Britannia sees signs of pick-up in house market

Britannia Developments, which is privately-owned, said it is close to completing deals to buy land in Leeds and Bradford and that it has reduced its exposure to the troubled market for new-build apartments.

David Firth, the managing director, warned however that widespread job insecurity and the financing problems facing first-time buyers would create a slow recovery.

Britannia, which is owned by Mr Firth and majority shareholder Paul Rider, has seen turnover fall from £34.3m in 2007. Mr Firth said he expected the figure would reach £10m in the 12 months to September and then about £13m for the following year.

The Leeds-based firm said it would complete about 90 properties this year, made up of town houses, semi-detached properties and a few flats.

Next month Britannia is due to launch Templar’s Gate, a luxury gated development of five detached homes in Fountainhead, near Halifax.

It features the more traditional, middle-to-upper-market housing on which the company wants to focus this year. Prices are expected to be around £400,000 with buyers likely to be older couples who have invested in their house, Mr Firth said.

“These people are likely to have substantial equity in their existing property since they are likely to have made mortgage repayments.”

Britannia has shrunk during the credit crunch, which triggered a slump in the number of people buying a house or moving and left developers and social regeneration firms in trouble. Rok went into administration in November, two months after rival Connaught collapsed.

Mr Firth said Britannia had survived, however, and was growing again because it took early decisions to help it avoid the worst of the recession.

The number of staff has fallen from 60 in 2008 to 24 today and borrowings have been reduced every year, Mr Firth said.

“Britannia has adapted to a market affected by a lack of liquidity... Working with the invaluable support of our preferred lenders, Britannia has always carefully structured its finances to cope with the severest of downturns and, like most developers, our building activity has been scaled down in recent years.”

The firm is gradually reducing the number of flats it holds, Mr Firth added. It has 29 left to complete, of which it hopes to sell 19 this year and the rest the following year.

“There has been too much hype and (other) people got carried away with the city centre apartments,” Mr Firth said.

“It has settled down and we want to see sustainable development that is not doing that much.

“First-time buyers drive the bottom of every chain. We see increasing numbers of them living at home until they are in their thirties.

“That puts pressure on middle aged couples who are planning for retirement.”

Mr Firth said the strength of the first-time buyer has “evaporated” over the last three years with individuals and couples struggling to find deposits.

Self-certifying mortgages, which helped fuel an unsustainable boom in home loans for much of the last decade and were dubbed “liars’ loans”, did not make sense, he added.

One of Britannia’s projects between 2008 and 2010 included the development and sale of 50 apartments and 11 houses in Beeston in Leeds although the deals were not done at target prices.

Mr Firth said the crunch “decimated” the housing sector and it would recover slowly.

“The demand is always there because people always want to move house because of divorce or wanting a change or having a family.

“ It will pick up but we hope for a steady increase.”

“There is not enough notice of how the industry was driving the high street, (places) like DFS, Carpetworld, solicitors and estate agents.”

Interest rates, which remain at a record low of 0.5 per cent, will rise “a couple of times” this year but by little more than half of one per cent, he added.