Taylor Wimpey plc (LON:TW)
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Apr 29, 2026, 5:14 PM GMT
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Trading Update
Jan 14, 2021
Good morning, and welcome to the Taylor Wimpey Plc Trading Update Call. Today's conference call will be hosted by Taylor Wimpey Chief Executive, Pete Redfern and Group Finance Director, Chris Carney followed by a Q and A. I will now turn the conference over to Pete Redfern, Chief Executive. Please go ahead.
Thanks very much, and thanks, everybody, for joining us. I think we see this as a fairly straightforward, very much a trading Call rather than anything deeper. Obviously, we gave you a very full run through in November and moved kind of guidance and expectations for 2020 and 2021 materially. This is more of a sort of reassuring that that's all in line. Very happy to talk about how we see current Trading current market and our views for this year in terms of the market, but I don't think there's any dramatic new news.
But I think overall, we feel very positive about how The last couple of months since our trading updates have gone, very much the plan that we set out on cost savings and how we want to run the business and investments in land I've continued to follow the track that we set out there, and we see good evidence of the execution of those things, sort of, and I think particularly the land We'll continue to jump out at you, which I will come back to. First of all, running sort of over the 20. Sales prices probably will be the number That surprises you the most, and I will come back to that as we look forward, but up around 6%. The biggest part of that It's around mix, but we did continue to push price through the second half of the year. And that 6% is after Setting the care worker discount 5% on those plots, but a cost of about €20,000,000 on sort of revenue next year.
So even with that, we Still see a meaningful sort of improvement in price. Construction activity remained sort of very much in line with what we set out in November, Pretty much at normal levels through to the year end and beyond. And again, I'll talk about that a bit more when I talk about 2021, But no sort of material change. We still see sort of friction at a site level in terms of making it more difficult for our guys to manage, But not enough to impact on the level of construction that we saw through to the end of the year or that we expect. And I think sort of particularly reassuring that our WIP levels, sort of particularly as we look at vertical WIP, sort of driving completions through early 2021, ended the year In a good place, I'd say probably slightly ahead of what we would normally expect rather than behind.
And I think sort of our tactics have been slightly different to others in terms of focusing on ability to sort of move the business forward through 2021 and beyond, and actually pushing our guys to do the right build last year rather than maximize The last completions last year, I think Lisa's in a good place. You can see in the stats that helped by 2, which for us So we were able to use in a formal reservation way sort of only from about the 15th December, sort of Help the post November sales rate to about 0.92, so ahead of the year to date and ahead of the rest of the second half. I think if you stand back from that, because obviously, we said to you in November that we felt sales rate was slightly depressed Because we didn't have helped by any effects through the previous few weeks, that catch up could have risked exaggerating it. If you smooth that out over the period, I think we saw a very solid, but relatively normal sales rate through that period. And I think as we go into 2021, I would still say that construction slightly lags where our order book is overall as we still catch up from the Q2, but not by a lot.
So Yes. We expect a more normalized sort of performance as we go through this year. Availability is not quite normal, but it's getting there. And so we have a sort of relatively clean entry, I think, into 2021 in terms of those stats. And we were pleased that the outlook numbers remained stable, Obviously, with the slowdown in activity and slowdown in some areas in planning activity, risks that new outlet openings sort of been affected in the final quarter.
But again, because our focus was very much on the sort of forward position in the medium term, I think we devoted more time and effort to getting out that numbers Open through late 2020 and to create that stability. Still see that 2021 might see a small dip and then start to grow materially as we set out in November, but probably slightly less of a risk than we saw sort of a couple of months ago. And as I say, land purchases sort of continued at a high level post the November trading update. Yes. To give you sort of context, €1,300,000,000 of new land approvals equates to A normal year's land purchase plus the £500,000,000 capital raise, all committed in roughly a 7 month period And all that sort of returns and margins, but very much sit in or slightly above our sort of longer term guidance for financial performance.
So Very pleased with that. I'm very pleased with the breadth and mix of those sites with, as we said before, more smaller sites, but still sort of decent number of strategic sites I think sort of our take on that hasn't changed. We expect land purchases through the next year to remain positive, but more like normal levels. We don't expect to run at that run rate sort of into 2021, but it also isn't the case of we make those sort of additional purchases And then sit back and sort of see them slide backwards. We expect to continue to drive normal levels of land purchase through this year broadly.
Obviously, will be opportunity led, but that's our broad expectation. If I then look at 2021 and beyond, and I've obviously touched on a Couple of sort of leads into this year, in that sort of historical run through. I think it's been a good start to the year. It's Yes. Clearly, a different news, sort of out there with the 3rd shutdown and more concern over this wave of the Certainly, the November shutdown.
But from a construction point of view, government guidance is clear. I think there was a point a week or so ago where There was a risk that sort of the housing market was more became more restricted. I think that risk has reduced over the last few days. We've had fairly clear guidance both publicly and privately from government that they expect construction activity to continue. Where there is a little bit of risk is that some of the sales Sort of processes may become restricted, but I don't think that risk is high.
And with the strength of the order book and the level of, sorts of capacity. We now have doing most of the process remotely. I think we see that risk as being relatively low. And we haven't seen interestingly Yes. Any real impact of that on customer demand.
