Barratt predicts mortgage boost

A gradual freeing up of mortgage finance and higher margin land deals have helped housebuilder Barratt Developments has more than double its pre-tax profit to £45m in the last six months.

The Newcastle company said private completions increased by 5.3% on the prior year to 4,241 units in the six months to 31 December 2012, with group revenues in the period standing at £950m, in line with last year.

The company saw a significant increase in approvals to acquire higher margin land with £453m of land acquisitions approved in the period equating to 9,320 plots on 67 sites.

Net debt as at 31 December 2012 was £332m – a significant reduction from the £542.2m prior year position.

Barratt said government support for the UK housebuilding industry remained strong with a range of initiatives in place designed to support house purchases and stimulate growth.

“We saw an increase in interest in the NewBuy mortgage indemnity scheme during the Autumn. For the period, 7.7% of private reservations (excluding Scotland and Wales) were supported by the scheme,” the company said.

“NewBuy remains a priority selling tool for the group and we expect reservations using NewBuy to trend towards 10% to 15% of total private reservations in the second half of our financial year.”

Barratt also today announced the acquisition of two new major sites in central London with a gross development value of £400m.

These projects in Blackfriars Road in Southwark, and Cannons Wharf in Surrey Quays, will provide more than 1,000 new homes for the capital.

The firm said it was pleased to have secured a substantial additional allocation as part of the Government's latest FirstBuy funding round.

“We are targeting the use of FirstBuy particularly on sites where affordability remains a key issue, with a focus on driving sales on older and impaired developments,” Barratt said.

Group chief executive Mark Clare said: "This has been a good first half performance.  Pre-tax profit has more than doubled, net debt was significantly lower than the prior year, and we have started the second half with a strong private forward order book up by over 35%.

“In addition, we have been investing for the future, successfully securing higher margin land both in the South-East and across the rest of the country that will drive further profit growth."