8th Jul 2022 09:39
(Alliance News) - Vistry Group PLC on Friday reported a strong first-half, though it joined peer Persimmon PLC in warning on difficult regulatory conditions.
Vistry said planning "remains the single most significant constraint on the business". It noted a tricky political and regulatory environment, particularly around nutrient neutrality - which is essentially an issue surrounding the impact developments have on rivers, wetlands and estuaries.
Developments are only allowed if they are "nutrient neutral". Local governments across the country have been hit by capacity problems, however, slowing approvals.
"We are responding proactively by factoring longer lead times into our site forecasting, which enhances our control, and increasing our senior expertise in these areas. Our strong balance sheet and breadth of operations provide confidence and resilience to cope with any specific issues," Vistry added.
According to the Planning Advisory Service, part of the UK's Local Government Association, areas in south of England, including Portsmouth, Poole, Salisbury and Winchester are "nutrient advice areas". Regions such as Hornsea, Middlesbrough and Hartlepool, along the Yorkshire coastline, are also designated areas.
Persimmon on Thursday said there are roughly 120,000 development plots across the industry which are currently stalled due to neutrality guidance. It warned that uncertainty will continue, should there not be any "firm guidance" from the government.
Persimmon said it has 1,500 plots affected by the issue.
Vistry on Friday said it is factoring "longer lead times" into its site forecasts.
Hargreaves Lansdown analyst Matt Britzman commented: "Though the group's still expecting to hit the top end of guidance on underlying profit before tax at the group level. Planning permission, given a lack of capacity at local authorities was also called out – not for the first time this week as Persimmon suggested similar issues."
For 2022, adjusted pretax profit is expected to be at the top end of market forecasts, around GBP417.0 million, which would be up 21% from GBP346.0 million in 2021.
Vistry shares were 1.5% higher at 825.50 pence each in London on Friday morning. The stock has fallen 30% so far this year, however.
Sentiment towards the housebuilding sector has weakened as investors fret about the effect of rising interest rates, which make mortgages more expensive. The sector enjoyed rampant progress after emerging from the first Covid-19 lockdown in 2020, and there is an expectation that growth will weaken over the coming months.
By Eric Cunha; [email protected]
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