News20.10.23by Alex DanielBritain’s eight largest house builders have paid shareholders more than £16bn in the past 18 years, according to research, with dividend growth vastly outstripping that of new housing over the same period.Research shows Britain’s eight largest house builders have paid shareholders more than £16bn in the last 18 years (picture: Alamy)SharelinesResearch shows Britain’s eight largest house builders have paid shareholders more than £16bn in the past 18 years #UKhousing Dividend payouts were 260% higher last year than in 2005, totalling £1.8bn, according to analysis by Sheffield Hallam University (SHU).
Meanwhile, the number of new homes built annually was just 23% more between the same years, standing at 82,288 in 2022.
Dr Tom Archer, research fellow at SHU who co-authored the report, said: “Money is being lost from the housing system as shareholders extract huge returns, with little sign of this flowing back in to support new development.
“This raises serious questions about why reinvestment has not been prioritised to help increase the supply of affordable homes.” The Centre for Cities thinktank estimates that, compared to the average European country, Britain has a backlog of 4.3 million homes that are missing from the national housing market.
Meanwhile, the top eight house builders accounted for about 40% of all newly completed homes in the UK last year, according to figures from the Office for National Statistics.
The research, co-authored by Dr Archer and Ian Cole, emeritus professor of housing studies at SHU, tracks the performance of house builders Barratt Homes, Taylor Wimpey, Persimmon, Berkeley Group, Bellway, Redrow, Bovis and Crest Nicholson over the past 18 years, accounting for consolidation between the companies’ predecessors during the period.
The analysis calculated that if dividend payments and share buy-backs had been reinvested in productive activity, tens of thousands of new homes could have been developed.
On average, in 2022, the largest house builders paid £22,428 in dividends for each new home built, it said. By comparison, in 2005, the figure was £5,230, while after the financial crash in 2013, it was £4,561. Meanwhile, in 2022, dividend payments constituted 47 per cent of profits before tax, the report added, compared to 16 per cent in both 2005 and 2013.
The report called for “structural reform” in the housebuilding industry, and “a shift away from maximising shareholder value toward increasing stakeholder value”.
“This would necessitate a change in the patterns in ownership, operation and ethos of companies that provide essential public goods and services.”
Steve Turner, executive director of the Home Builders Federation, defended house builders’ records.
He pointed to the cyclical nature of housing supply and builders’ profits, and suggested that any analysis should not compare figures from before the financial crisis with those of today.
Mr Turner told Inside Housing: “Following the financial crash, supply collapsed and many housebuilding companies failed to survive and those that did posted losses.
“In the decade that followed, the industry doubled supply and firms moved back into profitability. Successful companies attract investors that allow greater investment in land and skills and local communities as more homes are built.”
Inside Housing approached the eight house builders for comment.
Bovis, Persimmon, Redrow and Bellway all declined to respond to the research.
Bovis became part of Vistry Group in January 2020.
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