 19%.
The house builder warned that the General Election would likely disrupt the spring selling season spreading demand further into the year.
Nicholas Wrigley, Group Chairman, said: “The typical seasonality of trading in the industry may be disturbed this year with sales rates picking up into the autumn depending upon the implications of the result of the General Election.
“To mitigate the risk to sales rates in the short term we are working extremely hard to open new sites as early in the spring season as possible.
“While planning-related pre-start conditions continue to increase the time taken to bring new outlets to market, we are pleased to have already opened 60 of the 120 new outlets planned for the first half of 2015.
He added: “We are working hard to increase our active outlet network to around 400 sites by the middle of 2015 up from 375 sites at the start of the year.
Persimmon generated £388m of cash during the year despite acquiring 26,822 plots of new land across 156 locations, representing 200% of current consumption.
It has now amassed enough land to build more than 100,000 homes over the coming years.
As a result, the board also announced it would bring forward its 95p a share cash hand-back payment from July to April.
Barratt predicted that building cost inflation will ease back this year to 3-4%, as it unveiled soaring profits for the first half of the year.
The house builder said cost pressures had reduced in the last few months as labour supply increased, although bricklayers remained in short supply.
Materials shortages, particularly of bricks and blocks, had also eased and would only have a “limited effect” on the firm’s costs and supplies.
Chief executive Mark Clare said: “Improving efficiency remains our priority and we continue to focus on mitigating, as much as possible, any future material or labour cost increases.”
Barratt, which presently deals with around 6,600 specialist subcontractors and 5,800 suppliers, said it aimed to drive further cost savings.
Clare said: “We have commenced work on a number of process reviews in key areas of the business including commercial, sales and marketing, and construction.
“Over the next three years, we expect these to increase further the efficiency of our operations, in part through a greater use of technology, reduce operating cost and deliver quality and service improvements to our customers.”
Unveiling a 75% jump in interim pre-tax profits to £210m he said that forward sales so far this year were 17% up on the strong prior year.
Completions rose 12% to 6,971 homes over the period, with affordable housing driving the growth, up by 53% to 1,150, as private sales rose just 6.9% to 5,563.
Private average selling prices increased 12.4% in the period to £253,200, split broadly equally between changes in mix and underlying sales price inflation. This helped to lift turnover up 24% to £1.57bn.
Clare said the house builder expected to open a further 90 sites in the next six months including Hollygate Park, the former Cotgrave colliery in Nottinghamshire; Baggeridge Village in Staffordshire, built on the former Baggeridge brickworks; Brooklands in Milton Keynes; and The Chocolate Works in York, the re- development of the former Terry’s chocolate factory.
Barratt is building a regionally balanced portfolio with a 4.5-year owned and conditionally contracted land bank, totalling 68,947 plots (2013: 62,644 plots).
He reported that Barratt was on track to complete 15,000 homes target by the end of its financial year.
Santander has set aside £100m for a new funding scheme to support developments by small and medium-sized house builders.
The bank’s corporate & commercial division will launch the new fund on 25 March to help builders get schemes off the ground.
SME developers and builders are now being seen as critical to stepping up the country’s housing delivery after many firms were driven out of the market by the banking crisis.
The scheme will be headed up by Andrew Whelan, managing director, regional real estate at Santander who will be supported by teams in London and Manchester.
Steve Pateman, head of UK banking at Santander, said: “We are aware that many small house builders struggle to raise the equity required to support conventional bank debt.
By allocating part of our Breakthrough Growth Fund to this sector, we will be able to bridge some of this gap with a tranche of mezzanine finance that will hopefully allow many small house builders to build out their land banks and from there go on to develop more sites.
He added: “This will benefit not only the housing market but also the broader UK economy.”
Housing minister Brandon Lewis has opened the consultation on planned Government measures to speed up section 106 agreements.
The proposals would see a time limit set on processing section 106 deals of a maximum of 13 weeks.
Brandon Lewis said: “Section 106 planning agreements can bring great benefits to local communities but too often they drag out planning applications for months.
“That’s why I’m proposing measures that will speed up the process, get planning permissions granted quicker and workers on site earlier, all the while keeping the community benefits that these agreements can bring.”
The government is also asking whether the requirement to provide affordable housing contributions acts as a barrier to development providing dedicated student accommodation.
Setting clear time limits so section 106 negotiations are completed in line with the existing 8 to 13 week target for planning applications to be processed
Requiring parties to start discussions at the beginning of the planning application process, rather than the current system where negotiations can often start towards the end
A dispute resolution process where negotiations stall preventing developmentInterest parties can express their views known on the DCLG website , the consultation closes on March 19.
Using standardised documents to avoid agreements being drafted from scratch for each and every application
Potential legislation in the next Parliament to give new measures teeth
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