Builder linked to industry probe will build fewer homes
BRITAIN’S third largest housing developer will build fewer homes this year, it has announced.
It comes days after a watchdog highlighted “persistent shortfalls” in the number of new properties.
Taylor Wimpey was this week named by the Competition and Markets Authority as one of eight builders being investigated over possible collusion that could be pushing up prices.
The group yesterday said it expected to build between 9,500 and 10,000 homes in 2024 excluding joint ventures. Last year, it built 10,438.
It said its earnings almost halved in 2023 due to rising building costs and a slump in new housing completions.
It reported a 48% drop in underlying pre-tax profits of £473.8million in 2023 after its revenues fell by more than a fifth to £3.5billion.
Property expert Jonathan Rolande said it was disappointing that – even with the support of Housing Minister Michael Gove, inset – the number of homes being built was reducing despite high demand.
He told the Daily Express: “Mr Gove can ask for as many homes as he’d like, but house builders are under no obligation to do anything but look after their own bottom line.
“Demand is there, but the cost of borrowing has diminished many people’s ability to buy, or at least to pay the inflated prices of recent years.
Shortage
“High rents have also prevented many first-time buyers from saving a deposit.
“Analysis of over a million plots indicates the shortage is caused by planning complexities and the business model of developers, where homes that will sell at high prices are built in favour of those that will not. This should not come as a surprise.”
The past year has been turbulent for developers as higher interest rates deterred buyers. But things are slowly improving and a reduction in mortgage costs over recent months has eased the pressure on home builders.
Taylor Wimpey CEO Jennie Daly said in yesterday’s statement: “It is still early in the year and the macroeconomic backdrop remains uncertain.
“However, it is encouraging to see some signs of improvement in the market, with reduced mortgage rates positively impacting affordability and customer confidence.”
The group said its weekly private net sales rate increased to 0.67% in the year to February 25, compared with 0.62% last year. Its cancellation rate dropped to 12%, compared with 17% a year ago, and its average sale price rose 3.5% to £324,000.
Ms Daly added the group was “poised for growth from 2025, assuming supportive market conditions”. The company said it would “co-operate fully” with the CMA, which is also probing Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow and Vistry. The watchdog said it had not yet reached any conclusions about whether or not competition laws had been broken, but added that any sharing by house builders of non-public information, such as house prices, may have the “effect of preventing, restricting or distorting competition”.
The CMA also said that “significant intervention” was needed to ensure enough homes were built.
Its investigation will look into the price of new homes, their quality and the pace at which they are built. Mr Rolande said: “I welcome the CMA probe. It will lay open the current issues that house builders and their customers face.”
Mr Gove’s Department for Levelling Up, Housing and Communities said that it was still “on track to build one million homes this Parliament, backed by £10billion investment in housing supply”.
It added its long-term housing plan would allow it to “build the homes local communities want and need.”