Home Property Taylor Wimpey – onerous ground rents impair profits

Taylor Wimpey – onerous ground rents impair profits

by Deleted Subscriber Content
28th Feb 18 10:15 am

Latest numbers revealed 

Taylor Wimpey has announced an adjusted operating profit of £841.2 million in 2017, up 10.1 per cent on the year before.

However reported profits were down 5.8 per cent at £555.3 million because of a net exceptional charge of £105 million taken to address onerous ground rents on some Taylor Wimpey properties.

Shares fell 4 per cent in early morning trading.

Laith Khalaf, Senior Analyst, Hargreaves Lansdown:

‘Another good year in the housebuilding business has been blighted for Taylor Wimpey by the cost of rectifying onerous ground rents on some leasehold properties.

That aside, rising house prices and the Help to Buy scheme have continued to provide a supportive backdrop for the housebuilding sector. Consequently Taylor Wimpey has been able to announce an increased dividend, though it’s overshadowed by Persimmon’s show-stealing plans on this front which were unveiled on Tuesday.

Looking forward the sector still looks like it’s sailing in calm waters, though there are some clouds gathering on the horizon as interest rates look set to rise. However the housing market is such a key plank in the UK economy that the Bank of England is unlikely to take any action which will significantly damage it prospects.

Affordability remains an issue in many areas for prospective buyers, while at the same time homeowners don’t want to see the value of their properties fall. The most crowd-pleasing answer to this conundrum lies in more modest house price rises and more robust wage growth. The first part of this equation looks to be falling into place, the latter is yet to materialise.’

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