Morning, everyone, and I know that we're a couple minutes behind time, so I'll get started. It's good to see you all here today. Thank you for taking the time. I'll jump straight in with sort of the agenda. I'll run through the highlights for Taylor Wimpey current market conditions and trading, which I know you'll be particularly interested in. We'll try to give you a bit more sort of insight here. Chris will talk you through the financials and guidance as usual, and then I'll return to remind you of the inherent strength of our business, which I outlined at the Investors and Analyst update in May. Our focus on building a stronger and more resilient business. Jumping straight in.
Let's start with the results. It's been an excellent first half for the business operationally and financially against a strong set of comparators. I'm pleased to say that our results are slightly ahead of our expectations, and as we announced today, we're now guiding to full year operating profit around the top end of consensus expectations. As you know, we've been very focused on driving operating and financial performance and embedding a cost discipline mindset focused on operational excellence. It's very pleasing to see the further progression in our operating profit margin increasing to 20.4%, benefiting in the period from planned land sales and a strong performance from joint ventures.
We've been very focused on optimizing sales price balanced against sales rate and delivery, and so we're very pleased to see a continuing strong and high quality order book. We are working hard on execution and delivery from our land bank, and I'm happy to tell you that we come into the second half with outlets slightly above where we guided, which is a fantastic result, and no mean feat. This has been the result of lots of hard work by our teams in a difficult planning and technical environment. We need to keep our eyes sharply focused here, but we remain on track to increase outlets at the end of the year and into next year. Importantly, we're achieving this in the right way.
We are leading the sector on production quality, again achieving the highest CQR score in the major builders, which we see as an advantage coming into the era of the New Homes Ombudsman. We have great people who have performed well and are vital to our progress, so I'm delighted to say that we've again won recognition in the Glassdoor Awards, as well as improving our ranking overall, which is voted for by our employees. During the period, we've continued to progress work on fire safety with building owners, management companies, and leaseholders, and remain committed to resolving these issues as soon as possible for our customers.
The wider political and economic backdrop is more turbulent than we have all seen in some time, resulting in higher inflation and interest rates than we all anticipated at the start of the year. However, the housing market has been and continues to be very resilient. Of course, as you've heard me say before, we don't operate in a bubble, and we are very conscious of the increase in the cost of living, higher inflation, and the potential impact on our customers. Certainly for now, we are seeing no meaningful change in the trends. The demand for our homes continues to outstrip current availability. In addition, mortgages remain affordable by historic standards, and banks want to lend to UK home buyers and are pricing mortgages competitively.
We are in a strong place, and our clear focus on building a stronger and more resilient business positions us well should conditions change. As you know, the sector has seen pressures on costs and materials across the last 12 months, and Chris will talk to you more about this. But we've been able to offset build cost inflation with healthy gains in house prices and on tight control on costs. We're focused on the things in our control and continue to perform well as a group with the help of our central procurement, our national scale supported by national agreements and Taylor Wimpey Logistics.
Finally, on this slide, and very briefly on Help to Buy, following the updated Homes England guidance, we will stop taking Help to Buy reservations by the end of October and are well progressed to deliver build completions by the end of the year and legal completions by the 31st of March, 2023. Turning now to our position as we go into half two, we've had a really strong first half. Given the length of the order book, we have consciously prioritized optimizing price and revenue in a good market and been disciplined in our approach to sales rate and have achieved a good balance with an efficient sales rate of 0.9 for the first half. Our order book, as of the 31st of July, is around 10,400 units.
On private homes, we are currently selling six months ahead, which is still a little longer than we would ideally like, but allows us to continue to drive price while continuing to give some transitional support on the withdrawal of Help to Buy. We are now 92% forward sold for this year, so very little to sell for this year, and we are now releasing availability and actively selling into quarter one of 2023. You'll see here, our sales rate, second half to date of 0.57.
We should remember that, we are only four weeks into the second half, having actively managed our order book length, which has constrained availability, improved its quality, and maintained the discipline of driving price. As this period was impacted too with lead times to sales, including the double bank holiday in June. As I mentioned earlier, we remain very comfortable as regards to demand. Customer interest remains strong, and we are continuing to see good price improvements across the group. You'll recall that, cancellation rate is simply a function of gross cancellations over gross sales. And cancellations in absolute terms, absolute numbers, are 9% down on the same period last year, and 29% down on the same period in 2019. We have seen very few cancellations from customers based on sentiment or concerns around affordability to date.
