2026.09.25 | GP | Housing | Keepmoat Affordable Housing

Housing Funding, Planning Constraints, Build-Cost Pressures, and the Path Back to EBITDA Growth for This UK Housebuilder

Primary:

Maison Bidco Limited

Associated:

Maison Hold Limited

CRST:LN

Bloor Homes Limited

TW/:LN

BDEV:LN

Miller Homes Limited

Avant Homes Limited

Lovell Partnerships Limited

MGNS:LN

VTY:LN

Viewpoint:

Former Executive

Moderator: Julien Dray (JD)

| Sep 24, 2026 | 40 Min Read

John Owen (JO), Former Land and Partnership Director - Keepmoat

SU MMARY

Overview

The discussion centers around Keepmoat, a UK-based house builder specializing in affordable housing. The expert, a former director at Keepmoat, provides insights into the company's focus on partnership models, funding strategies, and market positioning. The conversation explores the company's approach to land acquisition, project economics, and the evolving landscape of affordable housing in the UK.

Key Insights

The expert emphasizes the importance of Keepmoat's partnership model, which allows for reduced upfront capital requirements and collaboration with local authorities to secure land and planning support. Keepmoat's strategy involves a cash-light model by leveraging housing associations for land and build funding, minimizing the company's own cash usage. The expert suggests that Keepmoat's focus on affordable housing and partnerships is expected to increase due to the stagnant private sales market and the availability of government grant funding. The expert highlights the need for Keepmoat to increase its volume of delivered plots to improve EBITDA and maintain profitability amidst market challenges.

Competitive Landscape

Aspect

Keepmoat's Positioning

Competitor Activity

Market Focus

Strong focus on affordable housing and partnerships

Increased competition from national house builders and SMEs

Land Acquisition

Aggressive in acquiring land opportunities

Competitors like Persimmon Homes entering partnership space

Partnership Relationships

Established long-term relationships with housing associations

Competitors forming strategic group-level agreements

Regional Strength

Strong in Midlands and North of England

Competitors also targeting these regions due to favorable economics

Quantitative Insights

Metric

Revenue (recent period)

EBITDA (recent period)

Gross Margin

Revenue Split

Value

Up 8%

Down 9%

Fell by 2%

50% private buyers, 30% affordable housing RPs, 20% other

Development on Brownfield Land

61% of future development

Clinical Data

Not applicable as the discussion is focused on the housing sector.

JD: Hello everyone, my name is Julien Dray and I'm a moderator with Guidepoint. I want to welcome you on our call today. With regards to Keepmoat, we have a former land and partnership director to evaluate affordable housing funding, planning constraints, bid cost pressures and the path back to EBITDA growth for this UK house builder. If you have any questions, please feel free to email ask@guidepoint.com. Before we start, I would like to introduce our advisor for the day, John Owen. John, if you could quickly introduce yourself and give us a bit of background on your career, it would be helpful, and then we can begin.

JO: Thank you very much. Yes, hi, my name is John Owen. I have worked in housing development for over 20 years. I started my career in affordable housing development, working for housing associations, buying developments and doing partnership agreements with partnership house builders like Keepmoat. And from 2018 until 2025, I worked for Keepmoat as Land and Partnership Director, so my role effectively sourcing land opportunities, identifying partners to work with to fund and deliver those opportunities and basically delivering sites that the operational team could then deliver plots into the business. And now I run an affordable housing land and partnership consultancy.

JD: Understood. I'll briefly describe Keepmoat and we'll get going. It's a UK partnership-led house builder focused on affordable lower average selling price homes, mainly for the first-time buyers and institutional housing customers. It also has a strong brownfield generation focus with 61% of the 2025 development on brownfield land. Its key differentiator is the partnership model that we will discuss. The Keepmoat works closely with local authorities, which helps secure land, planning support and grant funding while reducing upfront capital requirements. In 2025, the business had a top line of £732 million for an adjusted EBITDA of £65 million, a 9% margin. Let's start understanding the business in terms of its different categories. So on our piece, can you take us through the value chain of the typical project unit economics?

JO: For the RP, Julien, or...

JD: Yeah, we start with the RP and then we can talk about the rest.

JO: Yeah, so the RP are effectively looking at quite long-term cash flows when they're looking at their investments. They aren't looking at things like profit and they aren't looking at the same kind of metrics that housebuilders work on.

