Sheffield-based affordable house builder MJ Gleeson plc said it has set out a new strategy including a scale-up of its Gleeson Homes business “including an objective of delivering 3,000 new homes per annum in the medium-term and exploring opportunities to deliver homes in partnership with blue-chip third parties.”
Gleeson Homes has entered into its first partnership agreement, with further transactions under negotiation, and it has a “broad pipeline of opportunity.”
In a trading update for the year ended June 30, 2024, MJ Gleeson said Gleeson Homes delivered a “robust” performance, completing the sale of 1,772 new homes during the period, an increase of 2.8% on the prior year.
The division is expected to report an operating profit of £30 million, ahead of market expectations.
MJ Gleeson said of its Gleeson Land division: “Notwithstanding the continuing challenges in the planning system Gleeson Land sold four sites during the year.
“The timing of the general election, which coincided with the period-end, resulted in the deferral of a significant disposal which is now expected to be completed in FY2025.
“Gleeson Land is expected to report an operating profit of circa £2m, below market expectations.
“Gleeson Land’s portfolio of sites as at 30 June 2024 includes seven sites with either planning permission or resolution to grant and which have the potential to deliver 1,473 plots (30 June 2023: 6 sites, 1,400 plots).”
In its outlook, MJ Gleeson said: “Gleeson Homes’ sales rate over the last six months was steady but less vigorous than expected as a consequence of deferred expectations around interest and mortgage rate reductions. Looking ahead, the board expects that, as rates start to fall, demand for new homes will strengthen through FY2025.
“The board remains confident of its medium-term objective as growth accelerates into FY2026 from the multiple outlet openings scheduled in FY2025.
“With a good number of prospects, and in a more stable operating environment, Gleeson Land is confident of a strong performance in FY2025.”
MJ Gleeson CEO Graham Prothero said: “We have delivered a solid overall performance with Gleeson Homes exceeding expectations in what has been a challenging year.
“We are making progress against our key strategic priority of significantly scaling up our operations over the medium-term. Looking ahead, we are anticipating an increase in demand for new homes as interest rates begin to come down and consumer confidence returns. We also expect Gleeson Land to complete on a number of significant land disposals in the months ahead.
“The agreement of our first partnership site is an exciting development. We are encouraged by the number of discussions currently underway with further potential partners and look forward to updating the market on progress in due course.
“We also welcome the chancellor’s comments regarding mandatory housing targets, planning reform and other measures to increase substantially the supply of new homes.
“There is much to do if aspiration is to become reality, but the determination that we have seen since the election to get things done marks a positive change in approach. Gleeson is ready to play its part in delivering much needed affordable homes.”