So we came into the year sort of Clearly, with people being in a more cautious mindset about the pandemic, but the 1st January was our 3rd best day ever of website interest and the level of activity and interest across all of our forward indicators has remained at good levels. Yes. It's 1 week, so I wouldn't want to pretend this is a statistical sort of piece of analysis, but our sales rate for the 1st week of the year Was well above last year. You continue to see Help to Buy 2 sales, sort of probably running at a more normal at a higher than normal level Yes, there's a bit of catch up, so we've been part of that. But just ordinary sales also remain solid.
And we're not seeing a big sea change in the confidence or approach of our customers. We are sort of going slightly above and beyond the government guidance from a safety point of view on things like sales. We are Yes, we're operating an appointment system in our sales offices, but we're trying to sort of make sure that our people can work from home If they don't have appointments and to make sure that there's some restrictions around appointments, the number of people from one family that attend those sorts of things, It's sort of to fit in with the spirit of the guidance as well as the detail. But both on construction and on sales, what we are seeing at the moment through this So the 3rd shutdown is that we can manage it without material additional costs or change. And as I say, more challenging for our people to manage, but not any Fundamental difference and not something that sort of affects our guidance and not something because things stand at the moment that we expect to.
As I said, We ended the year with a good position. We expect a stronger Q1 sort of as we catch up what would have been our Q4 2020 completions. And with the strength of the order book, and you know we run with an order book that tends to be longer than the sector. So to be a good 10% plus ahead of that Sort of puts us in a strong place. It continues to give us the opportunity to push price, sort of which we expect to do.
And Not going to give you a big update on that today, but we'll yes, I would expect us to come back in February and give you a clear picture of what price movements we've seen, And how we see that impacting as we move forward. On costs, I think sort of it's been a pleasant surprise that overall that remains benign. I The strength of the market and obviously the Brexit risk, there were some risks that we'd start to see cost inflation coming back in towards the end of the year. Probably the one area where we see material cost inflation is timber, which you'll understand as a sort of more international, not rather than a UK house building Sort of thing, but we are seeing some offsets. So actually, Avia cost remains running below the level that we've seen over the last few years, not zero, Sort of at a slightly lower level.
So that balance of price and cost Feels healthy. Certainly, feel that sort of they're offsetting each other and that there's a bit of upside as we go through this year, but a bit early to build that into our guidance. And we'll come back and talk about that in a bit more detail, I think, in February. And I think, sort of overall, Yes. So as we look at this year, we continue to see this as a year where clearly we can show significant improvement from last year.
But actually, more important, If we look at it from a long term value, then we can show real improvements in some of the underlying metrics and give real confidence And how we can then build both volumes and margins as we go into 2022, 2023, 2024. And still of the view that the volume growth piece will come As outlets open, outlets should open in 2022, but the volume sort of uplift of that comes largely in 2023, 2024. But we should be able to show you improving margin dynamics sort of over the next 12, 18 24 months. I'm going to stop there. I think that's the key headlines.
Really would like to focus The questions and the discussions around about this, the trading update, happy to talk about our views of the market, sort of, but February is a better time to talk about So the longer term sort of longer forward looking metrics. Chris, anything I've missed? I'm conscious I didn't sort of cover lots of numerical data, but very happy if you want to give Sort of a bit more on guidance and on cash position sets, etcetera.
No, I think that's all in the statement, Pete. So happy
And please wait for your name to be announced. And your first question comes from the line of Aynsley Lammin from Canaccord. Your line is now open.
Thanks. Good morning. Just two questions for me really. Maybe Pete, if you could give a bit more color on the land market. It seems that you've kind of gone out there Aggressively, obviously, buying land.
And is your view now that any bargains that may have been there are kind of less in 2021. It's more of a normalized market that kind of still meets in your hurdle rates. So just your view really on the land market and the outlook. And then secondly, the forward sales position, I think it's 50% forward sold for private completions this year. Just could you remind us how that compares to a kind of more normal year?
And is that higher forward sales a reflection of you derisking this year a bit? Or is it just kind of delays rolling over into 2021 in terms of build. Thanks.
Yes. So I think, yes, on the land market, normalizing but not yet normal. So we do still see some extra opportunities. It does sort of vary, you should have choose beyond the size of site, the nature of site, the local Yes, whatever thus, but I'd say that variation is probably sort of bigger than usual. Sort of you see you've seen lenders to sellers Broadly return to the market.
And you do see a little bit of a drive from some nervousness about future capital gains that is bringing some land to market, which is a newer dynamic Back end of last year, early this year. But I would not say we're now in a massively unusual market. I'd say it's It's getting closer to normal. There are still some players who are not in the market. There are some who are.
And you can see from our public investors, obviously, that others have been I've taken a different view through that and a different timing through that. And sort of time and execution will tell which of those approaches paid off. But you can see from their statements very clearly that we were more active than others sort of from very early in the year. So it's not been normal. It's not quite normal there, but it's close.