Predominantly, they'll be looking at net present value, so they'll be cash flowing their investment over a long period between 30 to 45 years and effectively looking to deliver a net present value of zero or above. The metrics obviously vary depending on which housing association it is and perhaps a little bit on the project and what kind of risk they're taking on it. But effectively, they're looking at a long-term cash flow, whether all of their income over that period is going to cover all of the costs over that period, because ultimately they're not actually profit-making vehicles; they're kind of social purpose, charitable vehicles, and looking at these investments on very long-term paybacks, and that's driven by the fact that they, you know, the rental income that they get for the affordable plots that they deliver is guaranteed to increase over time in line with CPI inflation, and that is a large chunk of that is guaranteed by government through welfare. And the upshot of that is that obviously housing associations can borrow at very low rates of money and so they effectively cash flow their finance costs and all other costs, as I said, over a long period, decades, 30 to 45 years, and are looking predominantly at what the net present value will be. They will look at a notional sort of margin approach on some of their shared ownership products. So a lot look for a kind of notional cost of value, if you like, of 10% and that caps how much they can offer for shared ownership plots. But ultimately, the metrics are looking at our net present value.

JD: Let's take an average project and you can take us through every stage of the cycle and how RP gets involved and how Keepmoat gets involved. I'm just trying to understand how the economics are allocated high level and how the partnership works.

JO: Okay, so just an example site. So say Keepmoat Homes were to identify... it usually starts with the developer identifying a land opportunity. So the developer will identify a land opportunity, say there's 100 houses, a site with outline planning permission for 100 homes, the house builder thinks it would work well as a 100% affordable housing scheme. They will approach housing associations on that basis and look to agree basically a package price for the whole scheme. And what the house builder will be looking to do is to secure for basically land funding from the housing association and then build funding from the housing association so that throughout the kind of land acquisition and development process there's a minimal amount of the housebuilder's own cash being used. It's a very cash-light model effectively. So say the land is £5 million and what they would look to do within the package price offered by the housing association is to have at least £5 million of that paid up front on the date that the land is completed on. And then depending on the deal structure, there will then be a method for paying for work throughout the build. And that can work in different ways, but usually it's done on kind of build stage payments effectively as you roll through the contract.

JD: So on a typical project, you'd pay £5 million for the land purchase price, right?

JO: Yeah.

JD: And is that all funded by the RPs?

JO: In an ideal world for a partnership house builder, yes, and often yes. If it's a 100% affordable housing scheme, you know, you are delivering it for a housing association. And so you would usually establish a way of them paying for the land up front.

JD: Okay. And so that money comes out of the RP's pocket. Keepmoat hasn't spent anything yet. What they're doing is basically remaining in charge in terms of building the assets within, I guess, a pre-agreed time frame.

JO: Precisely. So, within the contract, there will be what houses are going to be delivered, the floor plans and the kind of detailed design of those houses, the programme against which those houses will be delivered. And there usually would be some flex around that, but there will be kind of absolute dates at which those houses need to be delivered. Otherwise, you will incur what are called liquidated and ascertained damages, so effectively damages for delayed

delivery. But absolutely, the housing association in their appraisal will have assumed that they're getting rental income or shared ownership income on particular dates. And that's what drives their net present value calculation that I was talking about. And obviously they want to secure that within the contract that they're entering into with the house builder in return for forward funding the land acquisition and the build.

JD: Okay, so they are able to fund the acquisition price of the land day 1 and in return for that they get a predefined number of units that they will own and rent.

JO: Exactly that.

JD: Okay. And does Keepmoat make money on the selling price of those units that go to the RPs or they make most of their returns on the units that are not sold to them?

JO: Well, it does depend on the project. So there are 2 different types of affordable housing. There is nil grant Section 106 housing that is sold at much lower rates. And then there is grant funded affordable housing where grant funding is used to buy the house, to fund the housing delivery effectively. If a house builder, Keepmoat or anyone else is delivering what Section 106 nil grant funded affordable housing, they won't be making a margin. They won't be making a profit on those houses. They will be making the money from the open market sale plots on the scheme.

JD: Yeah.

JO: If though the scheme, and this is mostly Keepmoat's model, if the scheme is to deliver grant funded affordable housing, say it's a 100% affordable scheme, as in every plot on the scheme is affordable, all the plots on that scheme will be grant funded and yes Keepmoat will make their margin from that from the grant funded affordable. So the grant funding is there to top up the difference between nil grant funded affordable housing and the market sale price of housing. You won't get the full market sale price for grant funded affordable housing, but you will get a reasonable percentage of it and that does vary from project to project and region to region.

