Britain’s Vistry to focus solely on building affordable homes

By Aby Jose Koilparambil and Suban Abdulla

(Reuters) -British homebuilder Vistry said on Monday it will shift its entire focus onto its affordable homes business as a slowdown in the country’s broader housing sector intensifies.

Shares in the builder rose about 11% to a more than one-year high of 893 pence in early trade.

British housebuilders are increasingly feeling the pinch from the Bank of England’s 14 consecutive interest rate hikes, which have hit profit margins and demand as buyers cope with elevated mortgage costs and affordability concerns.

Industry gauges, from mortgage approvals to house prices, have fallen in recent months. Mortgage lender Halifax last week reported a 4.6% annual drop in house prices, the fastest pace since 2009.

Vistry has been working with local government authorities and housing associations to build affordable homes and this Partnerships division has outperformed its Housebuilding unit, which operates on similar lines to rival builders.

“The scale of the social need for affordable mixed tenure housing across the country continues to increase and it is clear that Vistry is uniquely positioned as the leader in partnerships housing,” CEO Greg Fitzgerald said in a statement.

The FTSE 250 firm said it would merge its Partnerships business with the Housebuilding operations by the end of the 2023 fiscal year to focus on this “high-return, capital-light, resilient” affordable-housing model.

“The shift in strategy removes any doubt about Vistry’s mixed model. It focuses the group on a less volatile part of the

housing market where need is very high,” Peel Hunt analysts wrote.

Vistry had bolstered its Partnerships business with its 1.25 billion pounds ($1.56 billion) acquisition of rival Countryside last September.

The company said it would aim to return 1 billion pounds to shareholders over the next three years and intended to launch an initial share buyback programme worth up to 55 million pounds in November.

Vistry, one of the biggest British housebuilders in terms of the number of homes built each year, reported a drop of more than 8% in adjusted pretax profit to 174 million pounds for the six months ended June 30. It reiterated its forecast for annual pretax profit to exceed 450 million pounds.

($1 = 0.7994 pounds)

(Reporting by Aby Jose Koilparambil in Bengaluru and Suban Abdulla in London; Editing by Rashmi Aich and Louise Heavens)

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