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.”