Barratt rides stamp duty holiday to record sales

UK housebuilder Barratt Developments said it sold a record number of homes in the past six months, underlining how the sector has emerged as one of the winners in an economy blighted by the pandemic.

The FTSE 100 company said on Friday that it had agreed sales of 13,588 homes in the six months to December 31, up 14.3 per cent in the same period in 2019.

Like its rivals, Barratt has been helped by a temporary cut in stamp duty, a property tax, that the government brought in to cushion the economic blow from the pandemic.

“Despite the ongoing challenges presented by the pandemic, we are confident that our operating performance and strong financial position provide us with the resilience and flexibility to respond to the operating environment in [financial year] 2021 and beyond,” said chief executive David Thomas.

The electrifying effect of the stamp duty holiday, which is due to end in March, came on top of an existing government Help to Buy scheme.

Barratt also built more homes in the past six months, completing 9,077 — up from 8,314 in the same period in 2019. The government has made keeping building sites open a priority. The imposition of a third lockdown in England, announced on Monday, excludes construction sites.

Shares in the group rose 4.5 per cent in early trading on Friday. The company expects to resume dividend payments next month.

However, the housing market is expected to cool in the spring, with the stamp duty holiday ending and the current Help to Buy scheme being tapered, leaving it with regional price caps and only available to first-time buyers.

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Barratt said that its sales rate had slowed since October, and the conditions that led to a frenzy of activity were gradually wearing off. 

“There was pent-up demand [when the market reopened in May], the stamp duty holiday: some unusual, one-off boosts to sales,” said Aynsley Lammin, an analyst at Canaccord Genuity. 

Sales were likely to slow in coming months, said Mr Lammin, and would be badly affected if there was a serious deterioration in the wider economy that led to higher unemployment. 

But “as long as that key group of buyers within the economy are not too badly hit by unemployment fears, the momentum is good enough to see decent sales in the spring”, he added.


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