» House builders do their best to adjust to the market

Write downs and slow sales prove tough for builders

Article Published: 10th September 2008

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Two of the largest house builders in the UK have announced measures to allow them to adjust to the present crisis in the housing market.

Redrow, the North Wales based company has taken the decision to down value its land bank by £259 million. Redrow have already cut its workforce by 40 per cent in one year alone. The write down is the biggest the house building industry has witnessed. The builder has set up an agreement with its six lending bankers that it £450 million facility should be based on cash flow rather than profit. The chief executive of Redrow, refused to speculate on whether the housing market turndown had reached its peak but said sales of new homes through their developments was remaining fairly steady at 27 a week.

Barratt Developments announced a drop in pre tax profits of 67 per cent and has done away with its final shareholder dividend.

The developer has looked at offering incentives to prospective buyers and has said it will pay their stamp duty on purchases of up to £500,000 and would be introducing a part exchange service selling their existing property to Barratts at a “fair market value”. Barratts have also seen a vast reduction of value on its land bank and has already seen a write down of £208.4 million with a fall in profits from £424.8 million in 2007 to £137.3 million in 2008.