"It has been another successful and very active year for the Group with growth across all areas of the business in line with our strategic plan."

Gary Skinner
Managing Director

 

It has been another successful and very active year for the Group with growth across all areas of the business in line with our strategic plan. Revenue, homes delivered and under construction, land plot sales and our land bank have all increased.

Land bank

The Group operates across a diverse land portfolio from town centre developments to major regeneration projects as well as some redevelopment of land located in the greenbelt. This requires a highly experienced and knowledgeable land and planning team and the team we now have in place ensures that we continue to be able to negotiate the complex landscape and deliver consented land both for sale and for our own construction activity.

We sold 837 land plots in the year, comprising 480 plots to private housebuilders, and 357 plots to Housing Associations. Despite these disposals and the 275 house sales in the year, our land bank still increased from 6,776 at 30 June 2017 to 6,870 plots at the year end.

We are continuing to see strong demand on our land sales and where appropriate we are targeting these sales to the major Housing Associations and where our Partnership Housing team can secure the related build contract as part of the transaction. Demand for consented and unconsented land within the London suburbs, home counties and the South-East remains strong amongst the major housebuilders particularly given the decline of the London housing market. The planning system continues to be the single biggest factor prohibiting housing delivery due to sustained lack of investment in the public sector planning departments. This has resulted in an increase in both planning costs and timetable to achieve planning consents. During the current financial year Inland will continue to focus on growing the land bank through the acquisition of brownfield sites and options over greenfield sites in strategic locations throughout the South East. In line with recent years, the pattern of land sales is likely to result in the profits for the year to 30 June 2019 being heavily weighted to the second half.

Total land bank split by type (%)

Houses

Flats

Status of planning (%)

Strategic sites

Planning applications submitted

Pre-application discussions

To be progressed

Unit completion timescale (%)

<24 months

2-5 Years

>5 Years

Construction and sales

An increasingly core business activity is our private housebuilding and partnership homes activities. We completed on 275 open market completions (including joint ventures), an increase of 46% from 188 last year and increased the Partnership Housing equivalent units from 37 to 79, an increase of 114%.

The average sales price of our residential units was £293,000 (2017: £306,000), and we continue to see significant demand from first-time buyers. Help to Buy has been a major influence, with 58% of our sales utilising the Government scheme. The abolition of SDLT for first-time buyers on homes of up to £300,000 has also benefited our sales, with 61% of our buyers purchasing under this price point. A combination of the two schemes and tailored incentive packages from Inland Homes has proven effective, with an increase in visitors and reservations at various sales events. Customer demand for our good quality, affordably priced homes remains strong and the average sales rate per active site during the second half of the year was 1.34 units.

As previously stated, we are committed to improving our housebuilding margins which we believe will come primarily through scale. Already, the increase in the volume of units we are constructing has enabled us to negotiate group deals at discount rates, including rebates, with national material suppliers, driving down our build costs, and alleviating the upward pressure on construction costs.

We believe we now have in place a construction team that can help us deliver on our stated target of building 1,000 homes a year, having added a number of highly skilled people to the team from across the industry. Our staff numbers have increased to 105 at 30 June 2018 from 74 last year. Career progression, long term incentivisation and a good working environment, should ensure that we maintain the quality and strengths of the team going forward.

Validating our Partnership Housing strategy, we secured our largest build contract to date with A2 Dominion, one of the UK's biggest Housing Associations. We sold our site at Church Road, Ashford in Middlesex for £29.7m and simultaneously signed a £65m construction contract for delivery of 357 houses and apartments. Together with our contracts at Alperton and Witley Gardens, Southall our Partnership Housing order book currently stands at approximately £100m for the delivery of over 500 affordable homes over five years.

We currently have 13 sites under construction which are diverse in both location and type of build. At the year end there were 682 homes under construction (including 220 Partnership Housing units) compared to 427 last year with 82 reserved or exchanged representing forward sales of £19.7m. We anticipate a slight drop off in the number of open market completions next year due to the build cycle of our sites. In line with the increasing demand from Housing Associations who have been tasked by the Government to increase the number of homes within their portfolios, we are targeting the delivery of 200 Partnership Housing units during the current year, resulting in an overall increase in total completions.

