Shares in housebuilding companies plunged when the market opened on Friday after the government put the brakes on the housing market, telling people to delay their home moves if possible and to stop new viewings.
The government, which announced the new guidance on Thursday night, urged buyers and sellers to put plans on hold until the coronavirus restrictions are no longer in place.
The move prompted a sell-off of shares in some of the UK’s largest housebuilding firms. Persimmon, Barratt Developments and Taylor Wimpey were among the biggest fallers on the FTSE 100 on Friday morning, all down 7%.
Redrow shares fell 6% after the housebuilder issued a Covid-19 update to investors. The company said it has stopped building new homes, is putting a significant number of employees on temporary leave and is in talks with banks to shore up its finances as the coronavirus hammers the construction industry.
The company, which has already moved most office-based staff to homeworking and shut sales centres, had been operating with reduced construction staff to try to finish projects that are close to completion. The housebuilder said it will shut down all work immediately.
“It has become increasingly impracticable as our supply chain has been significantly impacted in recent days,” the company said. “As a result, the board has now decided to go further and commence, with immediate effect, an orderly and safe closure of all of our sites and offices.”
The north-Wales based company said that as a result it has put a “significant number” of employees on furlough – unpaid leave, save for the £2,500 a month available as part of the government’s bailout.
Redrow said that it had a strong balance sheet, with assets of £1.6bn, but, given the company is facing a “prolonged period of inactivity”, it had started talks with its six banks.
The company is seeking to increase its £250m revolving credit facility and double an additional facility to £100m. The company has also applied to the the government’s Covid-19 corporate financing facility.
“These are unprecedented times,” said John Tutte, the executive chairman of Redrow. “The actions we have announced today will give us the flexibility to manage the business through this turbulent period to ensure we are ready to resume production when it is safe to do so.”
The company said it has an order book of projects worth £1.4bn, with £900m of that already contracted to complete.
Rightmove said it was cancelling its final dividend for 2019, which was due to give £38m to shareholders, because of the uncertainties arising from the coronavirus crisis.
The property website also scrapped its financial guidance for 2020 but added that the board was confident the company had the “financial capacity to withstand this challenging period”.