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Bovis Homes warns of further landbank writedowns

Bovis Homes has warned of more landbank writedowns and cost cutting exercises in a gloomy trading statement.

The Kent-based builder said today it hoped annual overheads would be below £45 million by the end of 2008 after a cost cutting regime that has seen it shed 40 per cent of staff since January.

Bovis also cautioned that it is expecting to make a write-down on its landbank inventory in December.

Cost cutting actions so far has seen Bovis shut its eastern regional office in Cambourne, Cambridgeshire as part of around 400 job losses this year. It has also merged the key functions of its northern and central regions.

Bovis expects to complete 39 per cent fewer home sales this year, at around 1,800 against 2,930 in the year before, with a third more social and partnership home sales.

The business has been reducing prices to attract buyers and help with cash flow, but said there had been a marked weakening in the market since June.

The statement said: “The developments in financial markets over the last year, with their acceleration over the recent past, have generated the worst trading environment in the housebuilding market for many years.

“The lack of mortgage finance, as evidenced by the 70 per cent year over year decline in mortgage approvals for home purchase reported for the third quarter of 2008, has led to a sharp decline in home buying activity.

“This, together with the general economic outlook, has weakened the confidence of prospective home buyers which is now creating further drag on housing transaction activity and placing downward pressure on house prices.”

The group hopes that its write-down will not be significant, but added it needs to take into account further house price falls.