Freeze hits building

Springfield halts rental homes plans for two years

Sandy Adam- Springfield
Springfield chair Sandy Adam

Springfield Properties said it is unlikely to build homes for the rented sector for two years following the Scottish Government’s rent freeze.

The freeze, applicable from next spring, was included in legislation rushed through parliament by the Scottish Greens to protect tenants from rising costs.

However, the decision caused uproar across the property and construction sector which was not consulted. A number of investments have been put on hold as a result of the decision amid warnings that this will result in tenants being worse off as fewer properties will be available.

In a trading update for the six months to the end of November, Elgin-based Springfield said its “plans to deliver homes for the private rented sector (PRS) are unlikely to come forward in the next couple of years following the Scottish Government’s introduction of a temporary rent freeze”.

The company also noted that the rise in interest rates and broader economic uncertainty in the last two months have impacted on reservations for the group’s private housing.

Private house price growth is no longer anticipated in the short term rendering the increase in build costs “more difficult to mitigate,” it said.

These factors are expected to combine to impact the group’s margin and, as a result, the group now expects to report profit before tax for FY 2023 below that of FY 2022.

It said revenues for this current financial year are largely protected by the Scottish missive system, which ensures that customers are contracted into the purchase much earlier in the build programme.

As a result, the group expects to report a strong increase in revenue for H1 2023 and remains on track for good revenue growth for FY 2023.  

However, cognisant of the continued market uncertainty, the board is taking a cautious approach to expectations of sales rates.

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