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Plumbers, estate agents and self-storage tipped as Help to Buy investment winners

Joanna Faith
Written By:
Joanna Faith
Posted:
Updated:
15/04/2022

Housebuilders were the immediate winners of the Chancellor’s decision to extend Help to Buy. But plenty of other property-related stocks are set to benefit.

The value of Britain’s housebuilders rose sharply on Monday following the government’s decision to extend its Help to Buy scheme.

Shares in all of the biggest firms jumped after Chancellor George Osborne said the equity loan part of the Help to Buy initiative – which offers potential homeowners 20 per cent loans on new-build properties worth up to £600,000 – will now run for an extra four years in England until 2020.

Persimmon led the pack, climbing 7 per cent, while shares in Bovis Homes and Taylor Wimpey climbed 4.4 per cent and 3.4 per cent respectively. Barratt Developments, Berkeley Group Holdings and Bellway were also up.

The Chancellor said a further £6bn will be invested in the scheme to help an estimated 120,000 additional homes to be built.

He also set out plans for a major new housing development around the high speed rail station in Ebbsfleet, Kent, earmarking £200m to build 15,000 new homes on former industrial sites and a former quarry.

All this has unsurprisingly shifted investors’ focus back to property-related shares, with housebuilders attracting much of the attention.

However, Mark Wharrier, co-manager of BlackRock UK Income fund, says while the extension of Help to Buy is supportive to housing affordability and consequently house prices and transaction volumes, which is good news for housebuilders, it raises the risk of greater land price inflation which could erode their profit margins over the next few years.

As a result, Wharrier prefers companies that can benefit directly from rising transaction volumes – which are at very low levels by historical standards – such as Howdens Joinery, the kitchen manufacturers.

Stephen Message, manager of the Old Mutual UK Equity Income fund, is also backing businesses which will profit from more housing transactions. He likes Big Yellow Group, the self-storage company which offers storage container rentals to their customers.

“Close to 25 per cent of its business is related to housing transactions. So as more people move house, the demand for the company’s services will increase. It might even have some pricing power,” he says.

Message also likes plumbing merchant Wolseley.

Countrywide, the UK’s largest estate agency and lettings network, is the choice of John Baker, co-portfolio manager of the JP Morgan UK Dynamic fund. He also tips Lloyds Banking Group as an indirect play.

“Its revenue line should grow with higher mortgage volumes while bad debts should decline as house prices recover and as the wider economic context improves,” he says.

Finally, Matthew Tillett, UK equities portfolio manager at Allianz Global Investors, suggests Henry Boot, a family run company with over 100 years of history operating in construction and land development.

One of its divisions is Hallam Land, a land development business.

“Land prices have not moved up that much during the current up-cycle in house prices. With an extension of Help to Buy, this could change quite quickly,” says Tillett.

“There will be more demand for prime greenfield sites, which Hallam Land has a lot of. Construction costs are usually the main component in the cost of a new house and they tend to inflate or deflate less rapidly than house prices. Thus when house builders start to have confidence in rising house prices they start to bid up the prices of land quite rapidly.”