Telford progresses PRS partner search and adds East London site to pipeline

Telford Homes has been appointed to partner a major landowner to obtain planning consent for around 700 homes on a site in east London. In a market update ahead of publishing its H1 2019 results later this month, the firm said the east London partnership was aiming for a combination of subsidised affordable housing, build-to-rent homes for the landowner and individual sale homes. Telford is also continuing its search for a long-term funding partner for PRS opportunities, advised by Savills, and expected to have identified the right investor by the end of the year, with a contract in place in the first quarter of next year. The firm also warned that the UK’s housing market had been hit by concerns surrounding Brexit as customers adopt a “wait and see” approach. Challenging sales environment The housebuilder said the sale of homes priced at more than £600,000 had become more challenging. This inertia is not expected to end in the short term since “negative sentiment is leading customers to take a ‘wait and see’ approach or to look for more significant price reductions to offset a perception of higher risk as Brexit gets closer”. “In recent weeks there has been an increasing amount of negative commentary around the outcome of Brexit and the impact it may have on the UK economy and housing market,” the housebuilder said. “This adds to a more general downturn in the market for expensive prime homes in London, which has been evident for some time.” Despite this, the group said it had continued to achieve sales at a consistent rate in the past few months, particularly where homes were priced at less than £600,000, with a significant proportion of owner-occupiers using Help to Buy. Long-term undersupply Telford Homes added: “We continue to believe that an enduring long-term undersupply of homes that people can afford to live in will underpin our plans to increase our output and the scale of the business regardless of any short-term Brexit impact. “Our strategic move into build-to-rent development has been well timed and we are confident this will form a significant part of the London market over the next few years.” The company said its interim dividend was proposed to increase in accordance with anticipated full-year profit growth. It expected to achieve pretax profit of £50m for the year to 31 March 2019, assuming the market “does not worsen further as the Brexit date approaches”. Profit before tax was expected to exceed the £8.7m recorded in the six months to 30 September 2017, the company said. Key objective Jon Di-Stefano, chief executive of Telford Homes, said: “Our key objective is to fulfil the ongoing demand for the homes that London needs. “Notwithstanding the uncertainty surrounding the outcome of Brexit, the group continues to perform well and is focused on increasing the scale of the business, driven by the need for homes at affordable price points, in particular in the rental sector. “We remain confident that our approach to forward sales with increased visibility over profit recognition enhanced by our success in build to rent will enable us to deliver strong long-term returns to our shareholders.” To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette