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L&Q reveals 82% drop in year-to-date new home starts
G15 giant L&Q has seen its nine-month starts plummet by 82% and warned that its annual earnings will now be at the “lower end” of previous forecasts.
The 109,000-home association kicked-off work on 351 new homes in the nine months to the end of December 2023, it said in a trading update today.
This compared with 1,974 starts over the same period in the last financial year. The majority of starts are “later phases of existing developments”, L&Q said.
In summer 2023, the group predicted that its annual starts would fall by 60% year on year.
On completions in the past nine months, L&Q reported a 37% drop to 1,902, down from 3,007 the prior year.
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L&Q first signalled it was cutting back on development in 2021, when it revealed that its annual housebuilding target was being slashed by 70% to 3,000 homes a year.
Since then, a string of other large landlords have reduced their development programmes due to the sector’s mounting financial pressures.
In today’s update, L&Q said 1,236 homes completed in the year to date were social housing tenures, representing 65% of the total.
The remaining 666 new homes were market tenures. The mix broadly remains the same as its last financial year, when 66% of L&Q’s completions – 1,980 homes in the nine-month period – were social housing tenures.
The group also revealed that its post-tax surplus in the nine months has slid by 26% year-on-year to £102m. Turnover fell 4% to £761m.
Waqar Ahmed, group finance director at L&Q, said: “Market conditions continues to impact sales across all tenures.
“However, with the end of Help to Buy, demand for shared ownership remains strong and we have maintained first tranche sales at 32% despite higher interest rates impacting affordability for purchasers.
“While the outright sales market remains subdued, our exposure continues to decline.”
Looking ahead, L&Q said it expected its EBITDA (earnings before interest, taxes, depreciation and amortisation) to be at the “lower end” of previous guidance. The association said this was due to deferring fixed asset sales and “expected reduced volume of new home sales”.
Other G15 landlords are facing similar struggles. In December, Peabody reported that its half-year surplus had nearly halved after a hit to its turnover.
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