And I think if I put it in margin terms, Chief. We were buying land about 21% operating margin sort of, But with a heavy mix of strategic lands within that, through this period, we've been buying land at more like 22%, 22.5%, so above, but not massively above, But with a lot more short term smaller purchases in there. And so it's really hard to sort of totally benchmark that because you've got a different mix. But you can see in the stats and the mix and you can see from some of the data we've quoted and we'll quote in more detail in February, yes, the mix of sites is different. We'd have to pay more for Do more deals in the short term market with more smaller sites that sort of underpin that sort of medium term performance?
Absolutely. So it's sort of shades of gray. In terms of forward sales, I mean, the forward sales are above 50%, sort of yes, we're always nervous about creating an absolute percentage because it feels like a formal forecast of volume if we give you the order book and percentage because it feels like a formal forecast of volume if we give you the order book at an absolute percentage, but they're a bit above 50%. Normal is more like 35%, 36 And sort of what's driving that, I don't it is more weighted towards the business rebalancing as construction has been catching up with sales. It's a bit that our order book at the end of the year continued to perform better than we expected.
So Yes. Both outlook numbers and the year end order book are slightly above sort of our forecast from a couple of months earlier. Sort of I don't think it's really driven by caution, but it's still the case. Although construction is activity is sort of Looking pretty normal in terms of the rate on-site, I do think it will be great to think that we could suddenly accelerate production, maintain the COVID guidance, Keep build quality and costs in line and catch up with sales rates. So I do think the construction activity will continue to be The limiting factor.
But again, as we've said before, that gives us the opportunity to just focus a bit more on price, focus a bit more on efficiency, and that's not a bad place to be given our sort of objectives around sort of margin recovery leading volume growth.
All right. All very clear. Thank you very much.
No worries.
Thank you. And your next question comes from the line of Gavin Mago of Barclays. Your line is now open.
Yes, good morning, everyone. Thanks for taking my questions. Just a few of them. The first one is just to revisit your comments on build cost, Pete. Obviously, one of your peers yesterday talking about build cost this year probably being up kind of a few percentage points.
I think I just wanted to be interested in where you think it could be in The second one is, I guess, a revisit from one of the questions back in November and also your pipeline of forward order book and delivery for Q1. I guess the risks around construction and meeting, I guess, for your customers who have got stamp duty savings to come towards them by the end of March. And the final is just an estimate of any change in mix between private and affordable, just given where that forward order book is for FY 2021. Thank you.
Yes.
So on build costs, we haven't given a numerical number at this point, partly because the movements are so small Actually, it'd be quite hard to sort of pin it down. And that's broadly true on both materials and labor. As I say, on the materials side, we are seeing sort of pressure on timber specifically, a bit of pressure on other things, But offset by sort of some savings elsewhere on materials. And I do think Yes. We've been very clear and very open.
We fully acknowledge that through, yes, particularly early 2019, we saw more cost inflation than some of our peers. Yes. Actually, sort of Jenny has sort of refocused our central procurement team, and we're seeing some good efficiencies come through that. It's not so I think we probably have a slightly different sort of set of things that we can go for and that's probably helping us a little. So I don't know which peer you're talking about who gave you numbers yesterday, but I would be below 3 to 3.5 at the moment.
But we're consciously waiting until February to be able to give you a slightly sort of clearer numerical guidance, but it feels a bit more benign than that. But as I say, Yes. We probably got a bit of catch up in there sort of relative to peers as well as seeing a broadly stable environment. And sort of similar on the labor side, sort of We're not seeing big pressure. But as ever, it's very much you'll see some pressure in one regional area or one particular trade because of availability.
And you know sort of, but you'll get some savings elsewhere. I think we expect to see cost inflation this year, but it's not huge. And against the price dynamic we see, I think our underlying guidance of selling price inflation, offsetting cost Inflation feels secure with a bit of upside, but a bit too early to put a number on it.
Sure. Okay. Thank you.
Sorry, and pipeline for Q1, I think at a point of the sale week sort of 10 days ago, where it did feel that there was Yes, pressure on the government to constrain construction activity, build activity. So sort of then clearly, That would have had an impact on our ability to deliver Q1 plots. If we had to close-site for a period, then sort of there's not a lot of safety factor in That risk largely feels like it's reduced. So in the environment we see at the moment, with, as I say, some friction with some tighter rules, making sure our own rules I replied really closely and we've gone back probably 3 or 4 times over the course of the last 7 months and really reinforce Make sure they're genuinely operated on seaside. I don't think that that creates a risk against quarter 1 delivery.
Yes, there will be a small number of plots that always are in the mix. But overall, in terms of delivering to those customers within that time frame, Yes. I think it's within our capacity. We feel in a good place with where work in progress is. And I go back to we manage the build recovery Carefully to and we set out an objective we knew our people can meet.
And then we kind of increased that Certainly, as we saw performance match it, sort of through last year. So I think we finished the year in a good place with our sites sort of feeling like They delivered the right completions last year and they were set up right for the Q1 of this year. And I think what I'm about to say It's probably a given, but sort of it is important. We expect our business to be much smoother during 2021 than it's been for a long time. Now sort of obviously how last year went has enabled us to make more progress on that than we would otherwise have expected.
So the risk through the year on construction delivery is lower than normal. And so that enables us to absorb sort of that Sort of friction around build that we're seeing without sort of having to either change our sort of forecast or sort of see Material risk to delivery on timing for customers. And then your final question on affordable private mix. I think I'm right in saying, Chris, that sort of the affordable mix will probably be down a bit this year. But that's just to do with the Yes, contractual delivery and timing and how the different phases of sales and production work through the pandemic.
