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Wed November 25 2020

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Redrow sees private reservations rise 52%

11 Nov 13 Shareholders of house-builder Redrow will get warming news from chairman Steve Morgan when they meet for the company's annual general meeting in Ewloe, Flintshire today.

Steve Morgan
Steve Morgan

They will hear how much the company is benefiting from the government’s Help to Buy scheme and its planning reforms.

Steve Morgan, Redrow’s founder and executive chairman, will say: "Redrow has continued to make good progress in a market strengthened by the increased availability of first time buyer mortgages as a result of the government's Help to Buy scheme. Private reservations for the financial year to date, at 1,400 homes, are up 52% on last year. Cancellation rates have reduced to 12% (2013: 17%).  Help to Buy reservations represented 35% of total private sales over the period.

“The average selling price of private reservations in the year to date is 11% ahead of the same period last year, at £271,000.  This is predominantly due to change in geographical mix, including an increase in London sales, together with a small element of house price inflation."

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Since the start of the financial year, Redrow has added 2,000 plots across 15 sites to its land bank. "The growth in the land bank over the last two years has been helped by the changes in the planning system, brought about by the NPPF [National Planning Policy Framework]," Mr Morgan said.

Redrow has 5,000 plots – a third of its total land bank – going through the planning system awaiting reserved matters approval or clearance of pre-start conditions. Mr Morgan voiced his familiar frustration with this process. "The regulatory burden involved in obtaining detailed permission and clearing conditions is the biggest constraint to the industry increasing production," he said.

Investment in land has resulted in net debt increasing from £91m in June to £120m now, representing gearing of 20%. Mr Morgan said that the balance sheet remained strong, leaving Redrow well placed to keep buying sites.

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