JD: But is it fair to say that the game for Keepmoat is to manage to have a large enough share of the constructed units that they can sell to private individuals or not necessarily they can also be profitable on the...

JO: They can definitely be profitable. On the affordable housing, the grant funded affordable housing side, the Keepmoat model there has been more focused on over market sales historically. So JD: Yeah.

JO: Maybe doing kind of 25% affordable, 75% market sale, but it does make profit from grant-funded affordable schemes at a margin rate that's not as good as open market sales, but isn't that far off. And bearing in mind the funding benefits of having your land paid for, having all of your build paid for is quite an attractive way to deliver houses. And really the fact they haven't done more affordable housing is really just more about the number of sites and opportunities as much as anything else.

JD: Understood. Now, to look at the breakdown of revenues of Keepmoat, it's roughly speaking 50% private buyers, 30% affordable housing RPs, and then 20% is other. How has that split evolved over time and where would you think it will go in the medium term?

JO: Yeah, so how it's evolved over time, I mean, Keepmoat was for quite a few years more private sale focused than it is now.

JD: Mm-hmm.

JO: It was a partnership business and every single scheme had some element of additional affordable housing on it. But the overall delivery of affordable housing was more like 20% to 30% and there was no kind of other element to it. So the private rented sector was not a part of the delivery profile until quite recently in any kind of scale. But they've really responded to the sales market and the changes in the sales market and the slowdown effectively of private market sales in the UK over the last couple of years and have moved to more focus on partnership working and that has been doing additional affordable housing and doing private rented sector. I think that trend will continue for at least the next couple of years because, in the proportion of affordable housing and other partnership arrangements, because the housing, obviously, the private sales housing market in the UK remains pretty stagnant, pretty slow, and without any serious green shoots at present. And if anything, the opposite, with probably interest rates on the rise over the next 12 months. That combined, on the other side, housing associations have recently been allocated strategic partnership grant funding from the government through Homes England and are therefore in a better position now than they have been for a couple of years to acquire more grant-funded affordable housing from partnership house builders like Keepmoat. So I would expect that Keepmoat will be looking to secure, basically secure delivery of the land that it has bought and that it is buying by doing more partnership contracts, because that's where the market is, basically, and that's where the availability of buyers is. That's how you get what's called your absorption rates as high as possible. That's how many homes you can build and sell on any one site in one year, basically, as you do that. At the moment, you can only really do it through partnership deals with housing associations and PRS because sales rates are so slow, like private sales rates are slow. So yeah, I would expect the next couple of years for that to maybe increase; maybe you'd get to kind of 60%, maybe even a little bit more affordable, and PRS, with maybe 30% to 40% sales, really depending on whether the sales market manages to continue or not. One of Keepmoat's advantages in the sales market is that it does a lot of first-time buyer housing where there is always demand and hopefully later this year we'll see some first-time buyer support coming through in the October budget from the government which will help them. But I still think partnership is probably where they're going to be focusing for the next couple of years. They've always been quite a nimble business. So as the sales market improves and they work on a side-by-side, opportunity-led basis and as the sales market improves, they'll be able to take advantage of it. But it's just obviously at the moment there's no clarity over when that might happen. So yeah, they will be pragmatic and pursue partnership opportunities.

JD: And the kind of margin at the EBITDA levels that I was talking about earlier, so roughly speaking, we're talking about 20% gross profit and then 10% EBITDA. Does that reflect, do you think that can be moving in the same direction? Or let's say, can that remain stable as the business increases its share or its exposure to affordable housing, or would you expect some downward pressure as part of what we just discussed?

JO: No, I would say EBITDA, you know, the point of doing lots of partnership deals is volume, right? So your fixed costs are spread over more plots because at the moment, I think their challenge is probably not delivering as many houses as they need to for their fixed overhead, and that will hurt their margin and their EBITDA. What they need to do is increase the number of plots that they're delivering annually as quickly as possible, because that is how they'll increase their EBITDA. And if they do that through doing partnership deals, yeah, okay, there is a slight margin difference versus doing open market sale, but actually, provided you do the volume, your net position will be a lot better. So I think if they can take advantage of the grant funding that is available and increase their market share of grant-funded affordable housing, they will be able to deliver greater volume and that will have an upward pressure on their EBITDA that will offset anything around the kind of margin difference between private sale and partnership deals.

JD: Okay, so you believe that they shouldn't be suffering too much from the evolution, their mix, mainly as a function of the fact that they'll be able to maintain or maybe even grow volumes.