Down valuations remain low, as do the use of incentives. I know that there have been some questions on regional variations in recent weeks. Looking at the data, there's no discernible changes to previous patterns of reservations, price growth, cancellations, and the like, so there's no outliers for me to flag for you today. Today's planning environment, which I'll come onto, does remain a real challenge, so we are pleased to have opened 50 outlets in the period, which is testament to the skills of the team in a clearly more difficult environment. It remains our focus to open these as efficiently as possible. Forward indicators remain positive, tracking closely to pre-COVID metrics in 2019, though clearly lower than we have seen in the less comparable years of 2020 and 2021.
Appointments, inquiries, and website visits remain at good levels. Reassuringly, this is still with media spend running at about a third less than 2019. We have some flex there, if we were to need it. You'll also see a dip in appointments at the Jubilee Bank Holiday, where as part of our community engagement events, we were open to walk-ins, so the appointments model didn't capture the data in the normal way. I wanted to share with you more of an insight into what our customers are looking for and the key areas factoring into their decisions.
It's worth saying that in all of my discussions with the sales teams across the business, in recent weeks, they continue to comment on the positive sentiment of our customers keen to get on with the process. Looking a little deeper, into the available data, our customers are feeling secure in their employment, supported by good accessibility and affordability of mortgages. For example, from the qualifications carried out by our largest IFAs, we can see that the savings on deposit data we shared with you in May continues to support first-time buyers, with the majority funding their deposit from savings. We continue to embed the use of and improve the quality of the data flowing from our adoption of Dynamics for our sales and customer service.
From that data, we can see continuing strong prospects in the early pipeline, with inquirers sitting comfortably within our pricing offer. A high number continue to be from first-time buyers. On average, inquirers are looking to move within the coming year. We think there's more potential to unlock in knowing our customers better to enable us to have a sharper and more meaningful customer proposition. I mentioned at the investor and analyst event in May that we would be undertaking some data-driven customer research. This is still ongoing, and I'll update you more comprehensively at the full year.
However, as part of the research, we carried out our biggest data-led customer surveys together with focus groups, and I can share with you a few snippets today from one of the surveys which sampled 1,500 recent home buyers and those in the market looking to move in the next year. Firstly, and confirming what we know, there continues to be a strong appetite for homeownership with demand outstripping supply. The move for more green space we saw during COVID continues, which obviously plays to our strengths, particularly given the focus on master planning and placemaking we've had in recent years.
The research also confirms that purchasers value those attributes, such as good transport connections, community services, and facilities that are already accounted for, in our placemaking, and more broadly in our locational quality matrix, which you'll be familiar with, and which assesses land on a macro and micro location basis at the time of land acquisition. We are very encouraged by the findings so far. It reinforces that Taylor Wimpey has adopted the right approach to land buying, focusing on those sites our customers desire the most, and ensuring that we do indeed have the best quality land bank in the sector.
All this reinforces our confidence in the overall resilience of our outlets and landholdings should the market change. Now, just before I hand over to Chris, I'll sort of step back for a second. I've talked to you a lot about sharper operational focus and building a sort of greater resilience and continuing to drive operational excellence across the business. We are well-positioned or agile, and we have the ability to act swiftly should conditions change. I'll hand over to Chris now. Thank you.
Thanks, Jennie, and good morning, everyone. These are an excellent set of half one results, which show progress for both growth and operating profit and their respective margins against some very tough comparatives from last year. You'll recall that in half one last year, it benefited from completions delayed from Q4 2020 due to COVID, and that is the reason why you see a reduction in revenue year-on-year. The reduction in adjusted EPS is driven by an increase in the pre-exceptional tax rate from 18.3% last year to 22.1% this year, mainly as a result of the introduction of the Residential Property Developer Tax. As you would expect, the reduced number of shares at issue as a consequence of the buyback partially offsets that tax impact.
Despite the investment in operating assets in the period, which you'll see on the balance sheet, the 12-month rolling return on net operating assets also showed good progress, increasing to 24.4%. Turning to UK performance, we were very pleased to be able to deliver just a little bit more in completions in the period than the expectation of 45% of full year completions. When you combine that with a sector-leading build quality score, it really is an excellent performance. Affordable homes contributed 22% of full year on completions in the period. Our guidance for the full year of 20% remains unchanged. The blended average selling price was pretty flat year on year due to the increased proportion of affordable homes.
