The eight largest housebuilders in the UK have paid shareholders £16 billion in dividends over the last 18 years without significantly increasing the supply of new homes, according to new research from housing experts at Sheffield Hallam University.
The report tracks the financial performance of the UK’s largest housebuilders and shows that dividend payments to shareholders were 260% higher in 2022 than before the financial crisis, even after adjusting for inflation. The number of homes built by these firms increased from 66,902 in 2005 to 82,288 in 2022, an increase of 23%.
In 2022, dividends payments by the largest housebuilders totalled £1.8 billion, constituting 47% of profit before tax, compared to just 16% in 2005.
“Money is being lost from the housing system as shareholders extract huge returns, with little sign of this flowing back in to support new development.”
The analysis estimates that if dividend payments and share buy backs had been reinvested in productive activity, tens of thousands of new homes could have been developed. On average, in 2022, the largest housebuilders paid over £22,000 in dividends for each new home built.
Dr Tom Archer, Senior Research Fellow in Sheffield Hallam University’s Centre for Regional Economic and Social Research, said: “Money is being lost from the housing system as shareholders extract huge returns, with little sign of this flowing back in to support new development.
“This raises serious questions about why reinvestment has not been prioritised to help increase the supply of affordable homes.”
The report notes that the dividends paid between 2016-2021 exceed the £8.8 billion the UK government spent on its major affordable housing programme over the same period.
It calls for reforms to curb excessive shareholder returns and capture more value for reinvestment, which would directly benefit the millions of households currently struggling in the housing market.
Dr Archer will appear alongside the report’s co-author Ian Cole, Emeritus Professor of Housing Studies at Sheffield Hallam University, on the two-part BBC Two documentary Britain’s Housing Crisis: What Went Wrong?, the second installment of which is due to air at 9pm on Tuesday 24 October.
Read the full report from Sheffield Hallam Univeristy here.