JO: Yeah, exactly that. But I think they have to grow volumes. I think if they don't grow volumes, they will be in a

difficult position because their EBITDA will not be able to increase. And I think it will be hit. So if they did another year of kind of 3,000 or sub 3,000 homes and did that for a few years, I think they would be really struggling with their fixed overheads.

JD: Yeah.

JO: And I think they're going to need to be increasing that delivery, you know, 3,500, 3,750, 4,000, using the partnership opportunities to do that, because that's how you really grow quickly at the moment in the current market. And in doing that, yes, they can hold their margin and improve their...

JD: Is it Keepmoat that finds the sites and then brings them to the partners or is that a different process?

JO: Yeah, no, exactly that. So usually housing associations, RPs, are quite heavily regulated and generally if they identify a site that they want to deliver, they have to procure through procurement frameworks who's going to build the site with them and it's kind of an open tender process. So it's very rare for housing associations to take sites to house builders. It's JD: Yeah.

JO: house builders that identify the sites on the whole and take them to housing associations. So in a land bid process, you might have 4 or 5 house builders bidding for a site and each of those may have gone to the same list of RPs. So maybe the RPs are bidding with more than 1 house builder for any particular site, or house builders and RPs maybe just pairing up together to buy sites.

JD: Yeah. And do you feel that there is enough of a pipeline for them to find such sites, have them qualified by authorities? I mean, that can be bottlenecks with bureaucracy, which is why I'm asking. It could also be an issue with whatever supply is available.

JO: Yeah, so in terms of land supply, and specifically land with planning permission, because that's what counts for Keepmoat because they're an immediate land-led business, so predominantly they buy sites with planning or that have good prospects of getting a planning permission in the immediate future. They're not long-term strategic land investors on the whole. In terms of that kind of immediate land supply, the land supply in the UK at the moment is pretty decent and there are a lot of land opportunities around and available to them across all of their regions. I think the problem... In terms of whether they can deliver all of them as affordable housing really depends on whether they can bring in RPs and get enough grant funding in to deliver them all because that's probably a bigger constraint than the actual land availability. Basically their businesses, they need to increase the amount of land that they're buying and thereby increase the share of grant-funded homes they're delivering. And what I mean by that is, there's the new grant-funded Affordable Homes Programme, the Homes England Programme is basically intending to deliver 300,000 homes over 10 years, right? So 30,000 homes a year. And that is about what Homes England have funded over the last 10 years. I mean, it tends to be about 30,000 homes per year. Keepmoat has delivered under 1,000 partnership homes in most years, and a lot of them weren't grant funded. So Keepmoat historically has not delivered a large percentage of the available grant-funded programme, maybe 2%. And so for them to grow their business they need to grow the amount of grant-funded sites that they're delivering, so they need to bring housing associations in with their grant funding to deliver the land opportunities that are available.

JD: How do you grow that market share if you're Keepmoat? What's constraining them from expanding this market share?

JO: Well, it remains quite a highly competitive land market, but I would say actually my perception is that Keepmoat are expanding their market share of the land market. And I think we'll probably see that come to fruition over the next

kind of year or so, because they continue to be quite... I watch them, they continue to be quite aggressive in the land market when other house builders have fallen away a little bit. So a lot of house builders, obviously they're private sale focused and have effectively pulled up the drawbridge in terms of land acquisition. So a lot of them aren't doing much in terms of immediate land acquisition. So there is a significant opportunity currently for Keepmoat to go out and take advantage of that. And from what I'm seeing, they are doing that. And that is absolutely critical that they secure... they take the opportunity now whilst a lot of the PLCs, the national house builders aren't being particularly active. It's a great time basically to strike while the iron's hot and to go and get hold of as much land as possible. And I mean, a big part of it is really investing in land and their land teams so that they can basically take advantage of it. And I think they have done that, but that's not to say that they've done it to the absolute maximum extent that they can do.

JD: Why is that?

JO: Well, I guess because they're probably limited, like most business, by overhead considerations from quarter to quarter and how much they're willing to invest in terms of staff and resources into any particular function. And so I suspect that there's just limits to what they'd be willing to invest in terms of staff costs into land acquisition, based on my experience of how they have been in the past. But there is definitely an opportunity to basically, if you want to buy more land, you need more people to buy land. And at the moment, there are so many land opportunities out there that you can go and get hold of them if you've got enough people. And also if you've got enough partners. And that's the other key aspect. And in terms of partners, Keepmoat are very good, one of the best kind of partnership house builders in the country and have very good long-standing relationships. With lots of housing associations, I think what they don't do as well as some of the other partnership house builders is the kind of group level strategic agreements. So what you'll see with some of the other national partnership house builders, Vistry is an example of this, and Vistry's done a lot of things wrong. One thing that it has done right is establish group level partnership agreements, effectively contracting to deliver a large number of plots over a large number of sites, so they're effective with different housing associations and different PRS providers. And what that gives them is the flexibility to draw down on those contracts on sites to support basically their land acquisition program.

