You are viewing 1 of your 1 free articles
Scottish house builder commits to affordable housing return by signing contracts worth more than £50m
Springfield Properties has agreed new contracts totalling more than £50m for affordable housing delivery, solidifying its return to the sector after a change in Scottish government policy.
The Scottish developer, which has also reported a significant drop in completions, decided to temporarily stop entering new affordable-only fixed-price contracts last year.
But it reversed the decision after the Scottish government increased affordable housing investment benchmarks by 16.9% in June 2023, alongside a reduction in levels of inflation for materials and labour.
Springfield has now signed more than £50m in new contracts, according to its annual accounts for 2023-24.
It said two-thirds of the affordable revenue forecast for the full year of 2025 has been contracted, with the remaining balance under negotiation.
READ MORE
Springfield added that its affordable housing revenue for 2023-24 had dipped by 13% to £47m as a result of this move.
Innes Smith, chief executive of Springfield Properties, said that “having actively recommenced signing affordable contracts, contracted order book in affordable housing at year-end was also ahead of where it was at the same point in the previous year”.
The developer completed 270 affordable homes in 2023-24, down from 328 in the previous period, with an average selling price of £174,000.
It said that the number of active affordable housing developments was 10 at 31 May 2024, down from 15, and that 10 active developments had been added during the year and 15 completed.
Its total completions reached 878 versus 1,301 in 2022-23, which it said was “in line with market expectations, reflecting challenging market conditions in the housing industry”.
The developer’s group revenue dropped by 19.7% to £266.5m year on year, due to “challenging market conditions experienced across the industry” and a lower forward order book, Mr Smith said.
Its adjusted profit before tax totalled £10.6m, which was lower than the £16m reported in 2022-23 but remained “ahead of management’s original expectations due to strong profits on land sales”.
Springfield said one of its key objectives was to “significantly” reduce bank debt throughout the year, which it has done. Net bank debt now stands at £39.9m, compared to £61.8m as at 31 May 2023.
“A key priority was reducing our debt, and we’re very pleased that we have exceeded our target. This was achieved through taking decisive action to reduce costs, manage working capital and secure profitable land sales of sites that do not impact on our near-term development pipeline,” said Mr Smith.
The developer also flagged a strategic collaboration agreement signed with Barratt Developments to create a new village of almost 600 acres near Stirling.
This included a land sale to Barratt for 34 acres at the site for £10m, Springfield said.
“We continue to have one of the largest owned land banks in Scotland, with a high proportion of sites having planning already in place,” Mr Smith said.
“We are particularly excited about the forthcoming investment in Scotland with the creation of the Inverness and Cromarty Firth Green Freeport and the development of Scottish & Southern Energy Networks’ new powerlines to provide the UK with renewable energy, which will require the building of thousands of new homes.”
He added that the firm was “pleased to be able to return to making dividend payments earlier than initially anticipated”.
Springfield agreed a £15m deal with a developer for 75 homes earlier this year, as part of its continuing return to the affordable housing market.
