Bovis builds record profits as skills squeeze eases

Builders have been taking on apprentices and even turning to sources such as army veterans for workers

Builders have been taking on apprentices and even turning to sources such as army veterans for workers (Getty)

Bovis Homes overcame rising wage costs to post record results yesterday, and said an easing of the industry’s skills squeeze was in sight.

The housebuilder suffered a 7 per cent rise in labour costs in 2014, when firms were stepping up construction to cope with demand caused by the Government’s Help to Buy subsidy scheme.

Builders have been taking on apprentices and even turning to sources such as army veterans for workers.

Bovis chief executive David Ritchie said the labour market was “still constrained”. But he added: “Over time that labour is starting to come back into the sector. We’re seeing more trainees, people coming back and people coming from overseas again, from Europe, and that will help increase supply.

“In terms of my business, it’s certainly one of the things we talk about a lot – how we’re going to build an increased number of houses this year when labour is this tight.

“The supply chain only reacts over a period of time. That supply chain is reacting, it is adjusting – and that brings more labour into the market.

“This will sort itself out in the relative near-term. More fundamentally in the long term [the issues are] good quality mortgage finance available to first-time buyers and a land planning system releasing sufficient land to allow us to build the number of houses demanded by the Government.”

Bovis posted pre-tax profits of £133.5m for 2014, up 69 per cent, after selling a record 3,635 homes. The dividend more than doubled to 35p and Bovis will pay at least as much this year.

Bovis had robust trading in the first seven weeks of 2015, with 479 private sales against 468 in the same period last year. However, it expects the market to cool around the looming general election.

“When the media starts getting focused on the hustings, people tend to get a little bit distracted – you can understand why people would not make a huge life decision like buying a house. We are doing all we can to get ahead of the game in the first three or four months of the year.”

Mr Ritchie has swollen its consented land bank by 23 per cent to 18,062 plots over the past year, but also hit out at accusations from Labour that housebuilders are hoarding land. The Labour leader Ed Miliband has threatened the industry with a “use it or lose it” policy if he wins in May.

“We are buying land to do one thing – and that is build homes. I can’t afford to buy land to just sit and look at it.”