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New Homes Developer Sells Just 7% of Stock to Homeowners
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
New homes developer Telford Homes has revealed that just 7% of its stock has been sold to homeowners.
The firm reports that its achieved sales were split 28% to UK investors, 41% to foreign investors, 24% to institutional investors and 7% to owner-occupiers.
The company has announced record-breaking results this year, largely due to foreign and British investors, and the Build to Rent scheme.
Telford Homes claims that owner-occupiers are either reluctant or unable to buy homes off-plan with deposits.
New Homes Developer Sells Just 7% of Stock to Homeowners
The firm sells homes off-plan, taking at least 10% of the sale price as a deposit. Where sales are agreed more than two years ahead of completion, Telford usually takes another 10% 12 months after exchange. At the end of March this year, it had taken just over £70m in deposits.
The developer reports: “The relatively low percentage of sales to owner-occupiers is not a function of a lack of demand and is purely down to the timing of sales.
“The group aspires to forward sell its developments to de-risk existing projects, and investors purchase much earlier in the development process than owner-occupiers.
“By de-risking existing projects, the group is able to advance investment into new projects and grow more rapidly.”
It could be possible that a rush of buy-to-let landlords into the property market boosted the firm’s profits ahead of the 1st April Stamp Duty deadline. As of this date, landlords and second homebuyers are charged an additional 3% in the tax. This guide helps investors understand how the higher tax rate will affect them: /landlords-guide-3-stamp-duty-surcharge/
Telford Homes, which concentrates on the non-prime London market, saw its pre-tax profits rise by 28% to £32.2m and revenue up by 42% to £245.6m this year.
The company’s performance was boosted by a move into the private rental sector, saying that it has gained “exceptional” capital returns.
Telford has sold off two Build to Rent developments, one to fund manager M&G and the other to housing association L&Q.
This week, it announced that it is partnering with M&G Real Estate to build a private rental development in Bow, east London.
The Chief Executive of Telford Homes, Jon Di-Stefano, says: “There have been some recent and justifiable concerns over prime residential properties in London, but this is a different market to that served by Telford Homes.
“The group is focused on desirable non-prime locations in London at a price point that continues to see strong demand.
“There is an ongoing housing crisis and a clear imbalance between the supply of homes and the needs of a growing population. Telford Homes is building homes for Londoners in a market where demand continues to significantly outstrip supply.”
