The UK’s second largest house builder, Taylor Wimpey, revealed a 24% fall in first-half profits after setting aside £130m to help homebuyers affected by a leasehold scandal.
The firm achieved a 6.3% rise in total average selling price to £253,000 in the first half of the year. Completions rose by over 9% to 6,580 homes, which helped to deliver a 24% rise in pre-exceptional operating profit to £346m.
But provisions of £130m following the leaseholder review, depressed pre-tax profit to £205m compared with £269m in the first half of 2016.
In a note accompanying its results for the six months to July 2, the firm said: “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.”
It added: “We continue to view the provision, before tax, of £130m as an appropriate estimate.”
Taylor Wimpey said the cost of building each home had gone up to £137,400 – an increase of £8,000 – and said that build costs would rise by around 3-4% over this year. It said the rise was largely down to hikes in labour overheads.
Overall chief executive Peter Redfern was upbeat, particularly about opportunities in London.
He said: “Customer confidence in central London has improved after a period of uncertainty, while the outer London market remains robust.
“In central London the land environment has changed, and we are seeing opportunities emerge.
“Having remained disciplined on acquisition criteria in the past 18 months in central London we are working on certain potential opportunities that would be significant and financially attractive and would provide the backbone for this regional business for a number of years.”