The 3% increase in private selling prices is less than the underlying inflation of 6.5% that you'll see on the next slide, because the average size of the homes completing in the period was 2.6% smaller and slightly more weighted towards the north. In contrast, the growth in affordable selling prices is mainly due to those completions being much more weighted towards the south. A combination of mix and inflation will push the private average selling price higher in the second half of the year, and a greater share of affordable completions from the north will at the same time generate a slight reduction in the affordable selling price. Pardon me. Overall, we expect blended average selling prices for the full year to be 4%-5% ahead of 2021.
There was a strong performance from JVs in the period, and we're increasing our expectations for the share of JV result to GBP 14 million for the year. Those of you with eagle eyes will have spotted that the U.K. growth and operating margins are slightly less than the group figures shown on the previous slide, and that's because we had a strong performance from Spain, which included a small one-time accounting benefit. However, even on an underlying basis, their margins were still ahead of the U.K. This slide provides the drivers of the improvement in margin period-on-period. Consistent with our guidance, you can see that market inflation on selling prices more than offset build cost inflation for completions in the period.
While we have very good data on pricing, it's not easy to discern how much of the uplift is market and how much is down to our focus on price optimization. With the benefit of an excellent order book, we have been more focused on price this year than ever before. The 6.5% shown on the slide is the underlying price inflation captured on completions in the period compared to the first half of last year. Build cost inflation on legal completions coming through the income statement in the second half of last year was 5%. In March, I said that had pushed up a bit further at the start of this year, and you can see that we're showing 6.5% included in the slide for half one.
Today's prevailing rate of cost inflation is higher at around 9%-10% because the pressure from both material and labor costs have increased, with more of that pressure coming on the material side, driven by higher energy and fuel costs. Despite this higher level of cost inflation, the pricing we are seeing on sales means we continue to expect price growth to offset build cost inflation. You can see that the margin in half one also benefited from the improved JV performance and a handful of planned land sales, which were mainly phases of larger sites where the sale was either anticipated on acquisition or is related to a swap with another developer. We're not expecting to repeat the same level of JV profits or land sales in half two. As you would expect, you know, we continue to be very disciplined on cost.
The negative impact from net operating expenses is a combination of lower fixed cost recovery as volumes were less than last year, and increased expenses, principally as a result of higher salaries from annual pay rises and benchmarking exercises, but also due to increased insurance costs and a return to more normal spend on travel and subsistence. For the full year, our margin guidance remains unchanged. We continue to anticipate underlying year-on-year progression towards the 21%-22% target range. What you see on this slide is that we've maintained a strong balance sheet with low adjusted gearing and at the same time continued with our measured investment in the business to put us in a position to deliver future growth, assuming a stable market.
The increase in land is a reflection of the growth in the short term on land bank from 59,000 plots twelve months ago to over 66,000 plots at the end of June. This brings the total short term land bank to 88,000 plots, which is 10,000 more than two years ago and is bang in line with what we committed to deliver at the time of the equity raise. Following the same theme, the growth in WIP balance is also in line with our guidance as we look to grow our outlet numbers at the end of this year. At the end of June, we had already started on site at 24 of the outlets that we plan to open in half two, and we own and have detailed planning for a further 17 outlets also for half two.
The increase in provisions is consistent with the additional GBP 80 million of fire safety remediation commitments we announced in April when we signed the government's Building Safety Pledge. As expected, the group's net cash position reduced in the period, largely due to the investment in land and WIP. The 2021 final dividend of GBP 161 million was paid in May, and today we've declared an interim dividend for this year to be paid in November of GBP 163 million, or 4.62 pence per share. This, together with a GBP 150 million buyback, which was completed in the first half, means we will return GBP 474 million to shareholders in 2022. It's probably the right time to emphasize that our ordinary dividend policy is different to the rest of the sector.
You know, in a cyclical environment, earnings fluctuate, so basing our ordinary dividend policy on net assets significantly improves the consistency and reliability of those returns to shareholders compared to earnings measures. Clearly, we are very mindful of the prevailing general economic uncertainty, but with our fantastic land bank and strategic pipeline, we are more confident than ever that we can continue to pay an ordinary dividend of at least GBP 250 million in a normal downturn, which we previously put parameters around, and we would still emerge in a very strong position.
By now, I'm sure you're all aware, not least because Jenny's already mentioned this, that today, based on our performance in the first half and current market conditions, we are upgrading our guidance for 2022 group operating profit, including JVs, to be around the top end of the current consensus range, which is GBP 924 million. Our UK completions guidance is reassuringly unchanged at 2%-3% growth on 2021 and affordable at 20%. Blended average selling prices on completions based on the order book and current prices for rents or plots are now expected to be 4%-5% up on last year.
