This morning as the house builder reported bumper profits more than trebled, it backed plans set out by trade body, the Home Builders Federation, to tackle the industry’s vast cladding remediation challenge.
HBF members have committed to fund remediation works on all their buildings over 11m where there are fire safety concerns as part of the sector’s response to the Government’s call for action to resolve the cladding crisis.
In response to Levelling-up Secretary Michael Gove’s ultimatum for the industry to come up with proposals or face punitive measures, the HBF has committed house builders to remediate their buildings, but also called for a review of the looming Residential Property Development Tax, which will slap a 4% charge on annual profits from April this year.
Greg Fitzgerald, chief executive, said he was supportive of the principle that remediation costs of cladding and fire safety should not be borne by leaseholders and was supportive of Government seeking a proportionate solution.
“Being a successful business is also about doing the right thing. We are acutely aware of the anxiety faced by leaseholders in properties requiring cladding and fire safety remediation and we fully agree that the financial burden for this work should not rest with them.
“We remain committed to working with the Government to fix this difficult issue for leaseholders.”
He added that given the uncertainties in this area Vistry was still unable to precisely estimate any additional costs in the event the HBF’s proposed recommendations were implemented, but considered that these could be in the range of £35m to £50m.
Fitzgerald commented on the HBF plan as Vistry reported “excellent progress at both its House Building and Partnerships operations throughout the year.
A strong market rebound last year saw pre-tax profits soar to £319m from £99m in 2020, from group revenue up 30% to £2.36bn.
Home completions over the year bounced back by around 24% to 11,080 homes.
Vistry Partnerships continued to deliver rapid growth in higher margin mixed tenure revenues, up 66% in 2021, driving an increase in the operation’s adjusted operating margin to 9.2% (2020: 6.7%).
Fitzgerald said Partnerships was firmly on track to deliver on its 2022 targets of £1bn revenue, an operating margin of at least 10% and in excess of a 40% return on capital employed.
In the medium term, Partnerships’ growth strategy is targeting £1.6bn of revenue and at least a 12% operating margin.
He added that across the board build cost inflation was expected to continue at 6% due to group supply agreements ending at the end of 2021 and inflation in the sub-contractor labour market.
