Taylor Wimpey sounds affordability warning despite profit hike

Taylor Wimpey has posted a 22 per cent increase in pre-tax profit but warned that completions will tumble this year as higher mortgage rates affect demand.

Full-year results to the end of 2022 show profit before tax was £827.9m, up from £679.6m last year, on the back of improved sales and signs of stabilised customer confidence.

However, the homebuilder said it expected completions this year to be between 9,000 and 10,500 – down from 14,154 last year – and these would be weighted towards the second half of 2023. Its reservation rate will also be “significantly lower” than in previous years.

“While it is encouraging to see an uptick in sales and ongoing robust customer interest in our homes, as previously announced, our reservation rate is significantly lower than in recent years as affordability concerns weigh, particularly for first-time buyers, and we have reflected this in our build programmes for the year,” it said.

Earlier this week, pre-tax profit at rival Persimmon fell by 24 per cent, reflecting the impact of a £275m post-Grenfell building safety provision.

In its results, Taylor Wimpey said it had already committed £245m to cladding remediation and was now in final discussions with the Department for Levelling Up, Housing and Communities, with a view to signing the long-form agreement which would make the principles of the Building Safety Pledge legally binding.

Levelling Up secretary Michael Gove has told developers they have until 13 March to sign a cladding remediation pledge or risk being frozen out of the market.

Taylor Wimpey chief executive Jennie Daly (pictured) said the company had delivered a strong financial and operational performance in 2022 with full-year operating profit in line with expectations.

“We are particularly pleased to have delivered a strong operating profit margin as a result of tight operational controls and price discipline,” she said. “In a year marked by two distinct halves, we acted quickly and decisively to address rapidly changing market conditions in the second half of the year and continued to focus on operational excellence and efficiency.”

While the weaker economic backdrop continued to impact the near-term outlook, Daly claimed that customer interest in Taylor Wimpey homes remained high and, although it was still early in the year, trading had shown some signs of improvement compared with the last quarter of 2022.

“Looking forward, we have a strong proposition that is clearly recognised and valued by our customers, supported by our sharp operational focus and highly experienced teams,” she said.