Our cash guidance is unchanged at GBP 600 million, and as always, it's very dependent on the timing of land spend, but with the increased profit, the risk is probably a bit weighted, more weighted to the upside. We're continuing to approve land on a replacement basis with around 7,000 plots approved in the first half. We've updated our guidance on net finance charges to GBP 20 million, which reflects the increase in interest we expect to receive on our cash deposits. Lastly, I mentioned earlier, you know, we've increased our expectations on share of JV profit to GBP 14 million for the year. Looking further forward, and you know, as Jenny's already said, we remain on track to increase our outlet numbers at the end of this year. If market conditions remain stable, that positions us for growth. Whatever the market conditions we face in 2023, those additional outlets will give us flexibility to continue to optimize our sales and returns for shareholders.
Thank you, Chris. I just want to take a few moments to remind you of what we set out at the investor and analyst day. Don't worry, I'm not going to repeat it ad nauseam, but I just wanted to remind you at a very high level of our focus. It's worth repeating that our clear focus is on building a stronger and more resilient business, and that there are four cornerstones of value which are key to deliver shareholder value and returns. Land, operational excellence, sustainability, and capital allocation, which going forward, you will hear from us time and time again. Our financial targets are simple, 21%-22% operating margin and return on net operating assets of 30%. I did say I wouldn't linger too long.
The whole business is very focused on these KPIs, and we've simplified and aligned them with the cornerstones. Again, it's back to simplification and driving value where it matters. Some of the KPIs, for example, employee engagement and carbon reduction are only annual measures. Going forward, this will be the last time that you will see these at half year. Instead, we'll give you an update at each half full year. I won't deal or dwell on the detail, but I will highlight just a couple of things I think you'll be interested in. Land as a percentage of selling price has increased. This isn't a surprise. The market, as I've mentioned, you know, quite a few times over the last year, is more competitive.
There are a smaller number of pull-through plots in the period from strategic land. However, it also reflects the locational quality of the acquisitions, a higher proportion of smaller site sizes and more advanced planning provenance, which obviously reduces risk in absolute terms, but also the risk of planning delay, which is, as I've indicated previously, a continuing challenge for the sector. All that being said, the acquisitions continue to support our margin target. Our focus on health and safety is consistent. We, while we perform well ahead of industry, we're continuously striving to drive down injury rates as much as possible. Build quality is important for the customer proposition, but it's also more efficient to get things right first time.
I'm very pleased that we remain the leader in the sector on construction quality. I spoke to you about our new house type range last year at the 2020 full year results, when there were just computer graphics. In a moment I'll show you a step on from this with a video fly-through. But the message you'll hear is the same. As a reminder, the objective was to produce a customer-focused range of houses with great curb appeal and livability, and that provides us with an efficient tool to buy land and gain planning consents while being simple, cost-effective, and safe to build. The first homes sold, I can now confidently say that the range is delivering on all fronts.
The range was developed with the new regulations in mind, which will help us ease through transition, so we're in a good place. The new range supports the principles of simplification, standardization, and yields greater efficiency, and increases the uptake of the national sales and technical specifications, and maximizes the benefit of our central procurement processes. The range comprises a core of 28 new homes, and you can see how that compares to over 100 back in 2017. This very efficient range provides us now with the resource ability to introduce a small number of additional house types, such as a small urban range, which will support our competitiveness for denser urban and brownfield sites.
As a reminder, we sold the first new house types this year and these are available for plotting across the business and will be on the majority of our sites by 2025, reflecting planning progression. You may have seen a reference in this morning's statement to a current position regarding the Standard Assessment Procedure, SAP, which is the methodology provided by government to assess and compare energy and environmental performance of homes. The new Part L regulations came into force on the fifteenth of June this year. However, the sector continues to experience issues with the new SAP software, and we remain unable to conclude our future specifications until these are resolved.
It's increasingly important that these issues are corrected and the complete and accurate SAP modeling software published by government to ensure that the sector's prepared prior to the end of the transitional period in June 2023 to enable the industry to model new sites. We continue to support the Future Homes Hub and engage with government to address this. In terms of preparing for future homes, we'll be beginning construction of pilot homes later this year, and these will provide us with invaluable insights into the best technology solutions for net zero homes, and well ahead of the introduction of the Future Homes standards in 2024 in Scotland and 2025 in England and Wales.
