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Bellway upbeat after homes scheme boost

HOUSEBUILDER Bellway said it has already taken a couple of reservations under the Scottish Government's MI New Home scheme and is confident it will match the success of the NewBuy programme south of the Border which has accounted for 10% of its sales in recent weeks.

HIGH HOPES: Bellway expects more reservations under the MI New Home scheme when sales pick up in spring. Photo: Daniel Lynch/Newscast
HIGH HOPES: Bellway expects more reservations under the MI New Home scheme when sales pick up in spring. Photo: Daniel Lynch/Newscast

The company, which has developments across the central belt, reported a "steady improvement" in home sales north of the Border.

Bellway's profit gains in recent months have largely come from sites in southern England but it is hoping for greater earnings from Scotland as it starts to bring in sites in towns including Motherwell, Dalkeith and East Kilbride.

In a trading update for the 18 weeks to November 30, Bellway said: "Market conditions remain largely unchanged, however, customers' ability to access higher loan to value mortgage finance has improved slightly compared to the same period last year."

Bellway is a participant in the Scottish Government's MI New Home Scheme, which was launched in October after the NewBuy mortgage indemnity scheme was established south of the Border.

A spokesman said Bellway had already had a couple of reservations via MI New Home and it is hopeful it will have similar results to NewBuy once the selling season restarts in spring.

Bellway reported that one in 10 of its sales in the 18-week period had been through the NewBuy scheme.

Under the MI New Home scheme, a housebuilder puts aside some of the sale price for each home into an indemnity fund.

If the property is repossessed and sold for less than the amount of the outstanding mortgage within seven years, the lender can recover some of its loss.

The Government is keen to see a resurgence in housebuilding to help the economy.

Although home completions have been falling, Scottish Government figures show new projects are rising in number.

Bellway said that UK-wide, its reservations have risen to an average of 100 per week, up 6% on the same period last year. The number of sites it is operating has risen to 213 from 205 a year ago.

Bellway is moving towards selling more family homes as opposed to inner city flats and said its average selling price has risen 4% to £195,800 as a result.

Simon Brown, director of equity research at Northland Capital, said: "Whilst the market is undoubtedly challenging, the strategy in place, plus a more expansionist stance by the Government, offers the template for further recovery."

Mark Hughes, analyst at Panmure Gordon, said: "The outlook for this company is relatively positive, with growth forecast in volumes, prices and margins. That said, the underlying growth in units on a per site, per week basis is low, and underlying prices are stagnant.

"So we are hardly in a building boom."

Rival housebuilder Berkeley highlighted the benefits of its strong presence in the London market where property prices have remained high despite the economic downturn.

Chairman Tony Pidgley said: "London in particular is a city which remains a world centre of excellence, culture and business, and is central not just to Berkeley but to a recovery in the wider UK economy."

The company declared a 15p dividend, its first since 2008, after reporting a 40% rise in pre-tax profit to £142m for the six months to the end of October.

A larger capital return is planned for 2015.

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