JD: Okay. Does that mean there's a way for them to protect their profitability by expanding the share of units that they are entitled to sell to private individuals?

JO: At the moment, that probably wouldn't be a good strategy. They can do that. They can definitely do that. And they have the flexibility to do that. And like I said, they tend to look at things on a side-by-side opportunity-led basis, albeit with kind of overall sort of aims. So they could, on most of the sites that they deliver, most sites that Keepmoat deliver are not 100% affordable housing. There is an element of open market sale and they have control over what level of market sale they're going to do on a particular site. And so they're looking at margin and they're looking at return on capital to decide what the split between private sale and affordable housing is on any particular scheme. So they absolutely have the flexibility to go for more private sales. The problem with that, and ordinarily you would think that your margin will be better doing private sale because you'll get full market value instead of maybe 80% to 85% of market value as you would with a partnership deal. But at the moment, sales are very slow and they're not getting very good prices for the new-built houses. They're not getting the premium that they would have expected when they chose to invest in the sites. They're taking a very long time to sell, which means that their prelim costs, so their on-site overheads are extremely high and going up and up on private sales schemes. And of course, also their finance costs are going up and their return on capital is going down. And margin is decreasing alongside all of that. So right now, actually, I don't... there's a limit to how much appetite they would have, I would expect, for growing the market sale element of their business. But that's not to say that as the market improves that they are a very nimble and pragmatic business and would easily be able to take advantage of that.

JD: Interesting. That's very clear. I think you alluded to that earlier and I want to hear your thoughts on it. The new affordable homes program is £39 billion over the next 10 years from 2026 versus £18 billion over the prior decade.

How quickly do you think that... How quickly would that funding translate into actual RP purchasing volume and what level of incremental completions would you expect per annum?

JO: Okay, so just going back to the £39 billion, it is £39 billion over 10 years, but if you actually look I would just say be a bit careful because if you actually look at the number of homes they're looking to deliver over the 10 years it's actually not that many more than they have been delivering in previous years under previous grant funding programs. What has changed is actually in this grant funding program the government wants to fund a tenure called social rent which needs more funding to make it viable. So actually what's happening is that the grant funding level per plot has gone up. And that doesn't necessarily benefit partnership house builders because ultimately that additional grant funding is just going into the scheme to get the RP's offer up to where it would have been with less grant funding on previous programmes, if that makes sense.

JD: Yeah.

JO: So it's not a huge, massive transformational change in terms of how much funding is available and how much affordable housing will be delivered. It's actually more of a change in terms of the government's political desire to deliver social rent housing, basically.

JD: I mean, it's almost double, right, the previous decade. So I get it that there has been some inflation on the construction cost, on the land price as well, and then you mentioned larger units, but it's still very much seems like, and correct me if I'm missing something, a larger target, total addressable market for Keepmoat.

JO: It is a larger amount and it is a larger market but it isn't actually that much larger is what I'm saying. So the grant rate in the previous program was maybe kind of 55,000, 60,000 per plot. In this, more like 85,000, 95,000 a plot. So a lot of that additional funding is not delivering additional plots. That's what I'm saying. So it doesn't necessarily translate into we're suddenly going to be delivering each year a lot more affordable houses than we were before. It will be quite similar, maybe a little bit more.

JD: Okay, understood. But that still means a bigger pie for, in pound terms, it does mean a bigger pie for Keepmoat to capture. It doesn't have to be really dependent on how large the units are. What they want is to be able to build units and then sell them at the margin that we discussed earlier.

JO: Sorry, yeah, but just so to clarify, though, the grant per plot is higher, but Keepmoat doesn't get any more per plot than it would have done previously because that grant funding is just filling a funding gap because the rents are now lower than they used to be so that's what I'm saying, the market is slightly bigger but it's not absolutely massively bigger because they will still only be delivering about 30,000 plots per year under this program which is about what they've been delivering in previous programs.

JD: In terms of volume, I am with you. But at the end of the day, what Keepmoat makes money on is the margins of the construction costs.

