Sheffield housebuilder MJ Gleeson cites ‘disastrous’ mini-budget as profits fall 43%

The firm also sold a lower number of homes this year when compared to the year prior, with a drop of 13.9 per cent to 1,723.

In a statement to the London Stock Exchange, the company said: “The combined impact of rising interest rates, the Government's disastrous mini-budget in September 2022 and withdrawal of Help to Buy, all led to a rapid slowdown in the housing market in the second quarter and a significant fall in demand.

“Whilst we started to see early signs of a recovery in January and February 2023, demand did not recover to prior year levels.”

Mortgage rates rose following the mini-budget in September under former prime minister Liz Truss and chancellor Kwasi Kwarteng, which the company said it believes led to a shift in the types of people looking to purchase houses.

The Help to Buy scheme, aimed at helping first-time buyers to come onto the housing market, also ended earlier this year.

The business noted that reservations from first-time buyers in the second half of the year accounted for around 50 per cent of open market reservations, compared to the 80 per cent it has typically seen.

The firm said that in response to economic conditions, it took a number of “defensive measures” early in the financial year. These measures included the buying of land being paused, and new site openings being delayed.

In February, the firm also announced that it would restructure, reducing from nine regional management teams to six. This process resulted in a number of redundancies, which the firm says generated cost savings of £3.2 million.

Former MJ Gleeson CEO, James Thomson, who became chairman of the firm earlier this year, said the company expected a “swift” return to growth once market conditions stabilise.

He said: “We believe that the scale of unmet demand for affordable and high-quality homes will underpin a swift return to growth as soon as market conditions stabilise and confidence returns.”

Mr Thomson added that the firm was “not complacent” about the short term risks presented by the wider macroeconomic environment, including constraints to planning.

Recent research from The Home Builders Federation revealed that planning permission for new homes across England and Wales has fallen to the lowest it has been since records began in 2006.

Group chief executive Graham Prothero said he felt the firm had achieved positive results given current economic conditions.

He said: “I am pleased to report a robust performance in a year characterised by economic volatility, a deterioration in buyer confidence and shifting buyer demographics.

“We continued to experience delays in planning, further exacerbated by the local elections in May and uncertainties around government policy.”