Housebuilder Taylor Wimpey points to ‘buoyant’ market as earnings cool

● Boss says firm entered 2018 in strong position with ‘positive momentum’

Taylor Wimpey has pointed to “buoyant” market conditions north of the Border after its full-year profits were knocked by a leasehold scandal.

Britain’s third-biggest housebuilder saw its bottom-line annual profit fall 5.8 per cent to £555.3 million. Adjusted operating profit lifted 10.1 per cent to £841.2m, driven by improved performances in both the group’s UK and Spanish businesses.

The firm is paying out some £500m in dividends and confirmed yesterday that it planned to make further “material capital returns” next year and beyond.

Group finance director Ryan Mangold told The Scotsman that conditions remained buoyant despite the spectre of higher interest rates with “attractive” mortgage deals and the continuing imbalance between demand and supply underpinning activity.

However, the latest results showed that the group has set aside £130m to help customers trapped in onerous leasehold contracts.

Leaseholders were forced to stomach ground rents that doubled every ten years and the freeholds to their houses were able to be sold to thirdparty private firms, making many homes unsaleable.

Taylor Wimpey said it had secured agreements with 90 per cent of freeholders to allow affected customers to convert to an inflation-based leasehold scheme and was making “good progress” on agreements with the remaining freeholders. Chief executive Pete Redfern said: “2017 was another strong year for Taylor Wimpey and we enter 2018 in a good position with positive forward momentum.

“We have been encouraged by early trading patterns at the start to the year and despite some wider macroeconomic uncertainty, consumer confidence remains robust and market fundamentals are solid.”

Total revenue rose 7.9 per cent to £3.97 billion as it reported a 4.6 per cent rise in completions to 14,842 over 2017.

Stripping out the exceptional items, pre-tax profits came in at £812m for the year, up from £733.4m. Average prices on private sales lifted 3 per cent to £296,000 in the UK.

Laith Khalaf, senior analyst at financial services group Hargreaves Lansdown, said: “Another good year in the housebuilding business has been blighted for Taylor Wimpey by the cost of rectifying onerous ground rents on some leasehold properties.

“That aside, rising house prices and the Help to Buy scheme have continued to provideasupportivebackdropfor the housebuilding sector.”