Finally on this slide, I know there's quite a lot of information here, you'll see a table from DLUHC that was published only last week showing what we already know to be the case. When considering the average cost of energy per home, new build is significantly less compared to the existing housing stock. Once we've referred to it previously based on anecdotal evidence, the data from our customer research I referred to earlier now confirms that the cost of living crisis and energy costs are causing some customers to reevaluate that balance of benefits such as energy efficiency and maintenance costs in favor of new build. I'd like to show you a fly-through of the Chedworth home from our new range.
It's just over 1,000 sq ft net sales area, and it meets the space and accessibility standards of the majority of the new homes that we've created. Customer research describes this home as an entertainer and customers particularly liked the separate but connected use of double doors and the open plan Y factor. Hopefully, as the video plays, I'll just call out some of the features for you. You'll see additional light and space in these homes with more open plan living. We've used those in between spaces, the liminal spaces, for desks and workspace to provide flexibility to work from home even in our smaller homes.
The kitchen being the prime, living space for many of our customers has been enhanced by removing laundry, increasing attractiveness and usability of the living space. This has been a feature in a number of our larger homes for a long time, but the new range extends this principle to all homes, no matter how small. You'll see through the video various examples of how we've used previous dead space, such as below stairs, built-in storage. To reiterate, as well as a customer-facing design feature in the range, it's also been designed to be cost-effective and efficient to build. It is more concise, less complex, and designed in external options to ensure that there's less need for bespoke, non-standard house types to be plotted.
Unfortunately, we didn't get the chance to show you around our prototypes given the pandemic restrictions that operated at the time and before they were successfully sold. We do hope later in the year to get some of you out on site to have a look at the new house types. Okay, the land market, and look, we spoke about this in May, in some detail, and it's not going to be surprising to you to hear me reiterating that it's very competitive. That's not to say that they're not opportunities to be had, but we're certainly seeing the benefit of having built a long land position and have an excellent strategic land pipeline, which becomes a clear competitive advantage in a market like this.
We remain active in the market, which is important, but with the strength of our land bank, we have some inbuilt protection and the benefit of being selective. On the planning side, it continues to be very frustrating, and our teams are really working hard to get their sites through. You'll remember me telling you that this now extends to all areas of planning not just the initial planning decision, and it's clear that it will take some time for this to be resolved. The more recent issue is the increase in the number of planning authorities impacted by nutrient neutrality following the Natural England announcement in March of this year, which extended the areas affected. HBF data indicates that this now affects 74 authorities and up to 120,000 potential homes across England.
This has the potential to cause delays to site starts and could affect up to 1,500 owned Taylor Wimpey plots expected for completion in the next five years. This restriction is also impacting land availability in the affected areas, but we are actively engaged with government, local authorities and other stakeholders seeking a resolution. Overall, there's no doubt that it's a difficult backdrop, but we are very pleased to have ended the half year with a higher number of outlets, and remain on track to increase outlets numbers at the end of this year. I always like to give you some reference data, and this chart from Savills shows you what's been going on with land values.
If you look at the purple line, which is probably for some of you a black line, you can see that pricing for UK greenfield land has stepped up. According to Savills, UK greenfield land values increased in Q2 2022 by 2.2%, taking annual growth to 9.9%, with UK greenfield values now only 1% below their 2007-2008 peak. These figures demonstrate the competitiveness of the market now, and really underlines, I believe, the quality of the acquisitions we undertook in 2020 and early 2021 in particular when compared to today's market. Having talked about the very difficult planning environment, I hope that the next two slides will give you comfort on the visibility that we have on our volume delivery.
You can see that the extra land we've acquired since 2020 and the excellent work of our teams means that despite the difficulties, we have capacity to deliver outlet-led growth subject to stable market conditions, with planning well advanced on our sites for 2022 and 2023. You can see here the progress we made on the 2023 plan completions since the full year, with 99% of plots already with planning. I'm particularly pleased that we have advanced our owned with planning plots to 80% from 61% at the time of the full year reporting. On this slide, you'll see that we have good visibility with all of our outlets for 2022 owned and controlled.
We have started work on 24 outlets due to open in the second half of this year, and 93% of our new outlets for the first half of 2023 are already owned or controlled. We remain focused on opening new outlets late this year, and just to stress, we mean really late this year, November and December to deliver on growth in 2023. Locational quality has and continues to be a key investment criteria for Taylor Wimpey, and so our outlets coming on stream are in quality locations supported by strong demographics. We are confident about their underlying resilience. On the final slide this morning, in summary, we're in a really good place, and our disciplined focus on building a stronger and more resilient business positions us very well.