I think our underlying level of affordable housing through the next 2, 3, 4 years. Yes, 2019 is probably a better measure of mix there than 2020, 2021 will be. I think that's fair, isn't it, Chris, in terms of 2021?
Yes. I mean, the affordable mix, as you know, tends to vary around the midpoint of about 20% from year to year. Couple of years ago, it was at 23%. In 2022, you can see from the statements that it's at 20%. And as Pete says, we'd expect it to be a bit lower next year, Perhaps around the 18% 17% 18% mark in 2021.
No worries.
Thank you. Your next question comes from the line of Brijesh CEO of HSBC. Your line is now open.
Thank you. I have two questions, if I may. The first one is on the pricing. If you can give a little bit flavor on what have you done since 1st January, whether You have made any price increases across the sites or any reason for difference there. If you can tell us a little more on that.
And secondly, on the planning delays, we recollect in November, you were talking about probably you're slightly Down where you planning to be, can you tell us where you are right now and what was your expectation So whether there is a significant difference or you're kind of more trending towards what you thought you would be?
Yes. So in terms of selling price increase, we did not, on this occasion, give, as we did 12 months ago, As sort of an absolute across the board price increase, partly because we've seen our businesses increase prices sort of through November, December. And so they were in slightly different places. And so it was appropriate to have a slightly different approach side by side. We have seen and the underlying instruction to our teams is You know where they are sensibly forward sold to start to test and move price up.
And we have seen statistically that happen in the 1st week or 2 of the year. So Yes. If somebody isn't, then we'll pick it up very quickly, but there's not been a standing instruction on this occasion. But the overall sense of just Yes, kind of making positive movement on price, sort of in using the stronger forward order book remains. I'm not going to put a number on it today.
We will come back in February, as I say, and talk about it in more detail. It's just a bit early days. And I think, sort of, We feel pretty good about the strength of the underlying market this year. But you can't get away from there being some risk around sort of where this Chief. So the 3rd shutdown goes and its impact on confidence.
At the moment, the signs are good, but sort of it feels a bit early
To sort of
give a lead. And sorry, could you just the second question was on impact of planned delays on outlet openings. I think I mean, many of you have heard me say many times, we expect planning delays. So we should build them into our forecast. So they shouldn't generally be A big reason why we see a difference.
And it's I will make the same comment today. I'm not sort of talking about Sort of a slower planning as being a reason why our outlooks will be sort of down in 2021 and Sort of all changing our volume forecast. They remain very robust. But I think we are seeing sort of Both because of the pandemic and its impact on local authorities and just their priorities and their resources, it is a grind Getting through the system. And I expect the next couple of years not to sort of be much different from that.
Having more sites and having more sites in the hopper, I think, is a key strength in that period. And we've sort of built that into how we talked about Timing about the openings and sort of the timing of sort of how we expect volume growth to come through. But that is what we're seeing. Sort of, I think, yes, if we were where we were 18 months ago, yes, with less outlets coming forward, that will make me far more nervous than it does today. But sort of I don't expect the planning environment to suddenly be easier over the next 12 or 18 months.
So yes, the best way of doing that is to have more choices. So you're not just who depends on any one of them. And yes, again, I'll go back to having more sites in those choices, so a better mix of smaller and larger ones. And I think you can see that in some of our competitors' commentary and where the numbers are likely Stand in the sector. They're likely to be lower in January 2020 than they were in January sort of 2019.
And sort of I don't think that's going to reverse overnight.
Thank you very much.
Thank you. And your next question is from the line of Sam Cullen of Peel Hunt.
I have a question
Thanks. In terms of the price mix in the order book, can you talk Perhaps about the prices you're seeing in the private completions including the order book and how the mix has shifted? And then also In terms of how much of that order book is weighted towards the Q1 versus the 2nd and third quarter perhaps? And where does that sit versus The last couple of years would be helpful to know.
So on price mix, I mean, we quote the movement on Understood a private price over the year. And actually, that's probably pretty reflective of what's in the order book in terms of Private Price, and that price movement is on the private side, the affordable side tends to not move that sort of quickly. Where is that mix the mix part of that coming from? I would say it's principally coming from the fact that as we talked about Couple of times through the last sort of 6 to 8 months that in the late stages of the quarter 2 shutdown and all the way through last year, The part of the market that relatively performed strongest. And I'm careful if I use the word relative.
It's not that first time buyers were slower. First time buyers continue to be pretty healthy, but they've been pretty healthy through previous years. The second And market moved better in sort of late 2020 than it had done for a while. And we see that in our mix of properties and prices. So sites with larger products and larger sites with some larger product on them, we've seen just a greater volume on sales rates at sort of healthier prices on those larger sites.
And that's probably the biggest change year on year that the part of the market that have been slowest seem to be more affected by Yes, effectively the dynamic of people staying at home and thinking, I want to get on with my life, I want to make a move. And it did seem to create a bit more movement in that secondhand market as the upper end of the market and upper for us. So we're talking about £300,000 plus 300,000 yes, in sort of midlands in the north and £500,000 plus in the southeast. So that's what's driving the mix is similar level of first time buyers, sort of and particularly if you smooth out the Help to Buy impact And a higher level of sort of other customers sort of in the second hand move up market. I'm sorry, Sam, there was a second question, wasn't there?