JO: Yeah.

JD: So if more money gets deployed to buy land, you're going to have the equivalent higher number or proportional increase in the asset values that are going to be built and Keepmoat takes a margin on that. Am I not thinking about it the right way?

JO: Yeah, not quite. The Affordable Housing Programme, the £39 billion is not to buy land, it is to fund the housing association to buy houses.

JD: Okay.

Okay.

JO: It funds a housing association to buy a house and it does it on a per plot rate which varies by region, whatever. What I'm saying is that the amount of funding into each plot has now increased. That doesn't mean that the value, the amount that Keepmoat or any other house builder delivering those plots will get has increased because all it is is filling the funding gap from a reduced rent versus the previous grant funding program. The £39 billion is going to housing associations who will use it to buy houses, but what I'm saying is that they won't use it to buy more houses than they used to, not much more. It will be a bit more, but it won't be loads more and they won't be paying any more money for each of those houses. Understood, because they're getting less rent from the houses that they're buying.

JD: Okay, understood.

JO: Okay.

JD: And so they reduce their income, so they want to compensate that by deploying more capital to take advantage of the market conditions, really.

JO: Yeah. So yes. And how quickly will that funding translate into volume, like into basically delivery for Keepmoat? Well, I mean, it should be pretty quickly, and it depends how Keepmoat go about doing this. There are, the initial bit of funding is for, basically, up until 2029. And so there are housing associations looking to fund houses that will be delivered in 2027 and in 2028 and 2029. So that means for houses being delivered in 2027, there's an opportunity basically for Keepmoat and partnership house builders to sell their unsold private sale plots to them. Because if an RP wants to deliver homes into 2027, it's too late now to find a new site and to get into contract on it and to deliver houses on it. You just won't get the homes out of it by the end of next year. The only way to deliver some homes into that programme next year is to contract on sites that are basically already being built out and so to go in and buy houses that are being built out by house builders. And so there's an opportunity there for Keepmoat to immediately increase its affordable volume and bring delivery of its existing sites forward a bit by selling plots to housing associations. But I think the real increase is probably going to be into '28 and '29. So, you know, if you want to deliver into '28 and '29, you want to be contracting now and over the next 9 months, maybe 12 months, and securing as much of your pipeline and as many sites as possible basically by next summer, because after that it will be too late to deliver into 2029. It'll be... or it will be a challenge, certainly too late for 2028, and a lot of sites, particularly if they haven't got full detailed planning permission, wouldn't be delivering those plots until after 2029 if you don't get the deal done sort of next summer, halfway through next year. There's an opportunity now to increase volume next year by doing stock plots effectively is what they call them. So by selling plots that you're already building or are about to start building to housing associations and then '28-'29, Keepmoat should be looking to contract now as soon as possible with housing associations to deliver significant numbers of affordable housing plots. And if you think about that, you know, they've kind of been doing under 1,000 plots per year really, and that's kind of represented a 2% to 3% share of the kind of grant funded housing delivery. You would hope that if they can effectively secure enough land deals now... and there are land deals available in the market now, and I know Keepmoat are being aggressive in going for those... they should be able to significantly increase their affordable housing delivery into 2028 and especially into 2029. They've got a massive opportunity to be delivering over 1,000 grant-funded units for sure into

1. They've got the time to put the deals together, basically.

JD: Outlet openings continue to be slowed by planning delays despite the policy reforms that we just talked about. Where, how do you see that impacting things going forward and are there any available options to solve this supply issue bottleneck in the medium term?

