Downsizing difficulties dent McCarthy & Stone profits
April 11, 2018 – Retirement house-builder McCarthy & Stone has seen its half-year profits dip by more than 50% as potential buyers seeking to downsize struggled to sell their family homes.
McCarthy & Stone blamed constraints in first-half trading conditions on the secondary market as well as a pause in build start activity following the EU referendum in June 2016.
The company has increasingly had to entice buyers by offering part-exchange, which dented profits.
In the six months ended 28th February 2018, McCarthy & Stone made a pre-tax profit of £10.5m (2017 H1: £21.8m) on revenue of £239.6m (2017 H1: £238.2m). Legal completions dipped to 760 units (2017 H1: 864 units) at an improved average selling price of £298k (2017: £260k).
Chief executive Clive Fenton said: “Trading remained resilient during the first half of FY18 despite the ongoing subdued conditions within the secondary market… We released 54 new sites for sale since the start of FY18 and our forward order book, including legal completions, is now c.13% ahead of the prior year. This provides continued confidence in our expectation that the full year outturn will be within the current range of analyst forecasts, albeit there remains some uncertainty created by the government’s announcement on ground rents.
“The growing need for retirement housing caused by our rapidly ageing population also means the long-term prospects for our business continue to be positive. However, the UK remains woefully unprepared for these demographic changes and we are calling for a joined-up policy approach across all government departments to encourage the delivery of better housing options for older people.
“We recognise the need to support first time buyers but government must not ignore the many benefits of building more retirement housing. This form of housing frees up existing homes for families and young people, and reduces pressure on social care services, which are set to account for half of all taxes raised by local authorities by 2035. The current reviews of planning and social care policy provide an excellent opportunity to rebalance housing policy and help the millions of older people who want to downsize into properties better suited to their needs.”