London Square sees profit double

Profit at developer London Square more than doubled in the year to March as the firm reaped the benefits from its ventures into build to rent and partnerships housing.

The London-focused business, set up by former Barratt directors Mark Pain and Adam Lawrence (pictured, right) in 2010, reported pre-tax profit of £22m, up 139% on the £9.2m reported the previous year.

The profit came as revenue recovered from the hit taken during the covid pandemic, with turnover leaping to its highest ever level of £278m, an increase of 75% on 2021 figures.

The figures for the first time included revenues from sales to Build to Rent investors, which comprised 29% of the turnover. In total, the business built 502 homes, up more than 50% on the 328 built the year before.

In a statement in the accounts, published on Companies House, chief executive Adam Lawrence put the performance down to the growth in the firm’s build to rent business, London Square Living, where it is contracted to build out a 756-unit scheme at Nine Elms, and its ventures into partnerships and affordable housing.

In June London Square secured approval from the Regulator of Social Housing to register its subsidiary, Square Roots, as a ‘for profit’ provider of affordable housing, after which it said it planned to build 3,500 homes.

Lawrence said, however, that “direct sales will remain the core focus of our business”, and said that London Square had enjoyed its highest ever private sales rate over the last year, with sales running at 1.06 homes per site per week.

The firm said its forward sales were also at the highest point ever reached, given its pipeline of build to rent and partnerships homes, and strong private sales, with £456m of homes pre-sold. This compares to just £195m at the same point last year.

However, the business did say that it had been impacted by “significant build cost inflation” in the last 12 months, and that the overall impact of these remained to be seen. Adam Lawrence admitted that meant that profit margins had been “under pressure”.

He said: “Despite the uncertainty of the economic environment, for the housing market the demand supply imbalance appears to be here to stay.

He added: “The economic backdrop has also brought about cost pressures, particularly on material prices. Processes put in place continue to prove effective at managing these increases in the current market. We are very excited about the prospect of the coming year.”

The strong results are a far cry from statements issued in the immediate aftermath of the covid crisis, when the business was forced to secure covenant waivers from its lenders because of having been temporarily forced to close its sites during the spring 2020 lockdown.

In the 2020/21 accounts, the business saw revenue drop by 42% to £159m as covid-19 restrictions hit sales.