Telford Homes warns of writedowns despite £57m grant

Telford Homes has said that grants from the Homes and Communities Agency (HCA) have shored up its position but it still expects to make land writedowns in its full-year results.

In a trading update today, the London-based housebuilder said it had agreed a £57m grant programme with the HCA that will part-finance more than 400 homes across seven sites in the next three years.

It added that it was in “advanced discussions” with housing association partners to build some developments entirely of affordable housing. “Although at a lower margin, this gives the company the ability to commence construction on these sites with secured cash inflows over the course of the development and makes this change in strategy very attractive in the current market,” it said.

The firm said sales had continued at a “steady rate”, with 350 open-market completions for the 12 months to 31 March, up 12.5% on 311 last year. It said almost 400 pre-sold open-market homes were due to complete in the next year but that it expected 60-80 of these sales to fall through fail while mortgage finance remained restricted.

Chief executive Andrew Wiseman said: “The strong partnerships which the company has with a number of housing associations and the grant programme agreed with the HCA mean that, to a certain degree, we are able to shelter the company from the lack of activity and confidence in the private residential market.

“The board will focus on these relationships to achieve security of cash inflows before embarking on construction and will continue to ensure that the company is adapting to current economic conditions.”

But the firm said it expects to write down the value of land and work in progress on a “restricted number” of developments when it reports its results for the year to 31 March, because of the continued decline in UK property values.

Telford added that it had completed negotiations with its banks to renew loans, extend terms and set covenants.