Housebuilder Gleeson sees strong recovery after Covid downturn

The Sheffield-based firm said its results for the year to June 30 reflected the Covid-19 impact on its historically critical spring to early summer period, when house buying usually hits a peak.

Pre-tax profit for the year to June 30 fell 86 per cent, from £41m to £6m.

Gleeson Homes’ sites and sales offices were closed from March 25 until May 14, when the firm commenced a phased restart. This resulted in a 30 per cent drop in the number of completions and the number of homes sold fell from 1.529 to 1,072. The group racked up Covid-19 costs of nearly £3m.

The average selling price rose slightly from £128,900 to £130,900. Gleeson caters for young families, many of whom are key workers, who are keen to stop paying rent and get on the property ladder.

The group said demand is expected to return in 2021.

Dermot Gleeson, Gleeson’s chairman, said: “Our unique business model is focussed on building high-quality, low-cost homes in the North of England and the Midlands and continues to deliver homes to the people who need them most.

"The majority of our customers are young, first time buyers and around two thirds are key workers, who can now benefit from our recently introduced Gleeson Key Worker Priority Programme.”

Gleeson said it is currently seeing strong demand. It expects this to continue throughout the year, as the demographics of its customer base and its low prices help to insulate it from rising unemployment, the end of the stamp duty holiday and the upcoming changes to the Help to Buy scheme.

When asked how Gleeson would cope if the UK sees a second wave of coronavirus, chief executive James Thomson said: “I think probably differently to how we coped with the first lockdown.

“Through the first lockdown, the Government didn’t intend house building or construction to stop on site. If we do see a second wave, we would certainly seek to maintain construction activity on site.”

He said that Gleeson has adopted a safe working environment, which is outdoors and very low density.

“Part of the reason we chose to close up sites, rather than keep building through the lockdown, was that much of the supply chain shut up shop - the builders merchants and some of our suppliers.

“That is unlikely to happen through a second wave.”

He said the firm will wait for Government guidance on sales offices and showrooms if there is a second wave, but he would hope to keep them open.

Gleeson’s low price points and large number of key worker buyers means it is in a resilient position.

Mr Thomson said: “Our low prices give us a significant degree of insulation, but it’s not just our prices, we’ve also got a very resilient customer base.

“Two thirds of our customers are the key workers in the broadest sense, ie, all of those people keeping us safe, fed and healthy, all the way from lorry drivers to people working in the logistics industry, through to nurses, teachers and police officers.

“A relatively small proportion are in the very high risk sectors of hospitality and travel.”

He anticipates that demand will remain strong.

“It’s cheaper to buy than rent. To buy is half the cost of renting,” he said.

“It would be wrong to be complacent and some of our customers will be affected, but we are seeing relatively low cancellation rates. I think the fact that we build good quality, but really affordable homes, gives us a significant degree of comfort.

“Of course, we will lose some customers, but many more who will then look at Gleeson schemes and might not have done historically.”