Housebuilder Barratt Developments today announced it has temporarily laid off 85 per cent of its staff through the government coronavirus job retention scheme.
Furloughed employees will receive full pay until at least the end of next month, the company said this morning.
The developer also said both the executive and non-executive teams had agreed to a 20 per cent pay cut until work resumes on building sites, and there will be no salary rise or increase in fees next year.
Barratt had already cancelled the payment of a £100m interim dividend, and suspended capital expenditure, land buying and recruitment activity in order to conserve cash.
The group has around £450m in cash, with total committed facilities and private placement notes of £900m.
Between 23 March and 12 April Barratt completed 1,349 homes, bringing the total for the year to 11,713 homes.
The company has forward sales of 12,376 homes at a value of £2.89bn. However while its sales centres and construction sites are closed further home completions and reservations will be “very limited”.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: “ Construction has ground to a halt, and the disruption means the likes of Barratt Developments are facing the double whammy of falling demand and prices.
“With revenues and profits squarely in the firing line, the group’s doing the right thing by trying to preserve cash.
“The biggest question will be how long the disruption lasts – a short-term shock will be painful, but manageable for the balance sheet. A long-term shut down could raise some trickier questions.”
She added: “The challenges faced by the housebuilders will not all be fixed once construction is allowed to start up again.”