Trading update from Barratt Developments
SHARES in housebuilders and estate agents dropped yesterday as the Chancellor announced plans to curb the booming buy-to-let sector by cutting tax relief. George Osborne announced in his summer budget that the amount landlords can claim on mortgage interest payments will now be set at the basic rate of income tax, currently at 20 per cent, this measure will be introduced over four years from 2017 and is aimed at creating a level playing field between investors and home owners.
Barratt Developements the housebuilder saw some of those losses reversed in early trading today as it released it’s trading update, announcing that it expected to see a 45% increase in full-year pre-tax profit to £565m, from £390.6m last year amid continued strong demand in the housing market.
Barratt said the group had traded well throughout the financial year, delivering a strong improvement in performance across all financial metrics, with good demand for new homes across all six of its operating regions, the company focused on maximising sales while driving financial performance.
Chief executive David Thomas said: “The housing market has remained strong and our operating performance has been very good. Over the last 12 months we have opened 176 new developments, increased our housing completions by 11% and committed £1bn of land investment for future housing. We start the new financial year with very strong forward sales and are well on the way to meeting our full-year 2017 targets of a 20% gross margin and at least 25% return on capital.”