The build-to-rent specialist revealed a pre-tax loss of £800,000 in May’s interim results  for the six months to March 31 2023 but was confident of a recovery in the rest of the year.

Those hopes were dashed today in a gloomy trading update and the news that Chief Executive Officer Richard Simpson has stepped down.

In May Watkin Jones was hoping to sell six schemes this year.

Today it said: “In the period since the interim results, market conditions have become more challenging. In particular, the recent increases in interest rates and prevailing economic uncertainty have impacted negatively on market liquidity. As a result, there is now a greater degree of risk over these transactions completing by the year end.

“We have also reviewed our balance sheet against this more challenging macro-economic backdrop and increased cost of funding. We continue to explore the sale of a limited number of non-core assets on our balance sheet and consider it prudent to reassess the carrying value of certain assets with the expectation that this will result in an impairment charge of c. £10m.”

Without further sales the firm said it would not expect much of an improvement in profit for the full year.

It also expects challenging market conditions to carry-on in 2024 with a pre-tax profit target of £15m-£20m as provisions for legacy cladding work are also increased by between £30m and £35m.

CEO Simpson has stepped down and been replaced by Chief Investment Officer Alex Pease who becomes Interim Chief Executive while a search for a permanent replacement begins.

Alan Giddins, Chair of Watkin Jones, said: “On behalf of the Board, I would like to thank Richard for his contribution to the Group over the last five years and in particular his leadership of the business through the challenges of the COVID pandemic.

“Alex has been a key member of the Group’s executive leadership team for the last 10 years and was most recently appointed to the Board as Group Chief Investment Officer.

“In taking on the role of Interim CEO, Alex provides both continuity, in what remains a very challenging backdrop for the sector, as well as significant experience in the residential for rent market which the Board believes will help enable the Group to regain momentum ahead of market conditions improving.”