Help to Buy helps Redrow post record results

The housebuilder has leapt up the profit ladder - with a foot-up from the government's homebuying scheme.

by Dave Waller
Last Updated: 15 Sep 2014

Redrow posted a pre-tax profit of £132.6m in the year to June 30, up from £69.4m a year earlier. It expanded its workforce by 21% – to 1,346 – in that period, and built 3,597 homes. That's 27% more than the previous year. The company attributed 35% of all private completions to the government's Help to Buy scheme.

Which all looks as rosy as a pristine welcome mat on a new-build porch. Yet it's unlikely to silence the critics. Help to Buy, which was launched by George Osborne in April last year and includes an equity loan element, offers prospective buyers an interest-free loan of up to 20% of the purchase price of a new property if they can stump up a 5% deposit. The government has been accused of propping up a housing bubble – and risking a phenomenal pop once the scheme is withdrawn.

But the key criticism of Help to Buy is that it's not addressing the root of the problem - the supply of homes, rather than demand.

Indeed, while Redrow's chairman Steve Morgan pointed out that this year marks 40 years since he founded the company, and described the positive results as 'quite fitting', he still took time to attack the UK's planning system for preventing the company building more.

'There's a lot of smoke and mirrors when it comes to planning,' he told BBC Radio 4's Today programme. 'We have a population increasing at the fastest rate ever and the third-slowest rate of building in the Western world.'

Yesterday Berkeley Group appeared to back this up, asserting that the UK housing market had reverted to normal transactions levels from highs in 2013.

Yet this seemed to be contradicted by news today that the UK construction industry is booming, posting its strongest jump in activity in seven months. The UK construction PMI, calculated by Markit, has risen to 64.0, up from 62.4, indicating an acceleration in growth. It’s the strongest reading since January, and one of the best in the last seven years. The fastest rise in activity came in housebuilding.

In fact it's apparently been booming so much that companies can't get the staff to cope.

David Noble, Group CEO at the Chartered Institute of Purchasing & Supply, is worried by the shortage of skilled builders, and the pressure on raw materials. 'The sector is struggling to find enough skilled tradesmen to keep pace with new work and the labour market will continue to put pressure on costs until the next wave of apprentices begin to enter the jobs market,' he said.

So much for Help to Buy. Can't someone offer help to build too?

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