Housebuilder Wimpey has taken a hit to full-year profits after setting aside £130m to help customers trapped in onerous leasehold contracts drawn up by the builder.
Taylor, the UK’s third biggest house-builder, said bottom-line annual profit fell 6 per cent to £555.3m in the year to December 31. Pre-tax profit fell 7 per cent to £682m.
The group said Britain’s property market remains solid despite wider economic uncertainty and hailed an otherwise strong year.
The firm’s finance director Ryan Mangold said: “We are seeing continued customer demand. There is more demand than there is supply.”
He said the group has also benefited from the high quality of its locations.
“We are buying sites where people want to live,” said Mr Mangold.
The group is currently trading from 43 sites in its Yorkshire region and delivered almost 1,900 homes in the region in 2017, up from 1,770 the previous year.
The average selling price in Yorkshire increased 5 per cent to £215,000, up from £205,000 a year ago.
Taylor Wimpey North Yorkshire recently opened its Thurstan Park development in Northallerton. The development consists of two- to four-bedroom contemporary new-build homes.
Debbie Whittingham, sales and marketing director for Taylor Wimpey North Yorkshire, said: “With hundreds of people enquiring and visiting the site in a few short weeks alone, we’re delighted to finally welcome home buyers.
“With the desirable countryside on your doorstep... the area offers home buyers the amenities they need with shops, schools and leisure facilities all nearby.”
All homes at the scheme are available to buy with the Government-backed Help to Buy financial initiative. This allows homes to be secured with a five per cent deposit thanks to a 20 per cent Government equity loan.
Talking about the leasehold contracts, Taylor said it had secured agreements with 90 per cent of freeholders to allow affected customers to convert to an inflation-based leasehold scheme and was making “good progress” on agreements with the remaining freeholders.
The group’s chief executive Pete Redfern said: “2017 was another strong year for Taylor Wimpey and we enter 2018 in a good position with positive forward momentum.
“We have been encouraged by early trading patterns at the start to the year and despite some wider macroeconomic uncertainty, consumer confidence remains robust and market fundamentals are solid.”
Total revenue rose 8 per cent to £3.96bn as it reported a 4.6 per cent rise in completions to 14,842 over 2017.
Stripping out the leasehold provision, pre-tax profits came in at £812m for the year, up from £733.5m.
Average prices on private sales rose 3 per cent to £296,000 in the UK.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Another good year in the housebuilding business has been blighted for Taylor Wimpey by the cost of rectifying onerous ground rents on some leasehold properties.
“That aside, rising house prices and the Help to Buy scheme have continued to provide a supportive backdrop for the housebuilding sector.
“Consequently Taylor Wimpey has been able to announce an increased dividend, though it’s overshadowed by Persimmon’s show-stealing plans on this front which were unveiled on Tuesday.”
The bullish remarks from Mr Redfern come in spite of mounting worries over a housing market slowdown after a run of recent downbeat reports as falling wages and Brexit fears weigh on the sector.
Mr Mangold said: "If the consequences of Brexit result in massive negative consumer confidence, then that would have an impact on the business.
"I don't think the expectation is that consumer confidence will turn negative. Unemployment still remains incredibly low.
"There is demand for new build housing and the mortgage market remains very competitive."