Henry Boot increases dividend amid optimism over UK housing market

Property developer Henry Boot has hiked its final dividend as it struck an optimistic tone on the outlook for the UK housing market in 2024.

The Sheffield-based firm declared a 4.4p per share dividend on Monday, bringing its total dividends for 2023 to 7.33p per share, a 10 per cent rise on the previous year.

Although the group anticipates a ‘lag in performance’ this year and is cautious about the near-term trading environment, it ‘feels the economy has turned a corner’ given inflation is falling and interest rates are ‘trending down’.

Reward: Property developer Henry Boot has hiked its final dividend amid expectations that conditions in the UK housing market will get better over the coming year

Consequently, it believes housing and residential land demand should increase, as well as investor interest in the commercial property and buy-to-rent markets.

But the business, which designed and built Pinewood Studios, warned that planning delays and uncertainty ‘will continue to be a problem,’ while the upcoming General Election presents further unpredictability.

Tim Roberts, chief executive of Henry Boot, said: ‘We are not immune from the challenges that the UK economy presents to the near-term trading environment.’

Last year, the company’s construction division saw operating profits slump by almost half to £6.5million due to a slowdown in building activity, especially private housing.

It was further impacted by subcontractor issues and delays in receiving building materials on two large-scale projects in Sheffield.

Henry Boot’s total pre-tax profits declined by 18 per cent to £37.3million last year despite turnover expanding by 5.3 per cent to £359.4million following strong results by its land promotion and property investment segments.

The former business benefited from the disposal of 125 plots at a site in Tonbridge, Kent, to housebuilder Cala Homes and the latter was bolstered by higher sales volumes at subsidiary Stonebridge Homes.

Roberts said: ‘Our focus on high-quality land, commercial property development and housebuilding in prime locations has meant demand for our product remained resilient.’

Trading conditions in the housing market started slowing during 2022 when the Bank of England hiked interest rates on multiple successive occasions in response to skyrocketing energy prices sending the UK inflation rate to their highest levels in about four decades.

Former Prime Minister Liz Truss’s mini-budget then caused a brief collapse in home sales and a large withdrawal of mortgage deals from the market.

Confidence across the property sector remained low throughout much of last year before recovering over the second half as inflation fell and the BoE ended its rate-tightening cycle.

Henry Boot Group shares were 1.1 per cent lower at 182p on early Monday afternoon, meaning they have declined by around 15 per cent since the year started.

This post first appeared on Dailymail.co.uk