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Business & Economy

Housebuilder Bellway to close Newcastle sites as housing demand plummets

Housebuilder Bellway has announced that it will close all of its sites by Friday (March 27), citing fears for on-site safety and plunging demand for new housing amid the COVID-19 lockdown.

The Newcastle developer — which is the UK’s fourth biggest housebuilder by turnover — has warned that it expects demand to plummet off a “cliff-edge” as strict new lockdown measures come into force amid the coronavirus crisis.

Sales are reported to have plunged by around 40 per cent this week, while cancellation rates doubled to around 30 per cent, with the housebuilder blaming the Government’s strict new social distancing measures for the loss in interest among members of the public.

As a result, the developer confirmed this week that it has decided to close its 200 Newcastle building sites by close of business on Friday March 27.

Although construction sites are currently one of the few workplaces that are allowed to remain open in the UK, Bellway argued that concerns about social distancing on site left them with no other option.

The group also reported having severe difficulty obtaining building materials for ongoing projects, following the closure of builders’ merchants and disruption to deliveries.

On the decision to shut construction sites, chief executive Jason Honeyman said: “The health and safety of our employees, sub-contractors and customers is our priority.

“We closed all of our newer developments last week and have started the process of closing our remaining sites. We expect that this will happen by lunchtime on Friday.

“We weren’t convinced we could police the social distancing or keep workers two metres apart at sites.

“There’s always some people who ignore it.”

The company is now taking immediate action to stabilise its finances, including pausing the acquisition of new sites for housebuilding, and announcing that it will postpone a decision on paying an interim dividend until later in the year when the crisis has eased.

The firm also hopes that strong performance early in the year will help shore it up over the coming months, stating that it had seen “solid results” over the prior six-month period, including a record 5321 home completions and a strong balance sheet with net cash turnover of £4.6 million.

A spokesperson added: “Longer term, the group has the ability to be highly cash generative should we enter a prolonged period in which land and work in progress spend are curtailed.”

Bellway is not the only housebuilder to make the decision to close sites. Developer Persimmon also confirmed it is also starting an “orderly shutdown” of its construction sites in the North East.

However, Persimmon also confirmed that it would continue with essential work to make partly finished homes safe, to ensure customers are not left in a vulnerable position during the outbreak.