275

open market completions

837

land plot disposals

682

homes under construction

Sites under construction

Chapel Riverside, Southampton

This riverside regeneration site is being delivered by way of a Development Agreement with Southampton City Council. It comprises of 457, one, two and three bedroom new build apartments plus 64,000 sqft of commercial space. In addition to the construction of the dwellings, there is a high element of civil infrastructure investment required. This includes the construction of a 210 metre long sea wall and the relocation of three water settlement tanks. This project is a lightweight steel frame construction, the first phase will complete in October 2018 with 36 private sale and 27 PRS completions achieved for the year to 30 June 2018. This is a six year development which is expected to complete by 2024.

Chapel Riverside, Southampton has added greatly to our accomplishments on the South Coast, selling out the first phase in just 17 weeks, with an average reservation rate of 2.63 per week. There has been a strong demand in the Southampton area. We have achieved 160 legal completions for the region this year and won the "Regeneration Project of the Year" award for Meridian Waterside, at the prestigious South Coast Property Awards.

Meridian Waterside, Southampton

This brownfield regeneration of the former Meridian television studios is adjacent to the River Itchen in Southampton. The development comprises of 350, one, two and three bedroom new build apartments plus 5,415 sqft of commercial space. Phases one and two were of traditional construction and comprised 96 homes. The final private sale completions in phase two were achieved in June 2018. The remaining 254 apartments in phases three and four are concrete frame construction up to 10 storeys high and piling commenced in August 2018. Completion is expected during 2021.

Lily's Walk, High Wycombe

This brownfield regeneration site on a former gas works in the heart of High Wycombe with sloping terrain presented a range of challenges to overcome. The project comprises 239, one and two bedroom new build apartments plus 15,800 sqft of commercial space and a Town Centre relief road. This four-year project is a concrete frame construction with the first completions due in June 2019.

Wessex Hotel, Bournemouth

The Wessex Hotel site was previously an operating hotel and is within walking distance of Bournemouth town centre on the south coast and will comprise 88 apartments (one and two bedroom) in two blocks together with a new 105-bed hotel where we have entered into a 25-year pre-let with Whitbread for a Premier Inn. This project is light weight steel frame construction over a concrete basement carpark. Construction commences in September 2018 with completion expected in the first quarter of 2021.

Abbey Wharf, Alperton

This is a brownfield regeneration of a former light industrial site adjacent to the Grand Union Canal in Alperton, near Wembley in North West London. A partnership contract was secured with Clarion Housing Association for £30.0m during the year for the construction of 135, one and two bedroom apartments. This project is concrete frame construction and is due to complete in September 2020.

Europa Way, Ipswich

This is a former light industrial site in Ipswich where we secured planning for 94 two, three and four bedroom houses and one and two bedroom apartments. The site was transferred into a 50:50 joint venture with the Anderson Group who are constructing the development and with Inland Homes undertaking the sales and marketing function. The project commenced in February 2018 with the show home opening in October 2018 and first completions due in January 2019.

Bucknalls Lane, Garston

This green belt release site between Watford and Hemel Hempstead comprises 100 two, three and four bedroom houses and one and two bedroom apartments. This project is in a 50:50 joint venture with the existing landowners and Inland Homes. Construction commenced in May 2018 with the show home opening in Autumn 2018 and first completions expected in Spring 2019.

Church Road, Ashford

The former Brooklands College in the town centre in Ashford, close to Heathrow Airport, will be developed into 357 homes (one and two bedroom apartments and three bedroom houses) plus 6,700 sqft of commercial space and 4,700 sqft of educational space. After receiving planning permission in December 2017, we purchased our joint venture partner's 80% interest in March 2018. In June 2018, we sold the site to A2 Dominion for £29.7m and simultaneously signed a £65.1m construction contract for this concrete frame build project. Construction commenced in July 2018 and phased completion is forecast for between 2020 and 2023.

Planning and future pipeline

During the year ended 30 June 2018 new planning approvals and resolutions to grant planning approval had been received for 594 residential units.

Detailed accounts of our key projects at Wilton Park, Beaconsfield and Cheshunt Lakeside, Hertfordshire are set out in the Chief Executive's review.

Gardiners Lane, Basildon

A designated for development site, this is also a joint venture with the Anderson Group on a site in Basildon with the partners having the same responsibilities as at Europa Way outlined above. Phase one comprised of 43 two, three and four bedroom houses and one and two bedroom apartments. This phase is now complete and the joint venture is in the process of purchasing phase two where planning has been procured for 33 homes. Construction is expected to commence in November 2018.

Strategic land

We continued to strengthen our land bank during the year to ensure that our pipeline of prospective projects extends well into the future. We acquired options over 90 acres of strategic land across eight different locations which has the potential for 771 plots and we now have 24 options covering approximately 380 acres of potential development land secured at attractive discounts to market value.