Details of job cuts following restructure to be made public in November
Vistry is setting itself up to deliver 25,000 homes per year under its new partnerships housing strategy, the firm鈥檚 partnerships boss has told 黑洞社区鈥檚 sister title Housing Today.
Stephen Teagle said the firm planned to deliver the firm鈥檚 previously stated target of 20,000 homes per year in 鈥渟hort measure鈥� and was structuring itself to build 25,000 homes per year.
This would make the company, which yesterday announced it is to merge its traditional private housebuilding business into its partnerships operation, by some distance the biggest housing developer in the UK.
Until as recently as last year Barratt, currently the UK鈥檚 biggest housebuilder, was targeting building 20,000 homes a year, which has commonly been seen by the industry as an effective limit beyond which builders will struggle to grow. However, it expects output to fall to as low as 13,250 homes next year amid the slowdown in the housing market.
In contrast, Vistry yesterday saw its share price spike after it said it believed it could deliver 5% to 8% annual revenue growth with its new model, which is more reliant on building affordable and rented homes, and return 拢1bn to shareholders.
Partnerships housebuilding, in which developers work to build homes for long-term investors such as housing associations, local authorities and build to rent landlords alongside homes for sale, is seen by investors as more resilient to housing market downturns.
Teagle, chief executive of partnerships at Vistry, said: 鈥淲e鈥檒l be delivering 20,000 homes within a fairly short measure, and we鈥檒l be delivering beyond that.
鈥淲e鈥檙e structuring our business so that we are capable of delivering over 25,000 homes a year.鈥�
In interim results released yesterday, the firm said it delivered just 6,050 homes in the half year to 30 June, meaning that reaching 25,000 homes per year implies doubling output from current levels.
Describing the strategy shift as 鈥渢ransformational鈥�, Teagle rejected the idea that it was an opportunistic response to the downturn in the market and said Vistry was now committed to delivering more affordable and rented housing through a partnerships model for the long term.
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鈥淭his is this is an absolute strategic commitment from our board,鈥� he said. 鈥淔rom the people in the business, and a commitment we鈥檝e given to our partners from wider stakeholders that we want to be part of the solution for housing supply in this country.
鈥淲e don鈥檛 want to be part of short term, cyclical approaches. And this partnerships platform, as well as providing a returns-based [business] model, represents that commitment for the long term to delivering affordable housing and addressing the housing crisis.鈥�
Teagle also said that Vistry, which announced that its housebuilding boss Keith Carnegie will leave the firm by the end of the year as it restructures, was looking for a private investor to ramp up production via its own in-house 鈥榝or-profit鈥� housing association, Linden First.
Teagle said 10 year-old registered provider Linden First had only a 鈥渧ery small stock holding鈥� at the moment, and Vistry was now looking at how the organisation could be used to 鈥渁ssist鈥� housing delivery. He said: 鈥淲e are interested in talking to partners and external investors who would be interested in an opportunity to invest in that for profit in order to use that to assist with our delivery.
鈥淭hat is not intended to displace our work with existing registered providers, merely to amplify it.鈥�
The new strategy will see Linden embark on a restructure which the firm said will see it trim its operating divisions from 32 to 27, cutting an unspecified number of jobs, and saving an extra 拢25m. Vistry said it would update the market on job cuts in its next trading update in November.
Vistry also yesterday became the first housebuilder to make a specific write down in its accounts for the cost of implementing the government鈥檚 requirement for all housing blocks over 18m to have a second staircase. Vistry said it had written down 拢18.4m against the policy, comprising a 拢6.1m inventory write-down and a 拢12.3m provision for additional costs incurred on committed sites.
Analyst Aynsley Lammin at Investec said Vistry was 鈥渆xceptionally well positioned鈥� to be the leading partnership housing provider in the country and increased the target share price for the firm by over a pound from 815p to 965p.
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