Yes. Just the weighting of the order book in the Q1 that you have at the moment, Q1 versus 2nd.
Yes. I mean, Chris, you may have the absolute sort of data in front of you, but I can tell you we are sold out for the first We are heavily sold for the first half and a lot of our sales at the moment are going into July, August September. There's some products still to sell for June, but there isn't much before June. So from that, you can take the order book is pretty evenly spread Between sort of first and second quarter and then with a decent level of sales into sort of the second half of twenty twenty one.
Yes. I think that's right, Pete. So you're probably looking at 40% to 45% of the private order book is for the Q1 On that basis.
Okay. Thank you. And sorry, just to come back on the first question. Are you saying you're seeing more sort of fresh demand for those properties, I guess? Or is it you're seeing more effective demand because second time buyers can actually sell Their existing home to buy one of your homes?
I'd say it's both, but the one that I'd pick up on is I don't think that it was that those 2nd time buyers couldn't sell their properties. I think it's that price it's that sort of Was that the dynamic in the market of those 2nd line buyers taking a sort of 1% or 2% sort of view on price to get liquidity move. There wasn't enough will sort of in the secondhand market to get it moving. I don't think that I think anybody who wanted to sell their house in 2019 at a reasonable price could have done and wouldn't have had to take a big discount. But if you want to get moving and you want to sell, you've got to sort Take a view and make a decision.
And we're saying just far more will to make that decision. And I think To a certain extent, yes, there's the psychology of the lockdowns and people see of their houses. It's also just the Pure confidence piece of, yes, a housing market that's remained stable to positive through sort of the Brexit period through general elections I think there's quite a lot of people who have looked at it and thought, well, yes, if it's going to stay resilient, then prices aren't going to go backwards in any circumstance. I'd want to get on with It was caution that was probably holding them back before more than the fact they couldn't sell.
Okay. Understood. Thank you.
Thank you. Your next question comes from the line of Arnold Layman of Bank of America. Your line is now open.
Thank you very much. Good morning, gentlemen. Just one question on my side. Could you give us a bit of color on the trends in again in the sales rates Now that you're able to book Help to Buy 2.0, how much of that boosted your sales rate in December or January? And what would you expect now in the context of the solid demand environment, but at the same time maybe a bit of Constraint on the supply side for the industry, what do you think should be normalized sales rate for 2021 assuming there's no Major macro disruption.
So I think if you looked at the sort of periods Pre Help to Buy 2 coming in. The actual sales rate was in the low 0.7. So I mean, let's pick 0.72 as a reasonable indication of where it was. Then obviously, we had a sort of a couple of weeks where sales rate was artificially high. If you could have sensibly smooth that out And adjusted a little bit for not all of the reservations would have come into the December period, some of them will come into early January.
I think the sales rate last year helped by yes, in those last sort of 3 months of the year helped by 2, have been there throughout, would have been something like 0.8 2.83. And that's taking into account the fact that we had, as we talked about several times, relatively low availability. And obviously, high audible, low availability go hand in glove. So I think if I look to sort of what we'd expect this year, It starts with the 0.8. And I think depending on where we are in the year, availability, underlying strength, we'll probably govern whether that's 0.80 or 0.88, 0.89, but that's probably the range.
And with the length of order book we've got, sort of the impact To borrows for this year's completions and where we sit in that range isn't huge. It's more about where the order book then lands for 2022 and beyond. And I mean, do you think that sort of view, Chris, a 0.8 something for sort of the end of last year, if you'd have smooth held to buyout And that view of this year, Phil, do you feel that's reasonable?
Yes. I mean, the intervening period between Sort of our update in November and the end of the year, that sales rate that was boosted by the additional Help to Buy sales was 0.92. So obviously, That was an elevated level. So I think, yes, what you've where you've got 2 people is very fair.
And we would not want in the idea world our order book to be as elevated at the end of 2021 as it is at the moment. It's fine where it is now because of the circumstances that have driven it there. But actually, I still think the right sort of distance to be selling out in normal circuits, that the right balance Volume and price, the right kind of forward look for customers is more like 5 months than it is 6, 6.5.
Very clear. Thank you very much.
Thank you. The next question is from the line of Marcus Cole of Liberum. Your line is now open.
Good morning, both. Three questions, if I may. I was just wondering if you could add a bit more color to the land spend since the equity raise in just terms of what was that number last And then just any color you can sort of add to forward indicators, any numbers you can give? And then just finally, on the dividend policy. I assume it remains unchanged to the 7.5% of ordinary, of net assets as it was before COVID.
Yes. In terms of land, there's not a lot of additional color to give at this point. I mean, I would say a normal year's land purchase would be In the order of $700,000,000 and obviously in the order of 15,000 plots. So $1,300,000,000 and 22,000 plots Yes. It gives you a pretty clear indication of where that is.
