Key facts
- Bellway’s chief executive, Jason Honeyman, said the Your First Home scheme could increase annual house production by 10%.
- The Your First Home scheme will offer first-time buyers in England a government-backed equity loan worth 20% of the purchase price.
- The scheme features household income and price caps.
- Full details are expected to be announced by John Healey on October 28.
- Bellway is targeting 9,000 to 9,400 homes in the current year, down from 9,695 last year.
- Bellway reported revenue of £3.16bn for the year to August 31, up 13%.
The government’s new Your First Home (YFH) programme for first-time buyers could increase the number of houses British builder Bellway produces each year by 10%, its boss has said. The scheme, announced by Andy Burnham a fortnight ago, aims to address a chronic shortage of homes and sent housebuilders’ shares soaring by more than 10% upon its announcement.
Jason Honeyman, Bellway’s chief executive, welcomed the initiative, noting it will be more targeted than previous help-to-buy schemes with household income and price caps to ensure modest homes are purchased. Full details, including the launch date, are expected to be announced by John Healey on October 28. The YFH scheme applies only to England and is for prospective first-time buyers purchasing a new-build property. Buyers will be offered a government-backed equity loan worth 20% of the purchase price, with a minimum deposit of just 2.5%. Honeyman cautioned that while the scheme has the potential to “provide significant support for first-time buyers,” it could weigh on the market in the near term as some buyers may wait for its launch. However, he anticipates it could drive Bellway’s annual completions back to 10,000 homes within the 12 months from next September, potentially boosting volumes by around 10% and providing a path to a return on equity of 15%.
Bellway is currently targeting between 9,000 and 9,400 homes for the current year, a decrease from 9,695 last year, citing a lower order book, ongoing pressures on customer demand, and higher construction costs of 3% to 4%. The company has a forward order book of 4,981 homes worth £1.4bn, compared to 5,285 homes valued at £1.5bn a year earlier. The average selling price is expected to remain flat at approximately £325,000 over the coming year.
These comments followed the company’s announcement of revenue of £3.16bn for the year to August 31, a 13% increase from the previous year, which lifted underlying profits before tax by 5.7% to £305.7m. Bellway shares rose 2% on Tuesday but remain down by over a quarter year-to-date. The YFH scheme is anticipated to benefit most large housebuilders, including Persimmon, MJ Gleeson, and Taylor Wimpey. However, upmarket builder Berkeley Group and Vistry Group, which focuses on affordable and social housing, are not expected to gain significant advantage from the initiative.