The boss of Britain’s biggest housebuilder expects half-year adjusted pre-tax profit to increase by about 7 per cent, boosted by resilient demand for its affordable homes from housing associations and the rental sector.
Greg Fitzgerald, chief executive of Vistry, switched the FTSE 100 developer last year to building homes for housing associations and local authorities in anticipation that the government would soon have to throw money at fixing a significant cause of the country’s housing crisis: a lack of affordable homes.
“It’s costing billions of pounds a year, people sitting in Travelodges and Premier Inns across the country,” Fitzgerald, 60, said.
“I looked at it and thought, whichever government comes into power, they are going to have to concentrate on this area. I hoped Labour would get in. What Labour has said since we announced our strategic change and during the election campaigning has been music to my ears.”
Although it can trace its roots back to the 1800s, Vistry as it is today was formed by the merger of Bovis Homes and the housebuilding division of Galliford Try back in 2020. Most recently, Vistry bought Countrywide, another partnerships builder.
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Last year, Fitzgerald went all-in on “partnerships” — building homes predominantly for local authorities, housing associations and institutional landlords rather than the private sale market.
Because those partners forward-fund most of the development and act, in effect, as a guaranteed buyer when the homes are ready, Vistry does not need to adjust its build rates to match demand like most other developers do.
While the majority of its rivals have been building fewer homes and reporting smaller profits because of the prolonged market slowdown, Vistry built 7,750 homes in the opening six months of this year, an increase of 8 per cent compared with the same period of last year.
In a trading statement covering the first half of the year, Vistry said it expected adjusted pre-tax profit to be up about 7 per cent to about £186 million. Over 2024 as a whole, it expects to surpass the £487.9 million operating profit it turned last year and build in excess of 18,000 homes, comfortably more than any other British builder. The group will report its half-year results in September. Fitzgerald said the numbers were proof that Vistry is “significantly outperforming” its more traditional peers.
Anthony Codling, an industry analyst at RBC, expects Vistry’s focus on build rates rather than sales rates to make it “the teacher’s pet of the Labour government”. Fitzgerald agreed that Vistry was “extremely well placed to support [Labour’s] ambition of delivering the biggest boost to affordable housing in a generation”.
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Codling’s concern is that, although the partnerships model is, in theory, more stable, Vistry will miss out when the private for-sale market recovers. However, Vistry, which still sells about a quarter of its homes into the open market, said “ongoing macro and political uncertainty and the higher interest rate environment” was keeping many would-be buyers on the sidelines.
Gregor Kuglitsch, a housebuilding analyst at UBS, suggested that Vistry would need its private sales to pick up as the year wore on to hit its profit guidance, although Fitzgerald denied this. “Our guidance is based on the current sales rates, but do I think [sales] will pick up a bit? Yes, I do.”
Vistry shares fell 21p, or 1.65 per cent, to close at £12.71 on Tuesday, valuing the company at £4.3 billion.
