Business

Taylor Wimpey profits hit by costs of dealing with leasehold scandal

Taylor Wimpey, the company that wants to build 640 houses in Debenham, took a hit last year from the scandal surrounding its sale of leasehold homes. It allocated £105 million to deal with the problem.

As a result profits after tax and exception items were down 5.8 per cent at £555.3m compared with 589.3 for 20165. Profit before tax and the cost of dealing with the leaseholds were up by 10.7 per cent at £812 million.

Revenue for the year was £3.97 billion, up 7.9 per cent on the previous year.

The scandal resulted from Taylor Wimpey selling houses on 999 year leases with ground rents that could be doubled after ten years. When new owners tried to resell they found mortgage companies unwilling to lend and businesses who had bought freehold rights from Taylor Wimpey demanded large sums from people who wanted to buy the freehold of their homes. More on the problems faced by leaseholders at the Guardian.

Other points from the 2017 full year results released today include:

  • We believe that the land market and planning environment have significantly changed over recent years. Whilst the planning process remains complex and is often slow, there is better clarity in many local authority areas and a better supply of suitable land that has good planning prospects with reduced competition.
  • Our short term landbank stands at c.75k plots, equating to c.5.1 years of supply at current completion levels as at 31 December 2017. During 2017 we acquired 8,040 plots.
  • A key strength of Taylor Wimpey is our strategic land pipeline. This provides an enhanced supply of land at a reduced cost. Importantly, it gives us greater control over the planning permissions we receive.

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