November 7, 2018 / 7:31 AM / 8 months ago

Redrow seeks regional price cap review under home buying plan; Chairman to retire

The company logo of construction company Redrow is pictured on a flag at a new housing development near Manchester northern England, April 7, 2016. REUTERS/Phil Noble

(Reuters) - Housebuilder Redrow Plc (RDW.L) on Wednesday said it embraced Britain’s extension of its policy to help first-time home buyers, but urged the government to review the lower regional price caps that it says favours the South of England.

The company’s comment came as it announced that founder and Chairman Steve Morgan, who returned in 2009 after a nine-year break, will retire from the board at the end of March and be succeeded by Chief Executive Officer John Tutte.

Britain said in October it will scale back and then end in 2023 a flagship “Help to Buy” equity loan scheme, an initiative which has helped first-time buyers get onto the property ladder by allowing them to purchase a new home with as little as a 5 percent deposit.

“We broadly welcome the extension, announced in the budget, of the highly successful Help to Buy scheme ... We would, however, urge the government to review the regional price caps that markedly disadvantage the North and Midlands in favour of the South of England,” Morgan said in a statement ahead of the company’s annual general meeting.

From April 2021, a two-year scheme will be introduced in Britain, which will have regional caps on the value of the property which can be bought, all of which will be lower than the current 600,000-pound rate, except in London, the government said in October.

At the moment those taking advantage of the programme, which is due to end in March 2021, can buy a property worth up to 600,000 pounds ($768,000) in England and benefit from a maximum 40 percent government loan in London and up to 20 percent in the rest of the country.

Following that, the government said it has no plans to continue the initiative after March 2023.

The current scheme has helped boost housebuilding and driven sales for many of Britain’s biggest developers. But critics say the government has contributed to higher profits and bonuses at some businesses and pushed up prices.

Redrow said it was trading in line with expectation for the first 18 weeks of its financial year, as good demand in its regional business offset subdued sales in London.

Reporting by Arathy S Nair in Bengaluru; Editing by Bernard Orr

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