Barratt, Britain’s biggest housebuilder, said sales jumped after the Covid-19 lockdown ended, boosted by the government’s stamp duty holiday and the help-to-buy scheme.
Barratt completed 4,032 homes between 1 July and 11 October, up 24% on the same period last year. Its order book comprises 15,135 homes, up from 12,963 homes this time last year, at a value of £3.6bn, up from £3.07bn.
The housing market ground to a halt during the nationwide lockdown from late March, when most construction sites shut for several weeks and house viewings and moves were banned. Restrictions were eased in May.
Since then, the market has come back, helped by the suspension of stamp duty on property sales of up to £500,000 until March 2021, introduced by the chancellor, Rishi Sunak, in July.
Just over half (51%) of Barratt’s customers used the government’s help-to-buy scheme, up from 45% a year earlier. Almost three-quarters (74%) of those were first-time buyers, up from 70%. Barratt explained that no mainstream lenders provide mortgages at 95% loan-to-value for buyers of new-build homes, increasing the reliance of first-time buyers on help to buy.
The initiative, introduced in 2013, has allowed people to buy new-build homes with a small deposit from as little as 5%, with up to 20% of the property’s sale price covered by a government loan. From next April, help to buy will only be available to first-time buyers and it is due to end in March 2023.
Mortgages with small deposits have virtually disappeared in recent months, with major lenders such as HSBC and Santander pulling 90% and 95% mortgage loans, fearful that a recession and house price declines predicted for next year could leave them exposed to big losses.
However, Boris Johnson pledged at the Conservative party conference last week to create 2 million new owner-occupiers with a number of 95% loans to “fix our broken housing market”. His pledge was short on detail and left the mortgage industry puzzled as to how it can be achieved – with lenders describing it as little more than a revamped help-to-buy scheme.
“Help to buy has acted like a monster pack of Duracell batteries, fuelling housebuilders since its launch in 2013,” said Russ Mould, the investment director at the stockbroker AJ Bell. He said the prime minister’s latest pledge was “music to the ears of a business like Barratt. What seems almost certain is that Mr Johnson and his colleagues will find some way of keeping the property dream alive.”
Barratt expects to build and sell up to 15,650 homes this year, including joint ventures, and is aiming for 20,000 a year in the long term. The government wants builders to ramp up construction to 300,000 new homes a year by 2025 to tackle Britain’s housing shortage.