Barratt Homes reports £565.5 million in profits

<p>The result reflects a 45 per cent jump.</p>

Barratt Homes has reported a 45 per cent jump in profits to £565.5 million for the year to June 30th.

The FTSE 100 company says the strong results are in part due to improved mortgage availability and government support through its Help to Buy scheme. In addition, the market for new homes has remained strong across Britain and demand continues to exceed supply.

In its final results for the year, the firm said that private house prices rose by 8.7 per cent to an average of £262,500.

Chief executive David Thomas noted that the company was expecting further growth: "The new financial year has started very well; we have a strong forwards sales position," he said.

Since this time last year, Barratt has built 16,447 new homes – some of which were through joint ventures – and it has committed £957 million for around 17,000 more houses.

Commenting on the results, Chairman John Allan said the company had delivered an "excellent" performance.

Barratt will also be paying investors a special dividend of ten pence per share.

On Wednesday (September 9th), share prices for the firm were up 0.75 per cent at 641.75p.

"Sweet spot" for housebuilders

Richard Hunter, who heads up equities at Hargreaves Lansdown, told the BBC that it's a good time to be in the housebuilding market.

"Housebuilders find themselves in an extremely sweet spot at present and Barratt is no exception. A combination of low interest rates, a general lack of new housing supply, rising house prices and increased mortgage availability all play into its hands," he explained.

However, Mr Hunter also warned that if the Bank of England raises interest rates, it could lead to a slowdown in the housing and mortgage markets.

Help to Buy schemes

The government has also announced its latest figures for the take-up of its Help to Buy Schemes, which it said are proving equally popular.

Since it started in April 2013, the Equity Loan scheme has issued 56,402 mortgages. Under this scheme, which only applies to newly built houses, the government takes a 20 per cent stake of a property's value (up to £600,000) and receives its loan back once the property is sold or the mortgage re-paid.

The other programme, the Mortgage Guarantee scheme, has issued 56,401 mortgages since it started in October 2013. Under this scheme, the government underwrites loans of up to 15 per cent of a property's value up to £600,000.

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