It's important and yes, hopefully, we're very clear in the way that we state this. Obviously, Because we're trying to give people a clear sense of where we're going, the number we're quoting is new land we've approved rather than what's come on the balance You can see in the land bank numbers, a chunk of that starts to come onto the balance sheet. But you'll see the land bank step up this year as those plots go through From approvals to contracts, and we were quite pleased with the pace with which those sort of first stages post approval were running at Yes, sort of through late November December. We were slightly nervous that it would slow down a bit because just of the level of activity and just people taking sort of A slower route through the pandemic, but we haven't seen that. So we're seeing good traction on that coming through.
But I think if you look at roughly that 1,300,000,000 So against the normal €700,000,000 you get a sense of the pace last year, but the impact of that on the balance sheet spread out sort of into this year. I'm sorry, there was a second question.
It was just there were 2 actually. There was just one on sort of forward indicators. Is there any sort of numbers
that you can give, sort of
the initial trading in January just to give us a bit more flavor? And then the
other question was just on dividend policy. Does it
So it remains unchanged from what it was before COVID. Yes. So I think on the sort of dividend policy, we've said we expect to pay ordinary dividends So from this year at a similar level per share for 2019 dividend and that remains the same. We'll come back to the special dividend policy later in the year, but that doesn't signal that we're expecting to fundamentally change it. But I think it's right to set it out in the context of a post Pandemic World, but we expect there to be material special dividends and that they're likely to resume from next year.
In terms of forward indicators, it is too early to give you something numerical. I think 1st week sales rates were above last year by a meaningful amount, but that's Help to Buy 2 activity levels and interest sort of are at good healthy levels at or above normal levels. But I'm nervous about giving you a single week sales rate because that just sort of doesn't I don't think that's particularly helpful.
Okay. Thank you very much.
Thank you. And your next question comes from the line Will Jones of Redburn. Your line is now open.
Thanks. Good morning. 3 as well, if I could, please. And I think mostly an extension of some of the points already discussed. But just coming back
to the land, that $1,300,000,000
would you be able to give us a broad feel as to How much
of that you feel was on the balance sheet at the end
of the year? Or maybe another way of answering,
I suppose, is if you were to say broadly replace Going forward in 2021, do you have an idea of, I guess, the
cash land spend demands on
the business through this year? Second one was just come back on outlets. Could you give us a feel for I think you mentioned the likelihood of a slippage 3.21. I appreciate it will be a function of sales as well. But is there a number you might be willing On that, is it something from the $240,000,000 odd?
And then did you say in the opening remarks, Pete, that a material lift in 2022? And if so, is that core business kind
of catching up? Because I
think you've guided that the new land money, if you like, really kicks in from 23 on sites. And then finally, would you be drawn at all on how you think completions may split this year between the first half and the second half? Obviously, you've had Strange 2020 in that regard and the big order book and just wondering how much you might be able
to book of your target
by the 6 month stage. Thanks.
Yes. So Chris, if I if on the land 1 and how much On the balance sheet and the cash impact, if I leave that to you and I'll pick up the other 3 and then come back to you on that one. On outlets, It's quite possible our outlets remain sort of will remain stable at about the 2.40 level. But as I've said Numerous times, sort of it's not entirely an aggregate. And the sort of range probably is 10% as we go through this year And the impact of sort of last year in solar planning kind of means new starts are a bit slower.
So the range is it dips a bit. But as we said in November, We expect it to dip a little and then more or less end the year in the same sort of level that we're at at the moment. In terms of Material lift in 2022 and sort of I'll be very careful and precise in my wording. What I'm saying is That we should see in late 2022, the first of the outlets from new land purchase. Does that have an impact over and above Business starting to come on and that's when we should start to see outlets begin to increase.
And where we talked about the impact So on the business, I'm talking particularly about then completions impacting on 2023, 2024. So we should be selling from some of those new sites in the second half of last year, but the material impact on completions against 2023, 2024. And that hasn't changed From the dialogue we have with investors back in sort of May, June, that's where the impact on completions come through. But Yes. We do recognize that it's really important to be able to show you the forward indicators.
So whilst we won't necessarily split because at At the end of the day, for one of our businesses, it's in the tip yes, there's no distinction between land that was bought from the capital raise and land that we would have bought anyway. You can see that we have secured more sites, but it would be artificial to us to run the business as if they were different. The aim is to get the value and the time out of all of them. But we will sort of be continuing to show you how that wave of additional land is progressing through the business through to those outlined openings and then that future Because it's our way of giving you confidence that volume growth is there. But it's a bit arbitrary to split them as totally different sites.
But yes, outlets in Second half of twenty twenty two, completions in 2023, 2024. Okay. And Chris, if you want to pick up the land, I think on sort of the half 1 half to completions split well. Much closer to fifty-fifty. I think sat here today, I'd still guide to sort of Slightly second half weighted, high 40s to low 50s, but so to much closer to fifty-fifty than we've been in a while.
Yes.
Yes. And just on the land, Will, of course, not all of that spend is going to be reflected On the December 2020 balance sheet, because some of it's still to be contracted or is already contracted, but conditionally contracted. But even so, you will be able to see an increase in net land in the balance sheet compared to 12 months ago. And when I say net land, I mean land net of land I think that was something like $2,000,000,000 at the end of December 2019. And I'd Expect that to be roundabout $2,200,000,000 in the December balance sheet when we report that at the prelims.