While the housing market has continued to perform well, amid wider macro uncertainty and the fundamentals are strong, we aren't complacent. We are monitoring the data and the environment very closely, we'll continue to prioritize margin, over volume growth and on delivering, outstanding homes and service from our quality locations. We have clear levers to pull should it be necessary, and we have the agility and ability to act, swiftly should there be a market change. We are very clear, in all market conditions that we can continue to drive performance and our focus on building a stronger and more resilient business, and remain confident in our ability to deliver superior returns through our sector-leading land bank and enhance value through sharper operational focus. Thank you, for your attention this morning. Chris and I now happy to take your questions.
Thanks.
Yeah.
Will Jones from Redburn. Three, please. The first around outlets, lots of helpful data in the pack, but would you be willing to put a view on where you see that the year-end position potentially finishing in Maybe even a view as to how that might sit in June of next year on the base case. I guess linked to that on the slide around the planning stage, I think it's about 88% of site outlets for next year that have got detailed planning. Would that be a normal percentage at this time of year for looking into the year ahead? Second one was then about land buying.
That 21% plot cost on approvals versus, I think, 16% as an average for last year. Different things going on there, but would you be willing to put a view on how much of that is mixed factors as opposed to underlying margin pressure? The last one is just around price. Clearly lots of focus in the business around that this year. Do you think, again, as a base case, you might be able to edge prices higher through the second half, or is it more about defending what you've done? Thanks.
Okay. Thank you. That was four on my count. Okay. I mean, I'll come back to you, Chris, on the outlets if
Yeah.
If you don't mind. In terms of 80% of outlets with, you know, 88% of outlets with approval for next year, I think it can be variable. But I think that in recent years, that's a really strong position. Particularly, you know, the comfort that I want to give you is you'll have heard lots of the frustrations in the planning system, and we're in a very good place, I think compared to many. I'm very happy with the position that we are in. On land buying, you know, we've indicated that it's been quite competitive. There is definitely quite a bit of geographical sort of mix in that.
There's been sort of less acquisition in the north of the business in the period. I would flag that low level of strategic land pull through which has, you know, quite an effect on the levels. We come at the acquisitions on a site-by-site basis. I flag too that the site size mix is more weighted towards smaller sites in this half than we have seen previously. The underlying sort of land cost as a percentage of ASP of owned land and the land bank remains very low at sort of 14.3%.
On price, you know, the business is very focused on price, and we've seen, you know, incrementally, month-on-month, you know, May, June, July, sort of continuing price momentum. We'll continue with that strategy. You know, very aware of the wider market, and reading the data, you know, closely well. Chris, can I just pass the outlet question to you, please?
Obviously average outlets for last year, 2021, were 225. We started this year with 228. In January and again in March, you know, I said that we were expecting them to be pretty flat up to the half year, and we closed the half with 233, and at week 30 we're sitting at 229. We are continuing to make very decent progress navigating the various planning challenges that we face, and we still expect to show outlet growth in half two, with that growth coming right at the end of the year. Am I gonna give you a number, Will? No.
Okay. Lorna Ami. Why don't you just go for it?
Hi, Sam Cullen from Peel Hunt, and I've got three also. I think on slide 13, you gave your sort of margin bridge. Assuming things remain stable, how should we think about that bridge for next year? I'm guessing the kind of net economic benefit captured at the 0.6 that you saw in the first half of this year, that would probably close in 2023 as the delta between sales price and build cost inflation probably closes relative to where it's been in the first half of this year at least. Whether some of those one-offs around land and JVs might repeat and help you next year, or whether they'll normalize again. That'll be helpful.
Secondly, on the SAP point you mentioned Jenny, could—what happens if that's not fixed, as it were, in the next 10, 12, 16 weeks? How long? What's the runway you've got, and what happens if it doesn't come through? The last one, I think the charts on page 20, and you helpfully point out the kind of different energy costs. Obviously, you know it. The government now knows it. Do customers know it, and are they willing to pay for it, as it were?
Okay. I'll take the last two, Chris, and then I'll come back to you on the margin bridge. I mean, on SAP, it's a really good question and, you know, we have been engaged with government to try and resolve the issues. At this point, we're funneling down the sort of priority for, you know, volume home builders that are delivering high volumes, asking government officials to concentrate on the elements that go to our sort of repeatability. I think that there is reasonable prospect that we will resolve this sort of by the end of September.
