Redrow calls for state help on mortgages

City A.M. Reporter
THE head of housebuilder Redrow called on the government to take action over the sickly first-time buyer market in a bid to revive overall sales, after reporting better-than-expected annual results.

Steve Morgan, the founder of Redrow who returned in a boardroom coup last year, described state intervention as a “no-brainer” due to low mortgage availability thwarting new home sales.

“I strongly urge the government to intervene by way of insurance indemnity schemes to enable lenders to provide 95 per cent mortgages to first time buyers, or at the very least, providing the first-time buyer a tax break,” said Morgan.

Mortgage availability has remained depressed since the credit crisis, meaning that first-time buyers typically need a deposit of 20 per cent, from an average six per cent before the crisis, he added.

House price growth and mortgage lending has stalled in recent months, leading to renewed fears of an economic slowdown.

“An insurance policy will cost the government next to nothing, this will stimulate the market and generate revenues, it will get the economy going… it will increase mobility and labour,” said Morgan.

“It is actually a no-brainer to get the housing market back again,” added the housing industry veteran, who also runs Wolverhampton Wanderers football club.

Morgan’s comments came as the company reported a full-year pretax profit of £700,000, against last year’s pre-tax loss from trading operations before exceptionals of £44.2m and a total pre-tax loss of £140.8m.

Economic uncertainty from government spending cuts and tax increases have hit consumer confidence since the general election in May, and dented house sales.

Now all eyes are on the key autumn trading period for signs of renewed interest.

Morgan said sales in the first eight weeks of the financial year, including the first week of September, were down in single-figure percentages on last year.