McCarthy & Stone sees rise in H1 profits as average sales prices rise

Retirement house builder McCarthy & Stone said it expected first half revenues to be £2m higher year on year at £240m as average selling prices increased although offset by on lower completions.

The company said current forward sales including legal completions were around 16% ahead of the prior year at £487m, supported by 50 new sales releases during the period, up from 32.

“Trading has remained resilient during the first two months of the new calendar year and the new sales releases have performed well,” McCarthy and Stone said.

Total legal completions fell to 7601 units from 8642. McCarthy said these were “constrained as expected by the lower number of new first occupation sites...and ongoing subdued conditions in the secondary market impacting older stock”.

Average selling prices were up 14% to £296,000 reflecting continuing improvements in the quality and location of the company's developments, it added.

Chief executive Clive Fenton warned of “continuing uncertainty” created by the government announcement last year on ground rents.

The government said it would ban builders from selling new homes as leasehold and was considering cutting ground rents to zero to curb a growing national scandal that has seen new property buyers exploited.

Communities Secretary Sajid Javid's proposal was squarely aimed at companies such as Taylor Wimpey, Persimmon and Bovis.

Fenton said McCarthy was "actively engaging" with the government in an effort to secure an exemption from the proposed changes.

"We believe that there is a strong case for a very specific exemption for the retirement housebuilding sector and we are seeking swift clarification on this matter. Until this is received, we continue our planning to mitigate the potential impact on the business, including maintaining discipline around our cash position and adopting a more measured approach to securing land," he said.