Great. Thanks a lot.
Thank you. And your next question comes from the line of Christopher Fremantle of Morgan Stanley. Your line is now open.
Hi, good morning. Two questions from my side. The first is on Help to Buy and stamp duty deadlines. I just want to understand your view on To what extent those deadlines have really pulled forward demand as well as you obviously satisfying a pent up demand from the initial lockdown? And if you can just talk about Help to Buy, what percentage of your second half volumes Our Help to Buy volumes and how does that compare to previous periods?
And if possible, you can tell us What proportion of those Help to Buy volumes are the non first time buyers? That would be helpful. And then the second question was about margins and the focus about returning to 21%, 22% operating margin. Appreciate you don't want to be too specific at this point, but is that something you aspire to achieving In 2021 or should we be assuming that that's a 2022 aspiration?
Yes. No, I think in terms of the Help to Buy stamp duty deadlines, we've been of the view Through the last 6 months, the impact of stamp duty was not huge. And particularly if I look at Economist commentary and the press commentary. There's almost an assumption, sort of when I say almost assumption, there is an assumption The stamp duty sort of holiday has been the reason why the housing market has Much stronger in the second half of twenty twenty than everybody thinks. I just think that's wrong.
I think Every bit of data that we look at in terms of actual performance and the anecdotal data of our conversations with our customers Says that it's a component, but it's not anything like the most significant component. And therefore, I am unconvinced that it has You know, sort of had a big impact in driving demand into a particular period. I think that's The underlying market, people's desire to move, low interest rates, mortgage availability, Help to Buy It's much more impactful, I think. And that, yes, you can see in our sales rates, it clearly has an impact on phasing when one scheme runs out and another one comes in. So the biggest piece of evidence that I can give you for that view on stamp duty is what we said to you in November And he's true in spades now that we don't see a disjoint between our sales performance on rate and price Yes, sort of when we move from selling sort of product that will complete in March 2021 to product that will complete in April 2021.
And we try to be very, very clear with customers sort of on what that sort of timing impact is like Because obviously, sort of it will make customer sort of relationship management very difficult if we sort of tell people we can deliver a product And we're going to benefit from that and then we can't. So we've been very careful with that. So we do not see a Yes, sort of price reduction in the sales we're taking in the Q2, and we're pretty well sold for the Q2 already and into the Q3. So I think we have Clear evidence on that, that it's continued to head in the same direction. I think you asked about the proportion of Help It will be lower because of the period where we didn't have Help to Buy.
I haven't got the numbers because we tend to look at sort of it on a completion basis and we haven't got the full data yet. But I would imagine sort of that help to buy Sort of sales, the reservations in the second half as we look back will be sort of low-40s or even high-30s rather than high-40s. Yes, it would have dipped just because of the period of unavailability and the sort of catch up in December wasn't a complete catch up. But I would I think if we look back, once Help to Buy 2 has got its full capacity, if we look at it on a completions basis, as we look back at 2020 2021, It won't have dipped very much. And so your question about what proportion sort of the first time buyers and sort of Extension to that question, isn't there, about what proportion with the format side there?
The price caps, about 20%, but I still think that the underlying demand You know sort of from first time buyers, yes, within the price gaps is enough that it will keep Help to Buy in that sort of 40 percent -ish kind of range through this year. It's an important part of the sales piece. And that's why I would play down the impact of stamp duty on the market in 2020 and 2021, but I wouldn't play down the importance of Helped buyers we look forward at 2023 and what government decides to do around first time buyers post then. That, I think, continues to be A material sort of debating question for the healthy market. Stamp duty, if I'm honest, is a bit more about noise.
And I don't think it's had a big distorting effect. Does that sort of and I know there's a question on margins, Chris, but does that answer the overall question you're asking around Help Yes. It's Antonio. Okay. I think on margins, we have never said and we will continue To say that we get back to that 21% to 22% level in 2021.
We won't have a fully normal level of volume. That brings a bit of inefficiency. Some of the overhead cost saving you brought in last year will impact this year, but there's still noise around the business. We're not back This year, we're heading there. Our plan and our goal is to get as close as we possibly can, but our guidance is absolutely not for that range this year and Never has been.
It's not necessarily to get into that range for 2022, but I'd say that's the 1st year where Feasible, but we certainly will be sort of disappointed if 2022 didn't start with a 2 in terms of margin. And we'll come back and give you A bit more sort of guidance on how we expect that to progress through the next couple of years in February and then during the course of the year, sort of because obviously there's a lot of water to go under the bridge. We expect to see material progression this year against obviously a very weak 2020 and to be able to continue to map out that path Back to that 21% to 22% margin in the short, medium term, if that makes sense. Very helpful. Thank you.
Thank you. The next question comes from the line of Gregor Kuglitsch of UBS. Your line is now open.
