LONDON (Reuters) - Britain’s biggest housebuilder Barratt (BDEV.L) said it will build around 20 percent fewer homes in London in 2016/17 and nationwide completions were unlikely to grow very much despite government efforts to boost supply.
Barratt is the second major developer to say this week that it would not be building significantly more homes for now after smaller rival Bovis (BVS.L) said its volumes would fall by between 10 and 15 percent in 2017.
Britain this month outlined plans to change planning laws and potentially take land from developers who hold it for too long. The government wants to increase the number of new homes built from 190,000 to at least 250,000 per year.
Barratt, which posted a 9 percent rise in pre-tax profit to 321 million pounds ($400 million) in the six months to the end of December, said rising land prices in the capital meant it had not replaced developed sites with new plots at the same pace.
“We had around 2,000 completions in London last year and we’d expect this year to be around 1,600 completions,” Chief Executive David Thomas told Reuters on Wednesday.
“What we’ve seen over the last few years, is a very, very competitive land market particularly in the central zones in London and that’s meant that we haven’t purchased new sites in zone 1 or the edge of zone 2 for more than two years.”
Barratt reported a 6 percent drop in the number of homes it built in the last six months of 2016 to 7,180 units, pushed down by an over 50 percent fall in London.
The centre of London has also become less attractive to developers as sales prices fell over the last 12 months due to an increased stamp duty property tax on top-end properties and Brexit deterring some foreign investors.
The company said it would pay an interim dividend of 7.3 pence per share, up from 6 pence a year ago. Its shares rose 2.3 percent by 0955 GMT.
Barratt said it expected full-year volumes to be flat at around 17,300 units after a combined increase of 55 percent in the last five financial years but that it was also important to maintain quality and customer satisfaction.
Bovis has faced a backlash from some buyers in recent months who have criticised it for substandard building work, forcing it to spend an extra 7 million pounds to carry out repair work at some of its properties.
Reporting by Costas Pitas; Editing by Paul Sandle and Keith Weir