Barratt FY order book ahead of 2019
Housebuilder Barratt said its current forward order book was strong with sales ahead of the same time last year as it emerged from the coronavirus lockdown that closed all its sites.
The company said it had an order book of 14,326 homes at a value of £3.25bn at the end of June, compared with 11,419 homes a year ago worth £2.6bn.
Britain's largest housebuilder added that cash at year end was £305m, down from £765.7m, equivalent to around 25% of the owned land bank. It was also paying back money from the government’s employee furlough scheme, but called for an extension to its controversial 'help-to-buy' mortgage scheme, which ends next March.
Completion volumes fell to 12,604 homes for the period ended March 22 from 17,856 homes a year earlier, reflecting the impact of Covid-19.
“Since the removal of government restrictions on housing market activity on 13 May 2020 there has been a welcome recovery in internet activity, site visitors and net reservations across both the industry and our business,” Barratt said.
However, it warned that the prospects for the wider UK economy and the subsequent impact of the pandemic on the housing market remained uncertain.
It also revealed that it would take a £70m hit after finding structural design defects in seven multi-storey concrete frames built more than a decade ago.
The problem was discovered when defective ACM cladding was removed from Barratt's Citiscape development in the south London suburb of Croydon in response to the 2017 Grenfell tower fire which killed 72 people
“As a responsible developer, we appointed independent structural engineers to review all of the other developments where reinforced concrete frames (RCF) were designed for us by either the same original engineering firm or by other companies within the group of companies which has since acquired it," Barratt said.
"These investigations have identified significant issues relating to the design of the building's reinforced concrete frame (RCF) requiring extensive remedial work."
"While we have no legal liability to cover the costs of this work, in line with our commitment to customers and recognising the responsibility we have for the work of our partners, we have taken the decision to pay for the required remedial action which would otherwise fall on leaseholders."
The house builder said it was now actively seeking to recover costs from third parties.
Hargreaves Lansdown analyst William Ryder said the strong numbers were tempered by the lack of mortgage availability at higher loan-to-values, which prompted the calls for the help-to-buy extension.
"However, there are a lot of demands on the nation’s pocketbook at the moment – and help to buy may not come top of the list. Also weighing slightly on sentiment is Nationwide’s house price index, which showed a year on year fall in June for the first time since 2012," Ryder said.
"The economy looks like it could go either way at the moment, and house prices and housebuilders are sure to follow it. The next few months are crucial for Barratt because, while the group demonstrated its strength during the lockdown, an extended recession would prove an even tougher test.”