Hi, good morning. Thanks for taking my questions and I hope you're doing well. Maybe on ASP, If I may, so obviously your private ASP was quite high, I think relative to history and you kind of flagged mix. And I guess the question that I have is, it sounds like as if this year, there's not going to be much change in that regard. Correct me
if I'm wrong. But as
we think about sort of medium term and looking at the land that you're buying, how do you think the mix Is there a mix on line, I guess, we should be thinking about? Or putting the question differently, if you printed nearly $290,000 of ASP, How does that compare to your land bank ASP as you kind of stand here today, maybe factoring in as well Yes, the land acquisitions that obviously aren't necessary in the land bank yet. That's question 1. Question 2 is on volumes. I think previously you sort of said 85, 90 for this year, if we take 2019 as
a benchmark for this year, right? And then can
you just remind us how you mapped that into 2022 and beyond? Do you think in 2022, you can already match the 2019 level? I appreciate The new sites only contribute later. I get that. But those were, I think, incremental.
So if you could just maybe map out for us The volume passed as well as you see it today.
I'll leave it there.
I have one other question, but that
those are the 2 main questions here. Yes. So Greg, I'm going to sort of go through those questions and I'm happy to answer them. But we're starting to stray into I think I better talked about in February. So I'll cover those.
But probably that yes, if people want to expand on those, I'm probably going to kick them back and say, we'll come back to you in a couple of months. I think on the average selling price on wine, no, we don't expect a material average selling price on wine. I think whilst there was an Improvement in mix through this year was that those higher priced properties started to get sort of that we start to see more traction. I see that as more of a normalization to what we would ordinarily expect it having been held back rather than a Sort of a totally temporary thing. Now there's a bit of a judgment in that.
It's hard to know how the strength of these different parts of the market will behave. But if you look at our land bank, I don't think our average selling price in our land bank at the end of 2020 is fundamentally different to the average selling price on completions delivered in 2020. So it will vary a bit from period to period depending on the exact mix, but I don't think it's that we're guiding you to it going backwards. And of course, that's Sort of helped a bit by some of that is an inflationary shift. It's not the bigger component, but it is in there.
So does that in there as well? In terms of volume unwind, yes, we guided you to 85% to 90%. We're not changing that. We feel sort of increasingly more confident about that. We haven't got formal guidance for 2022, but I think we would say 2019 is a good place to start, But probably slightly below 2019 rather than slightly above if we have to cut it today, sort of but not a long way off.
And then as you say, sort of starting to see sort of that volume growth past 2019 and 2023 and 2024. But I wouldn't want to be drawn on anything more numerical than that at this stage. And by the end of this year, I think we'll be mapping out for As those outlets flow through, a fairly clear trajectory on both margin and on volume. But I think at this point, we've given you, I think, pretty clear guidance about the overall direction. And given the amount of sort of uncertainty and change going on, that feels like A pretty fair place to give you in terms of sort of planning certainty.
Thank you. And then maybe just on the Help to Buy side. So I think if I look back, Completion mix was on private historically, I don't know, maybe I think in 2019, it was like 45%. With the new scheme, what do you think is realistic? Like half that level or more or less?
No, no. Definitely significantly more than half. Sort of And against 45, 40, sort of it's a bit less, but it's not massively less, I don't think. Yes. You will see every developer will have regions where they're very unaffected by the price caps And regions where they've got a couple of sites that have sort of product just over the price gaps and the effective grade, sort of overall, as they look nationally, sort of I don't see it having a dramatic impact.
There continues to be good demand for it within the price gaps and with the first time buyer limitation.
Okay. That's really clear. Thanks a lot.
No worries.
Thank you. The last question comes from the line of Amy Gala of Citigroup. Your line is now open.
Yes, good morning guys. Just one question. I was wondering if you could give us some color on the demand trends that you're seeing in the London market and how is planning really progressing in that market?
Yes. I think on the demand side, it's been sort of probably encouragingly and probably mildly surprisingly resilient. So I know people talk a lot about sort of an exodus from London. I think if you're looking at the rental market, you've clearly got less people moving into London, obviously, to the rental market is short term. But I think most people sort of house buying decisions are longer term than that.
And so we haven't seen a A material drop off in demand in London relative to the rest of the country. I think on the planning side though, we continue to see A reasonably challenging environment with the interplay between national government strategy and the mayor's strategy. So we continue to see, particularly for Central London, a more challenged planning environment than elsewhere than historically. And as we said in November, We've shifted our focus in London. We don't expect to be adding in new sites to what would be Historically, our Central London business, but we still remain committed to London and we have brought sites in London and then sort of the immediate surrounding areas.
So It is slightly different to the picture elsewhere, but I think particularly if you look at demand, it remains sort of reasonably robust. Thank you.
Thank you. That concludes our Q and A session for today. I will now hand over back to Pete Redfern for his closing remarks.
Thank you, and thank you for questions. And thank you For keeping them sort of largely pretty tightly around the trading update, we're looking forward to February and sort of talking a bit more forward looking a bit longer term. But we sit here at the beginning of 2021 and feel good about where the business is. Sort of, I think, 2020 gave us a chance to adjust some things on costs to make a big step forward in land purchase and having not driven for the Absolute maximum construction completions at the end of the year with the forward looking sort of part of the business that fills in a healthy place. Clearly some broader uncertainty, but I think we feel we sit pretty strongly within that.
So look forward to catching up properly in a couple of months' time. Thanks very much.
Thank you for joining the Taylor Wimpey Plc Trading Update Call. This call is being recorded and will be available to listen on demand on Taylor Wimpey's website later today. Thank you.