Springfield re-enters affordable housebuilding market

Springfield has re-entered the affordable housing market on the back of easing cost inflation and an increase in how much the Scottish government is prepared to pay to subsidise the development of new affordable homes. 

The Scottish housebuilder stopped entering new large long-term affordable housing contracts in September last year in order to protect its margins, which had been hit by the delivery of two large contracts signed in 2020 on the expectation of lower costs. 

In its annual accounts, published yesterday, the group revealed it had restarted work with affordable housing providers and had signed new contracts worth £9.7m. 

It comes after the Scottish government increased its affordable housing investment benchmarks, the maximum amount it is willing to pay to subsidise affordable housing schemes, by 16.9% in June. 

The latest accounts, for the year ending 31 May show pre-tax profit dropped at the housebuilder, despite a bump in revenue. 

Springfield reported turnover of £332m, up 29% from £257m, but pre-tax profit was 22% lower than the year prior – sitting at £15.3m compared with £19.7m. 

The growth in turnover came on the back of its acquisitions of Tulloch Homes and Mactaggart & Mickel Homes, which it took over in the middle of 2022 and the start of 2023, respectively.  

Addressing the current trading outlook, the report noted “significantly lower levels of reservations in private housing due to demand being impacted by continued high interest rates, mortgage affordability and reduced homebuyer confidence”. 

It has also said it will not make dividend payments until its £67.7m debt is “materially reduced”. 

For full-year 2024, the group is expecting an adjusted pre-tax profit of between £10m and £14m.