Shares in Vistry (LON:VTY) rallied after the partnership housing group was named as one of 33 strategic partners who’ll help deliver the government’s new £39 billion Social and Affordable Homes Programme (SAHP).
Vistry owns Bovis, Linden and Countryside Homes. The company has secured a £350 million affordable housing grant. Furthermore, the award reinforces its position in the UK government-backed housing sector.
Homes England is the government’s housing and regeneration agency. It said the SAHP represents the largest investment in social and affordable housing in a generation.
Although they weren’t named as strategic partners, rival builders Persimmon (LON:PSN), MJ Gleeson (LON:GLE), Taylor Wimpey (LON:TW) and Crest Nicholson (LON:CRST) caught a bid on the positive sector read-across.
Much-needed stimulus
Homes England reconfirmed Vistry is one of its 33 strategic partners on the Why Vistry shares are moving higher today: Bovis, Linden and Countryside Homes owner secures £350m affordable housing grant which reinforces position in UK government-backed housing sector.
Homes England reconfirmed Vistry was one of its 33 strategic partners on the SAHP. The firm has also secured the maximum direct grant under the first allocation of funding made available as part of the plan.
The FTSE 250 housebuilder said: ‘The initial funding of £350 million, the largest award possible in this phase, is significantly in excess of the first award received under the previous programme.’
| Ticker | Share price | Gain (%) | |
| Vistry | VTY | 318p | 18.4 |
| Persimmon | PSN | £11.74 | 1.2 |
| MJ Gleeson | GLE | 272.2p | 0.07 |
| Crest Nicholson | CRST | 67.3p | 3.1 |
| Taylor Wimpey | TW | 84.4p | 1.4 |
Source: Google Finance
Furthermore, Vistry said the grant will enable the delivery of over 3,000 affordable homes. This is ‘well ahead of what was possible under the first phase of the last programme.’
CEO Adam Daniels said: ‘Vistry has received direct grant funding awards under successive affordable homes programmes for nearly twenty years, and this award reflects our established track record and commitment to delivering much needed affordable homes in collaboration with Homes England and our partner providers.
‘We are delighted that Homes England has made this significant announcement that will create over 73,000 new homes and provide Vistry, its partners and the wider sector with a much-needed stimulus.’
Once-in-a-generation opportunity
Amy Rees, CEO of Homes England, said: ‘The strong demand for SAHP funding demonstrates the sector’s ambition to deliver as part of this once-in-a-generation opportunity to come together, alongside partners funded through the programme’s alternative (CME) route, to deliver thousands of social and affordable homes for people, families and communities across England.’
Today’s news has provided Vistry with a much-needed boost. However, we would continue to avoid the shares for now. Only last month, Vistry announced it expected to make a loss before tax of £30 million for H1. Worryingly, the company also announced the resignation of CFO Tim Lawlor.
We remain cautious on the housebuilding sector. The industry is beset by weak confidence, planning delays, rising input costs and a poor outlook.
In common with its rivals, Vistry is facing a prolonged slowdown in the new-build market. In addition, the group has been selling properties at a discount and delaying work in progress to generate cash.
