Completions at Barratt drop by one third

Sales income at the UK’s largest housebuilder Barratt has slumped by nearly 30% in the wake of the covid-19 pandemic, the firm revealed in a year-end trading update this morning.

The firm issued a call for the government to extend the existing Help to Buy scheme as it said the number of houses it sold in the year to June 30 fell by 30% from 17,856 recorded in 2019, to just 12,604 this year.

While it did not reveal expected turnover for the year, it did reveal average sales prices of homes this year and last, which multiplied against the number of homes sold, indicated sales income is likely to have fallen from nearly £5bn to £3.5bn.

But, with the pandemic preventing the firm from completing on existing reservations made by buyers, it said the forward order book was sharply up, to £3.2bn, from £2.6bn at the same point last year.

Barratt’s trading update also said “demand from first time buyers looking to use Help to Buy has been significant since the market reopened” and issued a call to extend the initiative, which helps those with small deposits to buy new-build homes, beyond its expiry in March next year.

Barratt’s statement confirmed the business had now re-opened all its sites and returned all employees back to work from furlough and will pay back government support given to it under the scheme.

The firm said that site productivity had reached about 75% of pre-covid levels, due to social distancing requirements, but that this should improve given recent changes in guidance.

Barratt also revealed its full year results, due to be released on 2 September, will be further impacted by a £70m write-down for the cost of repairs to a series of existing large schemes at which problems with the structural concrete frames have emerged.

Barratt said the bulk of this charge related to costs at one development, Citiscape in Croydon, built in 2001, at which significant issues relating to the design of the building’s reinforced concrete frame had been identified, requiring “extensive remedial work”. In addition, following checks, it said minor problems had been identified in seven further schemes, and that it estimated the total cost of repairs and checks would amount to £70m. This is on top of £15.8m of costs already incurred at Citiscape.

It said it was looking at recovering costs from third parties, expected to be the engineering firms behind the designs, but admitted: “However there is no certainty regarding the extent of any financial recovery.”

The problems with Citiscape’s concrete frame were uncovered during work to replace cladding in the wake of the 2017 Grenfell Tower fire.