Housebuilder expects 70% of its future pipeline to be for the rental market
Telford Homes is preparing to flip a number of its planned developments over to build-to-rent schemes as it looks to reduce its exposure to the private sales market.
Reporting its annual results today the housebuilder said it expected private sales to individual buyers to account for less of its future pipeline of 4,900 homes.
The group said it would continue to target owner-occupiers on specific developments and at prices up to £600,000, but it expected to change an unspecified number of developments that had been planned as individual sale schemes to build-to-rent.
The split of its current development pipeline, which numbers 4,900, is expected to be 70% build-to-rent-led developments and 30% developments led by individual sales.
Announcing a 13% dip in pre-tax profit to £40.1m for the year to 31 March 2019, Telford Homes said several factors were behind missing its £50m pre-tax profit target. “The individual sale market in London has been subdued by a prolonged period of uncertainty and customer expectations of enhanced discounts and incentives led to reduced prices on those sales that were secured.
“Our results for the year were also affected by the delay of two build contracts anticipated to exchange in 2019 but pushed back to 2020, due primarily to planning issues”, it added, although it said turnover of £354.3m represented a group record.
Telford Homes said part of the driving force behind its shift to build-to-rent was what it called a “fundamental imbalance between demand and supply of rental properties in London at affordable rent levels […] we firmly believe that institutionally owned build-to-rent developments are key to increasing housing delivery in London”.
Jon Di-Stefano (pictured), the housebuilder’s chief executive, said: “Our business model is increasingly focused on build-to-rent housing and the reduced risk and lower capital requirements it brings. Despite some challenges, our performance for the year represents a great achievement for Telford Homes with revenue at an all-time high due primarily to an increased proportion of build-to-rent contracts.
“Over the last three years we have made substantial progress against our objective to increase our output of build-to-rent homes to meet demand from institutional investors and to deliver high-quality rental properties in the capital.
“There remains a long-term structural imbalance between housing supply and housing need in London. Our recently announced partnerships with Invesco and M&G signal our reputation as a trusted build-to-rent partner, and as such are a significant step as we continue to develop our profile at the forefront of this burgeoning sector.”