 Redrow's John Tutte warns that return on investment in slower in London
Redrow does not build houses in central London because returns on investments in the city are slower than schemes outside of it, according to the firm's CEO, John Tutte. He also claimed stamp duty, which requires buyers to pay an extra fee on properties above £125,000 ($156,000), is causing the housing market to slow. Following Redrow's acquisition of Derby-based Radleigh Homes last year, Tutte said the company would consider deals with similar companies in the future. Redrow's revenue rose by 23% YoY in the last six months of 2016 to reach a record £739m.
Redrow chief executive John Tutte has warned it is “a real challenge” to build in central London.

Speaking at an Instinctif Partners housing policy event this morning, Mr Tutte said the housebuilder made the decision “not to be in central London” becuase it was “very difficult” to get the best returns there.

Construction News reported last month that output in London was expected to decline by 6.6 per cent in 2017 and 3 per cent in 2018, with a slowdown in the residential market the main factor.

Mr Tutte said: “The capital we put into London turns a lot slower than the capital we put into schemes outside London.

“You can’t get away from fact you have to make return on investment.”

Mr Tutte also spoke out against stamp duty, which currently sees buyers pay 2 per cent on properties between £125,000 and £250,000, 5 per cent on the portion between £250,000 and £925,000, 10 per cent within the next band up to £1.5m and 12 per cent over that.

He said: “Stamp duty has been an impediment to the market, which is why I think the market is slower than it was.”

Mr Tutte told Construction News earlier this month that Redrow was open to new acquisitions after posting a record revenue in the second half of 2016.

Redrow saw revenue rise by 23 per cent year on year for the six months to 31 December 2016 – the first half of the company’s financial year – hitting a record £739m.

The housebuilder acquired Derby-based Radleigh Homes this year, which Mr Tutte said was a “great strategic fit” for the company.

He said: “It’s difficult to plan for acquisitions, but if the opportunity came along for a similar company to Radleigh in the future, we’d certainly have a closer look at it.”