Telford Homes is on track to exceed £40 million in pre-tax profits for the year to 31 March 2018.
The group said there is an increasing emergence of institutional build to rent investment in the London housing market. The housebuilder is already developing nearly 500 build to rent homes with around 900 more expected to be added to the pipeline following the pre-construction agreement signed with Greystar in June 2017.
The Group said it has a diverse mix of customers including housing associations, build to rent investors, individual investors and owner-occupiers. The underlying need for homes comes from owner-occupiers and an increasing number of prospective tenants for whom finding a property to rent is a significant challenge.
Despite that underlying need the homes for sale market in London has been somewhat subdued by economic and political uncertainty around Brexit negotiations and the election outcome. This has mainly affected demand at higher price points and tax changes affecting buy to let investment have also reduced the number of UK based investors that are active in the market.
Telford Homes said it has experienced limited impact from market uncertainty to date due to the Group’s lower average price point, strong forward sold position and in achieving sales to build to rent investors.
The Group added that it is considering numerous opportunities to add to its substantial development pipeline both for build to rent and open market sale.
Far fewer open market completions were achieved in the first half of the year than the number expected in the second half. Telford Homes said this is purely down to development timings which are all on track and in accordance with the original programmes but do not fall equally across the year.
As a result of the imbalance of completions across the year pre-tax profit for H1 2018 will be significantly lower than H2 2018 and also lower than the corresponding period last year but will be entirely in line with expectations.
The interim dividend is proposed to increase in accordance with the anticipated full year profit growth.
Jon Di-Stefano, Chief Executive of Telford Homes, said, “Telford Homes is operating in affordable locations across London and has an excellent reputation as a trusted partner delivering high quality homes.
“We are focused on reducing risk through forward sales, limiting our need for external debt finance and delivering higher capital returns and this fits perfectly with our strategic move into the build to rent sector. I expect more build to rent transactions as institutional demand continues to grow alongside continuing open market sales at our well located developments. Our ultimate belief in what we do is underpinned by a chronic lack of supply and we expect to deliver more of the homes that London needs in the coming years.”