Building developers gain profits due to Help to Buy

Fri, 12 Sep 2014

Building developers gain profits due to Help to Buy
Barratt Developers have reported a good year, as they apparently have doubled their annual profits as a result of the Help to Buy scheme.

The scheme has generated a huge boost in the building market according to some reports, and Barratt says their profits rose to £390.6 million in the year to 30th June. Furthermore, the average selling price of a home sold by Barratt increased by 12.9% to £241,600, which is well within the price cap of the Help to Buy scheme.

This increase in average sales however has also been put down to Barratt moving away from building flats to building larger family homes, which are more often eligible on the Help to Buy scheme.

The developer is also expecting to build a further 15,700 homes this year, which will help to alleviate the rocketing house prices somewhat.

Mark Clare, chief executive of Barratt commented: "That's a good, solid, continued growth rate. Following the launch of Help to Buy, sales rates over the summer period last year were exceptionally strong. This year we have seen a return to more normal seasonal trends."

However, one issue with the increased build growth is the lack of building materials being produced. Scotland hit issue a few months ago as it ran short of bricks.

The increase in numbers of homes sold will benefit the shareholders of the developers, as can be seen through Barratt who plan to return £100 million to its shareholders by November next year, with the target of £400 million by 2017.

All is not perfect however, as share prices for building firms are still dropping, with Barratt falling by 18% over the last half a year, and house prices are still going up. Help to buy may have stimulated the building market, but not enough to keep up with the demand, and property values are still going up.
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