The British housebuilder Vistry is to shift its focus solely to social housing as soaring mortgage costs hurt sales completions across its wider business.
The strategic shift was welcomed by investors, which sent shares in the company – which acquired the affordable housing specialist Countryside Partnerships last year – soaring by almost 14%, making Vistry the biggest riser on the FTSE.
Vistry said streamlining its operations would result in some job cuts, while promising investors a £1bn windfall over the next three years as a result of the strategic shift.
It said the UK was facing a “chronic shortage” of affordable houses.
“The scale of the social need for affordable mixed-tenure housing across the country continues to increase,” said the Vistry chief executive, Greg Fitzgerald. “Delivering on the acute social need for housing across the country and increasing the availability of affordable, sustainable homes is at the core of the group’s social purpose and vision.”
The housebuilder reported an 8% fall in pretax profits to £174m in the first half of the year, despite a 32% increase in completions.
Vistry said it continued to see “good demand” for affordable housing from bodies including local authorities. By contrast, private sales had slowed further since June, the company said, as mortgage costs continued to soar for prospective homebuyers.
“The step-up in mortgage costs and increased macroeconomic led to a drop-off in completions to the open market,” the company said. “In particular, we saw a significant decline in completions to first-time buyers whose ability to purchase have been most affected by the rate increases.”
As mortgage approvals and house prices continue to fall at the fastest rate since 2009, the company said it intended to merge its affordable and private housebuilding operations by the end of this year, to focus on its “high-return, capital-light, resilient” affordable housing model.
Vistry indicated that the merger of its businesses would result in job cuts, with plans to launch an employee consultation to reduce the total number of regional business units it operates from 32 to 27.
The company laid off 4% of its more than 3,000 staff when it completed its £1.27bn acquisition of Countryside Partnerships last year.
Vistry reiterated its full-year guidance of achieving £450m in profits this year.
