Taxes are hitting us harder than war in Middle East, says housebuilder MJ Gleeson
Inflation and tax changes are hitting housebuilder MJ Gleeson harder financially than war in the Middle East, the firm has said.
The housebuilder said the tax and regulatory burden, combined with inflationary pressures, continued to ‘challenge viability’ and would restrict its near-term profit margin recovery.
MJ Gleeson said the outlook for the new financial year was ‘uncertain’ due to the economic impacts of geo-political events and potential policy changes with a new UK Government.
In a trading update for the year to 30 June, MJ Gleeson said it expects to report an annual profit in line with forecasts, underpinned by a robust performance from Gleeson Homes that offset previously announced delays to site sales in its land promotion arm.
Graham Prothero, chief executive of MJ Gleeson, said: ‘Against the backdrop of a continuing subdued housing market and widely signalled caution in the land market, we delivered a robust operating result.’
Shares in MJ Gleeson have fallen more than 36 per cent in the past year. They rose 1.31 per cent or 3.03p to 236.03p, on Friday morning.
Impact: Inflation and the ‘myriad’ of regulatory and tax changes on residential developments is hitting MJ Gleeson harder financially than war in the Middle East
Gleeson Homes, which accounts for more than 95 per cent of the company’s revenue, completed 1,968 home sales in the year ending 30 June, up 9.8 per cent from a year earlier.
It expects its adjusted annual pre-tax profit for fiscal 2026 to come in at around £10.1million.
MJ Gleeson secured five further partnership deals covering 254 homes in the second half, taking the year’s total to eight partnerships across 384 homes.
Adjusted group pre-tax profit for fiscal year 2027 is expected to average £19.3million, with forecasts ranging from £17million to £21.3million.
Net reservation rates averaged 0.77 per site per week across the year, up from 0.71, but the rate excluding multi-unit deals softened in the second half. The forward order book edged up to 848 plots, MJ Gleeson added.
The housebuilder ended the year with net debt of £2.6million and land creditors of £15.5million, and said it is taking a prudent approach to working capital and site acquisitions amid macro uncertainty.
Prothero said: ‘We cannot predict when the housing market will recover, but we can be confident that, with a much stronger homes business, delivering highly affordable, high-quality homes, and a Land division promoting an enviable portfolio, we are in good shape to leverage the market recovery when it materialises.’
On planning, the firm said: ‘Whilst there have been significant improvements in the wider planning system, much more needs to be done to free up planning bottlenecks which have constrained Gleeson Homes’ outlets, and will result in the business operating from slightly fewer sites in FY2027 than previously planned.’
The group will report its audited full year results on 15 September.
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