Redrow boss warns New Homes Bonus flawed

Aaron Morby 11 years ago
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Redrow chairman Steve Morgan has given his blunt verdict on the Government’s trumpeted New Homes Bonus warning it will fail to deliver a hoped-for surge in house building activity.

The Government has pinned it hopes on cash-starved local authorities clearing the way for housing to start so they can receive matched council tax payments for every home built.

But Morgan has warned that there is no appetite among council planners to green light new housing schemes.

Delivering the house builder’s half-year results, he said: “The Government contends that the New Homes Bonus will prove to be the catalyst to encourage local authorities to speed up the planning process and to approve more new homes.

“Unfortunately our experience on the ground does not support  that view.

“Instead we are increasingly being met by a reduction in planned numbers for new homes and grossly unrealistic expectations of what we are expected to deliver in the way of planning gain.”

Morgan added: “We remain in uncertain times and, due to a combination of affordable first time buyer mortgages and planning uncertainty, the house building industry is being prevented from providing the stimulus to the economy that it should be delivering.”

Despite the long term structural problems fuelling the housing crisis, Redrow managed to swing into profit again in the first half with a pre-tax contribution of £8.5m.

Revenues rose 15% to £216m, helped by a 16% rise in average selling prices to £170,500. After a loss last year, Redrow is now achieving an operating margin of 5.6%, some way below the heights achieved several years ago.

“While it is still too early to call the spring market, the second half has started encouragingly with reservations during the first 6 weeks comfortably ahead of the same period last year, said Morgan.

“These figures must be treated with a degree of caution however as they undoubtedly include some “catch up” from the December freeze.

He added: “Looking ahead, house prices have been stable for some considerable time now and we do not share the pessimism of some commentators that there will be a major fall in house prices during the coming year.”

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