It would still leave some specialist sort of areas that I think would still have some issues, and that creates the problems. Less for Taylor Wimpey and our house type range, but for those who are in the more specialist end of the end of the market. I think the reason that I sort of flag it is that this is the concern that we have with this plot-by-plot transition. It does require all parties to be understanding the criticality of the change.
Historically, with a site-by-site transition, it, you know, if there had been a little bit of slippage, it wouldn't have been as critical as it is now, and we really must, you know, have the fully verified SAP model as soon as possible. Sorry, your final question?
Just on the differing energy costs.
Yes.
You know, for the customers.
Yeah, I think you know, obviously the level of concern around energy costs in the last sort of six months, and you know, the last sort of three or four months in particular, have increased the level of sort of inquisitiveness and concern that customers have, and they are asking for more information around energy efficiency. As I said, from the customer research that we did, it really did stand out. You know, we felt that that's been coming for a while, but the customer research, which was in the field sort of over the last few months, you know, indicates that it really has gone up the customer's list of priorities.
Whether they'd pay more, you know, we've always taken the costs of energy efficiency Part L and Part F as a sort of cost to land, so you'll know that we've been embedding that in our land acquisitions. You know, if there was a benefit, whether it's green mortgages or in sort of affordability calculations, then, you know, that would be very, very positive. Chris, to the margin bridge.
Sam, the margin bridge that I presented back in March that sort of bridges to the, you know, 21%-22% range, you know, is still our view of the path to get there. You know, that included three components. The first was, you know, the energy efficiency benefits associated with higher volumes. That was the largest, you know, component of the bridge. We've reiterated today that we remain on track to grow outputs.
Obviously, if the market remains stable, that will position us for that growth. Land bank evolution also makes a contribution, and actually, you see some of that in this period's sort of rec. There were other operational improvements, things like the new house type range that Jenny's talked about, and also, the implementation of the new Microsoft Dynamics CRM system, which is, you know, now fully rolled out. You know, those are the things that will sort of get you to the level, all things being equal.
Okay. Charlie.
Thanks very much. Charlie Campbell, Liberum. A couple of questions, please. Jenny, you mentioned, when you were talking about, I think you said transitional support for people on Help to Buy. Just wondered what you meant by that particularly, and I suppose a broader question really about Deposit Unlock and how well you think that might work going forward. Then second, I suppose a related issue, mortgage lenders have sort of seemingly changed their attitudes towards new build. Just wondered how widespread that is, whether more lenders will change policies as well, and just generally how supportive mortgage availability is.
Okay. Thank you for that. My reference to the transitional support around sort of Help to Buy was more in respect of the length and quality of the order book so that, you know, gives us just a little bit of runway should there be any negative impacts from the unwind of Help to Buy. On the positive, you know, and very pleasingly, from the information that we're getting from the IFAs is that first-time buyers are, you know, funding deposits from savings. Those savings, you know, are significant at the moment.
You know, Deposit Unlock was designed to support the sector on the unwinds of Help to Buy and obviously Taylor Wimpey's been involved in that. We've had Deposit Unlock available for some time. Actually uptake at the moment is really very low, you know, and I would stress the very low. I think that indicates just the quality of the offers that are available from the lenders in the wider market. It is there, and I think, you know, it'll be a useful tool in our toolkit, should it be necessary.
That final point on the attitude of lenders to new build, you know, it's really positive for them to now see those benefits, maintenance costs, more energy efficiency. Obviously, the introduction of sort of the EPC threshold for rental properties, you know, around 2026 and transitioning into 2027, is factoring there as well. You know, from a lending point of view, knowing that those homes are fit for the future as opposed to needing a retrofit, it is very pleasing to see sort of lenders recognizing that. Okay. Thank you. Ami. Oh, sorry. We're going to come to you, Ami, I promise.
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Oh, sorry. You've got it. Yeah.
Ami Galla from Citi. Three questions from me. The first one on build cost inflation that you've guided at this stage, I'm wondering if you can give us some color as to how the tenure over which it's been fixed for, what sort of visibility do we have with that 9%-10% at this stage? The second one on the land market. Given the sort of pressures around pricing and costs over the next 12-24 months for that matter, are you planning to increase your hurdle rates on land as you go forward in 2023? The third one on in terms of the potential buyers that are coming to your site, are you seeing more requests for part exchange or some sort of incentives moving forward?
Okay. On sort of part exchange, no significant movement. No, you know, the sales teams aren't relying on part exchange at all. It's at a very low level. On the land market and pricing and cost, we assess our land acquisition on current costs, current sales prices. You know, not all of our competitors are perhaps as up to speed on build cost movements as we would be, you know, through the processes and communication that we've got in the business. That is our behavior. You know, current price and movements and price will be factored in.