JO: It's a major, major problem for all house builders across the UK and a lot of it is really about, yes, there have been planning reforms that have really helped, but actually you then need the resources in planning departments to process that. You need planning officers to process planning applications, and then how the English planning system works is you have a series of statutory consultees who need to be consulted on every single planning application. And so at the moment, you just don't have enough resource in those statutory consultees and sometimes you don't have any even in post and you don't have enough planning officers to run the planning applications. So that is a significant bottleneck and it's all, it's not about policy, it's about resource and it will take some time to resolve. There has been a little bit of additional funding, I think, I can't remember the exact number, maybe like £36 million or 30-odd million pounds from the government to fund planning officers across the country. But I mean, it's a small proportion of the overall investment that's actually needed to make a significant difference there. So I think the big picture is you're not going to get massive, massive improvements in terms of planning decision timeframes. One thing you can do as a house builder is enter into what are called planning performance agreements, PPAs, with local planning authorities. And that is you are effectively entering into a contract with a planning authority where you are paying them an agreed amount of money, usually tens of thousands of pounds and sometimes more, to perform in terms of the planning application within agreed timescales. So it's a way of basically funding planning authorities to provide you with the resources that you need to get a planning decision. But it is far from a perfect system and there are a lot of examples where even with PPAs you still experience significant delays because you don't have the statutory consultees in position to provide responses quickly enough. So it's a really, really difficult problem and I mean the only real solution for house builders at the moment is to basically get more land and more contracts so you have a large number of planning applications going through at any one time. And that is really the main way to sort of increase the delivery through the business of numbers of planning applications is just to do more. And I think Keepmoat are looking to do that. And most house builders who are looking to buy land are also thinking in that way because, yeah, planning has not, in terms of a process, has not really improved despite the planning policy changes. And I think, sorry, there is a bit of a legacy problem for Keepmoat as well in all this because Keepmoat effectively slowed its land acquisition program kind of 2022 to 2024. And a little bit of what's happening for them now is that they just didn't have enough and I guess it links back to what I'm saying, which is you just need more sites coming through. They just don't quite have enough sites coming through the system at the moment, and that means that they are totally reliant on a smaller number of sites than they would ideally want and a smaller number of planning commissions, planning applications coming through and therefore their business is sort of hit more significantly by planning delays than it otherwise would have been if they'd carried on basically buying land, entering into land contracts at a higher rate 22 to 24.

JD: All right. Let's actually talk about that as an important point. So the gross profit margin year to date in 2026 fell by 2%. And that's due to stagnant underlying selling prices, but also continued build cost inflation. How much, and I realize it's a difficult question, but whatever broad range you can provide that would be helpful. How much cost inflation would you say remains embedded in the order book?

JO: Yeah, it is a very hard question to give a precise answer to. I can tell you how house builders treat build cost inflation. And so they would have only looked at build cost inflation to today's date. They don't factor in any future build cost inflation, so effectively any build cost inflation between now and the end of any order within their order book will not have been accounted for. Okay, so what they will have done is have some kind of contingency in their budget to cover build cost inflation and other just cost items that maybe were unforeseen, for example, to do with technical on-site issues. They will have a level of contingency. Usually for house builders that will be between 2% and 5% depending on the risks associated with that project. I think bearing in mind that a lot of what partnership house builders like Keepmoat do is enter into fixed price partnership contracts with housing associations. So they may enter into the contract when they buy a site and they may then be delivering houses on that site over the course of maybe 2, 3, 4 years. And given the kind of rates of inflation that we're seeing at the moment, obviously a 2% to 5% contingency in the budget is not going to cover that kind of build cost inflation. And where you've got a fixed price contract as a partnership deal, you basically have nowhere to go. So your margin gets eroded very quickly by significant inflation.

And I think if you look at Keepmoat's performance in 2023, 2024, whilst it wasn't too bad, it was affected significantly by inflation and particularly because they've got a lot of fixed price contracts around where effectively you've got nowhere to go. You've got nowhere to save yourself from build costs. Whereas, you know, private market sale, historically, you've needed less cover because house prices have gradually risen over time and so house prices, build costs go up, but so do house prices. That obviously has not been the case over the past few years. You've had stagnant house prices and you've had fixed price partnership deals. So any £ movement upwards in build costs just is straight off your bottom line, basically. You know, the only thing that they can do about it really is allow larger contingencies basically to cover off inflation because generally there are things you can do with partnership contracts to reprice them at particular points, particularly if they're much larger phased partnership deals on longer term sites. But if it's just a standalone contract, you won't get indexation inflation clauses into those deals because basically housing associations aren't allowed to enter into contracts where the price is not fixed and they are audited by Homes England against that, so there's very limited places that you can go if you're doing fixed-price partnership contracts. Yeah, hopefully that was clear.

JD: Are competitors now bidding more aggressively for partnerships and broad field sites as private demand remains weak? Or do you feel that Keepmoat has a good enough positioning to try and expand on that side of the market?

JO: I think Keepmoat's got a very good position. But I think there is more competition, undoubtedly, and a lot of the national house builders who have traditionally focused on market sale, companies like Barratt David Wilson or Redrow and Persimmon, who are kind of the most traditional of house builders, have in recent years started to look more closely at partnership and very recently are definitely trying to get into it in a much bigger way. Persimmon Homes in particular I know are really trying to improve their reputation in the partnership world and deliver a lot more sites using partnership money, basically. That said, Keepmoat has been doing it for a long time. You buy land differently as a partnership house builder because you're always thinking about your return on capital, and frankly, it is very much a relationship business because there aren't that many partners to work with. Keepmoat has a good reputation and very good sort of long-term partner relationships. And it's really that that they need to draw on to make sure that they remain competitive and they don't sort of get their market share taken away by some other sort of big players coming in.

