By Scott Wright

SPRINGFIELD Properties has underlined the need for Scotland to build more energy-efficient homes as a matter of urgency as it unveiled its highest-ever revenue and profits.

Elgin-based Springfield declared there remains an “undersupply of housing across all tenures” in Scotland, stating that the underlying health of the market remains strong despite the rising cost of living and interest rates.

With households facing huge rises in energy costs, even with the two-year, £2,500 per year price cap for typical customers introduced recently by the UK Government, the housebuilder’s chief executive, Innes Smith, said the planning system needs to be reformed to ensure as many energy-efficient homes are built as quickly as possible.

Mr Smith’s comments came as Springfield reported a 10 per cent rise in pre-tax profits to £19.7 million, on revenue up 19% to £257.1m, for the year ended May 31.

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The period saw Springfield, which floated on the stock market five years ago, acquire Tulloch Homes for £56.4m in December. That deal was followed shortly after year-end by the acquisition of the housebuilding division of Mactaggart & Mickel for nearly £50m in June. The acquisitions, which Mr Smith said are integrating well, significantly increased the Springfield land bank and headcount. The latter now stands at around 900 people.

While Mr Smith said the housing market has “softened” recently, following a surge in demand that followed the easing of Covid restrictions, he declared: “There are not enough houses getting built in Scotland. We keep saying it. We don’t build enough houses in Scotland.

“Every year as an industry we are building about 18,000 homes – it should be about 25 [thousand]. Somehow someone needs to fix the planning system so that we can get more houses built. It is especially important now. We build really efficient houses now – our houses are about four times more efficient than a Victorian house, when you look the energy costs.

“We need to build more houses. I really do think that whatever needs to be done, should be done, to make sure we are delivering more houses for people. It is good for the environment, and it is cheaper for the customer.”

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Asked to sum up what was wrong with the planning system, Mr Smith replied: “Effectively it takes too long. We can buy a piece of land and it can be four years before we are building a house on it. It is not just Springfield saying this. Everyone in the industry will say the same.”

Mr Smith said Springfield has been “able to mitigate much of the impact” of materials and supply chain pressures and labour shortages.

However, it reported that revenue and margins in its affordable homes division have been affected by three sub-contractors going bust, as alternative labour and materials secured by the company were more expensive.

The company has temporarily paused signing new long-term fixed contracts because of the ongoing inflationary pressures that are affecting both contractors, which are finding it difficult to not put prices up, and Springfield, in terms of the price at which it delivers homes to the Scottish Government.

Mr Smith said that he hopes the Scottish Government will act to increase the benchmark price for affordable homes when it comes up for review later this year.

“We need to find a way of building affordable houses in an inflationary environment,” he said.

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The company has also paused the expansion of its private rented sector partnership with Sigma, following the introduction by the Scottish Government of emergency legislation to protect tenants, which includes a freeze on rents and moratorium on evictions until at least March 31.

Meanwhile, having completed two major acquisitions in recent months, Mr Smith said Springfield was not actively looking for further deals. “Now is the time for consolidating and focusing on getting the sales out from the sites that we have,” he said. “Never say never but we are quite happy with what we have got at the moment.”

Neither is it actively looking for further land to buy, given how much it now has on its books following the Tulloch and Mactaggart & Mickel acquisitions. The company’s land bank consisted of 16,652 plots on May 31, up from 15,281 a year earlier.

Springfield completed 1,242 homes across its business in its most recent financial year, up from 973 and the first time it has delivered more than 1,000 in a single year. Its consented land bank increased to 8,680 plots, up from 8,010.

The period also saw Springfield deliver its first PRS homes, with the company noting that this had diversified its revenue streams.

The company, which said it expects to report “significant growth” in its current financial year, declared a total dividend of 6.2p per share, up 8% on last year.

Shares closed up 3.5p at 114.5p.