Taylor Wimpey profits have been hit after the housebuilder set aside £130m to compensate homebuyers caught up in onerous leasehold contracts.
Profits for the six months to July 2 fell 24 per cent to £205m, in spite of revenues growing 18.5 per cent to £1.7 billion.
The group’s finance director Ryan Mangold said completions in Scotland in the period were “ever so slightly” ahead of the overall group numbers. Taylor Wimpey has 25 current outlets in Scotland.
Taylor Wimpey said in April it would make provisions for a leasehold system which saw it retain ownership of land in developments south of the Border, and double the ground rent paid by homeowners every year.
The group has now said the £130m booked in the period was “an appropriate estimate”.
“The process of negotiation with the owners of the freeholds to these leasehold properties is on-going, and is proceeding in line with our expectations, and we continue to keep customers updated on the progress of these discussions,” said the group.
Underlying profits climbed 26 per cent to £335m as the group sold 6,580 homes in the first half, up 9.3 per cent on last year.
The average selling price increased 6.3 per cent to £253,000 but margins are being squeezed by an increase in build costs.
“We think houses prices will continue to trend upwards but at a slower rate than we’ve seen and on the other side of the equation, there is build cost pressure in a sector with high levels of activity, as we [move] toward Government targets of housing supply,” said Mr Mangold.
He said the increase in build costs was ahead of inflation at about three to four per cent, though added this was mitigated by the increase in selling prices.
The group announced an interim ordinary dividend of 2.3p, and a special dividend of 10.4p, which will be paid in July 2018.
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