JD: Thank you very much.

JO: And sorry, the same, there's also more competition sort of below them in terms of size as well as in SMEs, because small and medium-sized enterprises are smaller builders and developers and contractors. Again, because the sales market has dropped off significantly for SMEs, partnership development is also where the action is. And it's very good for SMEs because they don't need to... one of their biggest challenges is always funding, cost of funding, and how that impacts on their margin, particularly where you've got unreliable planning systems and delays between your land acquisition and your delivery. Actually, doing partnership deals where someone else is paying for it is amazing for them and it's a great way for SMEs to grow their businesses. And I know and work with a lot of SMEs doing exactly that at the moment. And they will be competing for Keepmoat on the smaller sites that Keepmoat go for, which is the kind of 50 to 100 homes, basically. So I think there is a lot more competition in the partnership world and it's probably going to continue that way, given there isn't a lot going on with the private sales market at the moment. So, yeah, Keepmoat has got to basically keep their relationships and keep working them with housing associations, with RPs to help maintain their position.

JD: Which regions would you say currently offer the strongest combination of sales rate, land economics, and build margins?

JO: I would say for Keepmoat, it's probably the Midlands and the North of England. And that's even though the sales prices are lower. The land prices are also considerably lower and obviously Keepmoat has return on capital hurdles

that are quite difficult to achieve in higher value markets where there are higher land values. Because in a high land value market, you're competing with other house builders to buy sites and you have to offer commercial terms for those sites and usually those commercial terms will involve putting large amounts of money upfront to secure the site to buy it and that makes return on capital quite difficult. It does mean that your margin should be decent there and so there's a balancing act between ROCE and margin across different regions, but generally the north, because you have lower land values, tends to be easier to put together land deals and partnership arrangements whereby Keepmoat will hit its return on capital. And also because house prices are lower and because Keepmoat focuses on smaller homes, first-time buyer, 2-bed, 3-bed terrace, semi-detached houses. Their sales rate will generally be better in the north where those prices are much more obtainable to their target market versus somewhere like in the southwest or the southeast where house prices are much higher and the first-time buyer market is probably more difficult and as I said, you've got land value challenges in terms of their ROCE model. Does that answer the question?

JD: Yeah, absolutely. Through the third quarter of 2026, revenue was up 8%, but EBITDA was down 9%. So the margin was around 4%, let's call it. And this refers to what we discussed earlier, but at what volume level would you think fixed-cost absorption begins to outweigh the gross margin pressure and drive the margin growth again?

JO: I mean, obviously it's hard outside the business to know the exact number of plots, but if you take a step back, the business is being set up as in it has overheads to deliver 4,000 homes. That's what it was set up a few years ago to do and it was delivering 4,000 homes and they haven't really reduced in scale; if anything they may have increased slightly. So I think in order to start improving that EBITDA to be at 3,000-ish homes, they are definitely getting hurt by their fixed overheads. And I think they're at a point where increases in maybe 300 or 400 homes, 500 homes will actually make quite a significant difference to their EBITDA. And I would expect that I would have thought that you would see a significant improvement if they were able to deliver something in the region of 3,750 homes. I think you would see a massive benefit coming over from the per-plot saving of spreading out those fixed overheads across enough plots. And I think once you get to 4,000 and above, that's when it will start to work even better. But I think if they're 3,000 to 3,500, that's just not what they've been set up to deliver. And so, like I said, the per-plot cost of those fixed overheads will be weighing significantly on their per-plot contribution to EBITDA, effectively.

JD: We're nearing the end of this call, John. Is there any other topics that you think we should have covered?

JO: Not particularly. I mean, I think, you know, as a business, it's structured pretty well in terms of 9 regions. I personally don't think there are opportunities there for Keepmoat to grow into more regions if it can take advantage of the land market and if it can take a bigger share of the grant-funded partnership market over the next 3 years, basically. And it could then grow significantly by growing into new geographies and intensifying its sort of land acquisition and development in each region.

JD: Thank you, John. As a reminder for our audience, a replay and transcript of the call will be available shortly. Have a good rest of the day and thanks again for your insights. Goodbye.

JO: Thank you. Bye.

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