Housebuilder records slight dip in reservation despite huge drop-off in use of government’s subsidised purchase scheme

Barratt has seen its sales rate drop slightly amid a big fall off in reservations made using the government’s Help to Buy scheme.

The UK’s biggest housebuilder said in a trading update that it saw average sales of 0.85 homes per site per week between the start of July and October 10, down 2.3% on the same period last year, when the market was inflated in the immediate bounce back from the spring lockdown.

It said this small drop left it on course to hit end of year targets, and came despite the proportion of its homes being sold using Help to Buy plummeting to just 21% in recent months, from 51% in the comparable period.

Barrat TfL Wembley Park 1

A proposed Barratt scheme with TfL in Wembley Park, north London

The drop in the use of Help to Buy has come with the move over to a new less generous version of the scheme since April, with only first-time buyers qualifying for government assistance, and a series of regional price caps on the value of homes able to be purchase under the scheme.

The £4.8bn turnover housebuilder said the drop to 0.85 sales per site per week, while below the 0.87 recorded in the period in 2020, was well above the 0.72 seen in the “more relevant comparative period” in 2019.

This reservation rate is also an improvement on the 0.83 recorded in the immediate aftermath of the removal of the stamp duty holiday on homes of between £250k and £600k in July and August, as reported in its final year results just over a month ago.

The housebuilder’s trading update said: “We have seen continued strength in customer demand across the country for our high quality new homes […]. We have been particularly pleased with the strength of our private reservation rate given the significantly reduced H2B support.

The news comes as economic indicators are reporting gradually slowing growth in both house prices and housebuilding activity in recent months, with the removal of the Stamp Duty relief and growing concerns over the availability of construction materials and labour.

However, Barratt said that while it was aware of industry challenges around securing timely delivery of products “to date we have not experienced any significant disruption to our own build programme with our sites continuing to operate successfully throughout the country”. It said it was expecting build cost inflation of between 4-5% across the financial year.

The firm said it built 3,699 homes in the period, well below the 4,032 built in the same period emerging from lockdown last year. However, it said it remains on course to deliver around 18,000 homes directly and in JVs in the full financial year to June 2022.

If achieved, this would top the group’s previous record completions of 17,856, reporting in 2019 prior to the covid crisis.

Barratt also announced that its new chief financial officer, Mike Scott, who is joining from rival housebuilder Countryside, is due to start working for the business on December 6.

Countryside today announced that he is leaving their business on November 30, and will be replaced in the interim by Tom Wright, Countryside’s current group financial controller, while a permanent successor is selected.