Barratt Home Completions Just 3% Less Than Before Pandemic

Barratt Home Completions

HOUSEBUILDER, BARRATT DEVELOPMENTS PLC has issued a trading update for the year ended 30 June 2021 reporting 17,243 home completions this year – just 3.4% below 17,856 completions pre-pandemic.

The company says its profit “is anticipated to be marginally above the top end of the range of market expectations.”

There are more Barratt home sales reserved for next year than there were at the same point in 2019 for the following year’s home completions.

Barratt states “We are therefore well positioned for FY22, with the high level of forward sales providing us with increased visibility for our build programmes and a strong platform for the year ahead.”

Home Completions and Prices

Total sales for the forthcoming financial year stand at 14,334 homes, compared to 11,419 homes at the same point in 2019. They are valued at a total of £3,473.5m – well ahead of June 2019’s figures of £2,604.1m – demonstrating the steep rise in house prices.

Barratt homes averaged a selling price of £289,000 in 2021 – a 3.1% rise on 2020’s £280,300 and a 5.3% increase on 2019’s average home sale cost of £274,400.

The Group reported strong customer demand for new homes with a net private reservation rate of 0.78 per active outlet per week compared to 0.70 in 2019.

During the year, Barratt operated from an average of 343 active outlets down from 366 in 2020 and 379 in 2019.

Build Cost Inflation

Barratt says its site teams and subcontractors are ahead of planned output, with an average of 311 equivalent homes built per week in the year, rising to 324 equivalent homes in the second half of the year as the recovery continues.

However, build cost inflation ran at around 2% in 2021 and due to “the continued strength of the market and constraints in parts of our supply chain”, Barratt says it is currently experiencing build cost inflation of 3% to 4%. This is well below the increases in building material costs generally reported.

Barratt Cladding Costs

Barratt Developments states that all of its buildings, including the cladding and external wall systems used, were signed off by approved inspectors as compliant with the relevant Building Regulations at the time of construction.

It says it is working with building owners, management companies and expert engineers on assessments of buildings it built and the solutions needed to support leaseholders and residents at those buildings.

The company expects an additional charge of approximately £30m in the second half of this year and legacy property costs of both the cladding and Citiscape reviews are expected to total £81m for the year.

Barratt Land Bank

In the financial year 2021 Barratt approved £876.8m for buying land, equating to 18,067 plots on 97 new sites. The company has a target of an owned and controlled land bank of around 4.5 years with a minimum gross margin of 23% and 25% ROCE. It expects land approvals in FY22 to be up to 20,000 plots.

Barratt Developments plc is paying dividends to all shareholders based on a full year dividend cover of 2.5 times. It expects profit before tax to be near £812m.

>>Read more about Barratt Developments PLC in the news

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