14th Mar 2022 14:11
(Alliance News) - Shares in London-listed housebuilders were on the up on Monday, amid hope of a cheaper than anticipated final cladding bill.
In London on Monday afternoon, Persimmon PLC shares were up 5.9% at 2,299.00 pence each, Taylor Wimpey PLC was up 3.8% at 139.50p, Bellway PLC was up 3.2% at 2,856.00p, while Vistry Group PLC was 3.7% higher at 1,004.50p.
The Telegraph over the weekend reported that final cost projections on cladding could be lower than GBP1 billion. The newspaper said the UK House Builders Federation hired PwC to conduct an audit on homes with cladding issues across Britain.
It followed the UK government predicting the final cost of cladding remediation could amount to GBP4 billion.
https://www.telegraph.co.uk/business/2022/03/13/cladding-talks-hit-wall-developers-attack-marxist-demands/
Developers in the UK must agree a GBP4 billion plan to fix dangerous cladding on low-rise flats by early March or risk new laws forcing them to act, Housing Secretary Michael Gove said back in January.
The Cabinet minister threatened that he is "prepared to take all steps necessary" to fix the "broken system".
Analysts at Liberum commented: "The housebuilders' shares have been depressed by the ongoing negotiations between the industry and government about who will pay to remedy unsafe cladding on buildings.
"This news story is positive for housebuilders' shares as it suggests that resolution will be reached soon, and also that the total bill will be much less than GBP4 billion and that the bill will be widely shared, so that it is not only the listed builders that pay."
Cladding represents a large cloud of uncertainty for housebuilders, potentially deterring investors from buying into the sector.
While a cheaper cladding bill is good news, housebuilders face other pressures.
"Removing the uncertainty around cladding, at a cost that is much better than the worst-case scenario would be helpful. However, we believe that renewed performance may wait until investors have a better understanding of the macro-economic impact of rising costs on consumers' finances and appetite for home buying. 2022 has started very well and housebuilders are likely to be ahead of where they need to be to hit 2022 consensus earnings," Liberum added.
By Eric Cunha; [email protected]
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Related Shares:
PersimmonTaylor WimpeyBellwayVistry Grp