Taylor Wimpey today backed the government’s push to build 1.5 million homes in the next five years, as the FTSE 100 developer revealed a drop in profits.
The £6-billion firm stood by its own plans to complete up to 10,000 properties this year. Its chief executive, Jennie Daly, called Labour’s plans for homes – as outlined this week by Angela Rayner in the House of Commons – “ambitious”.
But the long-serving industry executive also said the target was “much needed”, adding:
“It is very pleasing to hear the deputy prime minister recognising, alongside the chancellor, that planning has been a major barrier to economic growth, and having a series of measures … I think it levels the playing field. This is an excellent start”.
Daly told the Standard that such targets were necessary for the industry.
“We need to be ambitious. History, unfortunately, does show us that if we don’t aspire to a significant number, then we’ll always fail to deliver what’s needed.
“It is not without its challenges. It is ambitious. But we also have to see it in the context of a substantial and meaningful deficit in [the UK’s] housing delivery over the last decades.”
Taylor’s half-year profit fell by over 58% to £187.7 million from revenue of £1.517 billion. The drop came as the company upped provisions for the cost of works to remove cladding from buildings, to improve fire safety.
I set aside a further £88 million for the remedies, increased largely due to the impact of inflation on the cost of the works, which are being carried out across the industry after the Grenfell Tower tragedy. The size of the team employed on the improvements has also been increased.
With the Bank of England expected to start cutting interest rates this summer from 5.25%, cutting the cost of mortgages, next year is shaping up as an important one for house builders.
Enquiry levels have been “surprisingly strong”, Daly said, even with the base cost of borrowing at its 16-year peak.
“What’s really challenging our customers, particularly first-time buyers, is affordability at the current interest rates”, she said.
The outlook for rate cuts in the second half of 2024 is expected to release pent-up demand in the industry.
“We’ve done all we can to set 2025 up well,” Daly added. “I’m really pleased with our visibility around outlets. It really is now all about the market.”
She said that cancellation rates were already normalising, which “shows consumer confidence is stabilising.”
Daly also said that even before the Bank of England acts, “we’re probably seeing some customers staring to anticipate potential interest rate cuts”.
And looking at lower rates, she said they “would be very pleasing if and when they come.”
The BOE is expected to keep the base cost of borrowing on hold in an announcement due at midday. City experts expect the first cut since the pandemic to come in September.
Taylor’s shares added almost 3p to 161.2p.
