Help to buy sends housebuilder Bellway's profits soaring
Company says pre-tax profits rose 53% to £158m, with upcoming election failing to dampen demand
Housebuilder Bellway has reported booming profits on the back of the government's help-to-buy scheme and said it had seen little sign of the usual pre-election lull.
Pre-tax first half profits jumped 53% to £158.9m and the company raised its dividend by 56% to 25p a share. The results boosted the group's shares and lifted the rest of the sector.
Bellway, which has gone from building 4,380 homes in 2009 to an estimated 7,500 this year, said its order book was 35% ahead of last year at £1.1bn.
While the cost of building materials such as bricks and blocks has stabilised, the company said it was still battling rising labour costs in and around London, where subcontractor pay rates are going up around 10% a year.
Help to buy, which helps first-time buyers and movers buy a home with only a 5% deposit, has given a big boost to housebuilding since it started two years ago. Ted Ayres, Bellway's chief executive, said mortgage lenders were now offering "very competitive rates" under the mortgage guarantee scheme, such as Nationwide's fixed 1.89% deal.
Despite uncertainty as the 7 May general election look to be the closest in years, Bellway's reservations have risen 10% year-on-year since Christmas. "We are only six weeks away, but the buying public don't seem to have been turned off buying houses by the election. Normally you get a bit more of a slowdown," Ayres said.
People are more relaxed because all the main parties have committed themselves to keeping the help-to-buy scheme going until 2020, he said.
The new help-to-buy Isa, introduced in last week's budget, will only have a limited effect on the market, Ayres said, because savings will grow gradually over four years – whereas the mortgage guarantee scheme "had an impact on day one".
Bellway has opened a new south-west division to serve the Bristol area, the third it has opened since the recession, taking the total number to 16, with another one planned in 2015-16.
Growth in selling prices is slowing, particularly in the capital where it averages 0-5% on new sites, from about 10%. Bellway is building homes on 27 sites across London, but most of them are in zone 2 or beyond, which means it is protected from the slowdown at the top end of the market.