Around sort of run rate on land acquisitions, you know, we've indicated that we're in a really strong position. We are being selective about the sites that we're acquiring. You know, we're looking at it sort of mutually as replacement level, but it really then does depend on the quality. We have the benefit of that longer land bank so that we can be selective and make the right decisions for the right reasons. On build cost inflation, Chris, do you want to tackle that?
Yeah. In a sort of a more normal market, it would be perfectly reasonable sort of question in the context that, you know, when we agree prices with our suppliers, then in a normal market, you know, they tend to go to the duration of the contract. What we've seen, I think, in recent times is that, you know, they're coming back to us just because their input costs are changing in such rapid ways. I don't really want to have a crystal ball and give you an answer. 'Cause, you know, things are changing. I mean, steel prices are ones that, you know, we talk about and along with timber quite a lot over the last couple of years.
You know, they dropped towards the end of last year. They peaked again with the Russian sanctions, and then they've dropped off again, and who knows what's gonna happen to those, you know, as you know, as gas costs increase in the second half. Then with timber, you know, it's again, you know, it's been very volatile. Prices increased quite a lot in the second half of last year. Softened since then. And the indications are that there might be a little bit of continued softening going forward. You know, it's very hard to call that. You know, when you have to look at each one of the inputs, it's a fairly complicated assessment to make for each one, and then you've got to add them all up together. That's why I'm not inclined to give you a number, I'm afraid. I mean.
Okay. Are there any other questions? Marcus?
Hi, Marcus Cole, UBS. I was wondering if you'd give us some color on the H1 intake margin, that's all. Just can you remind us what the margin differential is between the new and existing housing range? Thanks.
In terms of intake margin, I just reconfirm that the opportunities that we've given approval to are supportive of our margin targets. You know, in respect of the new house type range, from a design perspective, we've never relied on improved sort of revenues markets. We would always take the view that that's an additional positive benefit. I believe that these are attractive homes with you know strong curb appeal, addressing what customers want in modern living. The customer feedback from the prototypes has been really very encouraging. On a build cost perspective, we said cost effective. We would expect some benefit from the simplicity of some of the build as well. We're now, you know, sort of in the thick of tendering sort of the new house type range on a more significant level and that's something that we can come back to maybe at full year.
Thanks. Gregor Kuglitsch from UBS. Maybe quickly on the volumes and sort of the sites, I'm trying to get a picture of if the market holds, if everything's fine, what are you actually gunning for in terms of volume growth next year? Appreciate it. I mean, I'm looking at your site numbers that you gave. They're at a pretty low single digit. The sales rate obviously dropped off. I don't know, you know, I think that's a bit of a supply issue. But perhaps the sales rate normalizes. So what are we actually looking at here in terms of potential volume growth, assuming the macro is sort of where it is today?
I think that's best pitched to you, Chris.
Okay. Our expectations for 2023, Gregor, haven't changed. You know, I'm not expecting you know, to change the number at the moment. I think we just need to see how things pan out through the second half of the year. The normal routine in any case, I think, is for us to provide an update at the end of the year, and that's obviously what we'll do.
Okay. Any other questions?
Yes, by Rajesh Patki from JPMorgan . Just first one is just a clarification, Chris. I think you commented on the affordable ASP, if you can just catch up on that again. The second one is just the moving parts in terms of the second half cash flow. What would be the key moving parts apart from the dividends, the interim dividend payment in November? Thank you.
Cool. The clarification, the increase in the affordable ASP in the first half was a weighting of affordable completions towards the south. It was heavily mix related. Hopefully that answers the first question. We haven't changed our guidance for cash for the full year at GBP 600 million. Net planned spend within that is round about GBP 1 billion. Pardon me. We've obviously got extra WIP associated with sort of, you know, those increasing outlets. I've said before that, you know, I'm targeting to try and get to GBP 1.7 billion by the end of the year, and that's still the target. There aren't any additional pension deficit contributions 'cause you can see that we're in surplus, and that's in the slides. The payments on sort of exceptional provisions, you know, I'm currently estimating around about GBP 90 million for the year.
Okay. I think if we're all done with questions, well, thank you again for coming out this morning. You know, hopefully you've heard that these have been excellent results, which Chris and I have been delighted to deliver, positioning us really well for the second half of the year. We look forward to speaking to you later in the year. Thank you.