Housing group, McCarthy & Stone, has announced its trading update for the 14 month financial year ending October 31 2019 and revealed that underlying operating profit is expected to be in the forecast range of around £64 million to around £71 million.
According to the statement, full year revenue is expected to be around £720 million (2018: £672 million) supported by an around 3% increase in average selling price to around £308,000 (2018: £300,000) and total legal completions of 2,301 units (2018: 2,134).
The firms says that underlying trading conditions remained challenging during the period due to the impact of ongoing political and economic uncertainty on the secondary housing market. “Additional uncertainty over potential stamp duty changes dented transaction levels, particularly in the south east, resulting in higher discount and incentive levels compared to the prior year. These tougher market conditions are expected to continue throughout the new financial year.”
But McCarthy & Stone said that its new rental offering is gaining momentum, achieving recent net reservation rates of around seven per week. Its new multi-tenure options are now available across more than 70 developments nationally. The group delivered 101 rental transactions during the gradual roll out period together with a further 21 “rent to buy” and 47 shared ownership transactions.
The trading statement said that following the successful roll out McStone expects an increased proportion of its 2,100 targeted volumes to come from the rental offering next year. The group is looking to raise around £300 million from investors to put into the retirement rental strategy.
John Tonkiss, McCarthy & Stone’s ceo, said: "While the long-term demand for our products and services remains strong, we have continued to experience challenging conditions in the secondary housing market resulting from the ongoing political and economic uncertainty. The medium term economic outlook will depend on how the UK's EU withdrawal is delivered, but our new strategy has positioned us well to deliver a solid trading performance in a difficult market and respond positively when trading conditions improve.
We are also making exciting progress across our key strategic initiatives as set out last September, particularly rental, where our initial pilots have confirmed strong demand for renting in later life. This is a hugely positive step for the business as it enables our business model to become more resilient and ensures that we are in a strong position to capitalise on future market recovery.
We are committed to finding a high-quality strategic capital partner to co-invest with us in this hugely underserved retirement rental space in order to develop our vision of creating even deeper and longer lasting relationships with our customers."