Bovis Homes chief executive says the jury鈥檚 out on starter homes
The government鈥檚 starter homes policy is likely to boost housebuilders鈥� profits, the chief executive of Bovis Homes has said.
David Ritchie (pictured) said Bovis Homes鈥� initial view of starter homes 鈥� which will be sold at 20% off the market rate and capped at 拢450,000 in London and 拢250,000 elsewhere 鈥� was that it would enable the firm to 鈥減otentially sell homes for more money鈥�, over the alternative of meeting affordable homes obligations through selling parts of schemes to housing associations.
But he warned that the first starter homes were unlikely to be delivered 鈥渦ntil 2018-19鈥�, as there would be a lag due to the time taken to incorporate them into its pipeline and deliver them.
He said: 鈥淭he view from politicians is that they鈥檒l happen tomorrow. It was the same with Right to Buy, they expected hundreds of deals straight away, but it takes time.鈥�
Ritchie also warned the policy could 鈥渄istort鈥� the second-hand sales market given starter homes can be sold at market value five years after being bought at a discount, and suggested a covenant ensuring homes are sold at a discount 鈥渋n perpetuity鈥� could provide a solution.
Ritchie鈥檚 comments came as Bovis Homes posted record profit for the 2015 calendar year.
The firm posted a 20% jump in pre-tax profit to 拢160.1m for 2015, up from 拢133.5m the previous year.
The housebuilder also posted revenue growth of 17% in its full-year calendar results to 拢946.5m, up from 拢809.4m in 2014, on the back of a strong increase in completions to just shy of 4,000 homes.
The firm is planning to expand completions to 6,000 homes a year 鈥渋n the next few years鈥�, Ritchie said.
Meanwhile, rival housebuilder Persimmon posted a 35% jump in pre-tax profit for 2015 to 拢629m and upped its dividend payment plan to shareholders to 拢2.9bn from 2012-2021.
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