Taylor Wimpey plc (TW) Earnings Call Transcript & Summary

Hello all, and a warm welcome to the Taylor Wimpey Trading Update. My name is Lydia, and I'm your operator today. [Operator Instructions] It's my pleasure to now hand over to our host, Pete Redfern, Chief Executive. Please go ahead when you're ready, Pete.

Thank you. Morning, everybody. Thanks for joining us. I think this is a sort of very straightforward statement overall and seeing that sort of reaction from your notes this morning, it feels like you agree. So I'll probably keep my comments a little bit shorter than usual but run through the key areas as ever. First of all, just talking about current market. I don't think it will surprise you, you see it in all the stats that you see and in all those commentary that the underlying market has continued to perform well. And I would reinforce the comments that we made at the half year across all geographies in all product areas, underlying demand is good, prices have continued to slowly grow since the half year, and we'll come back to that again when we talk about costs in terms of the net impact. But we're continuing to see post stamp duty holiday, post -- immediate post lockdown kind of return to market, continuing to see strong underlying demand and good forward integrators on pretty much all measures across all geographies. And I think whilst we've slightly taken it for granted over recent months, I think it's important to sort of remind ourselves that it remains good and the forward look remains good. I also think it's worth touching on sort of because we have to keep an eye on the longer-term future on interest rates and Help to Buy. I think the experience of the last year or so has made me certainly slightly more relaxed about the Help to Buy exit next year, the fact that we're out of it in Scotland, the fact that we have a deposit unlock scheme, which can't be tested properly until Help to Buy isn't there, but gives an important sort of tool for customers, who really, really, really needed Help to Buy and we've continued to see our level of dependence on Help to Buy at a much lower level this year for various reasons to do with timing in the pandemic and sort of underlying demand and improvements in the secondhand market. But all of those, I think, have given us continued confidence in the underlying resilience of the market. And I think it's also worth touching on interest rates. We weren't sort of biting our nails as we saw the MPC's decision last week. But I think the forward signal about how far rates sort of might go up is far more important to us than whether we see a rate rise in December or January and February. It's about where they end up. And I think we look at that and feel that the sort of range that most commentates were expecting at the moment is something that can be absorbed by the strength of the current housing market rather than seeing it as a big risk. Those are the 2 areas I do think we still need to continue to keep a watching brief on. So I think it's important to have those in mind. But as I said, that's against the context of current demand being very resilient. Now just touching on land, planning, outlets. I think, again, I talked about by many others over recent weeks. And we said at the half year, we've seen a more competitive land market that had grown up sort of late in the first quarter and through the second quarter. I think that has continued. It makes us particularly pleased with the early investments that we made last year and the good pipeline of land and you can still see that coming through onto the balance sheet. The landbank numbers have ticked up again in this period and well, we believe, continued to tick up over the next 6 or 9 months and absorb some of the excess cash that we still hold. I think it's also been well publicized that planning has been more challenging. But we're pleased with that pipeline coming through -- sort of the number of outlet openings that we've made in the period has been sort of bang on our expectations. Our outlets have continued to remain below normal levels because of the pace of closing and a number that we've not put in a statement, but I think it gives you a sense. We have somewhere in the mid-60s of outlets that are sold out and therefore, not counted as outlets, but we'll continue to deliver completions sort of in the balance of this year and through to the half year next year. And with the higher sales rates, which have remained above normal levels given the state of the market, that level is quite a long way above normal, which kind of artificially suppresses outlet numbers today. But it's important in understanding sort of volume dynamics to get a sense of that. But overall, we're very pleased with the way our teams are handling a more challenging planning environment, and as I said, pleased with the early investments that we've made that give us, I think, more choices than most. Touching on build costs and sort of particularly the key area of material availability. The challenge remains in materials rather than labor, which I think is important to understand. But as you can see in the statement here, and again, I don't think will entirely surprise you. We have seen both the pressure on material costs and the availability of materials ease slightly over the course of the last few weeks. It varies a lot from sort of material to material. So the one I would call out has probably eased the most in both price and availability is timber, which really comes down to worldwide commodity supply-demand balance and cost. I think the other big dynamic we see is that our own teams and the supply chain as a whole has got better during the course of the last 6 months of dealing with those challenges. So it's not that they necessarily massively changed at the front end but people adapt. Our teams have gotten used to it. They've got used to longer lead times. And so sort of the level of pressure is less, and they're managing it well. And as you can see from the overall message in the statement that we're reiterating our guidance for this year. We expect to deliver towards the top end of the range of volumes that we set out of 13,200 to 14,000 at the half year, yes, nothing has changed. Our teams are having to work hard under the surface and are doing a good job in getting there. But I think overall, we feel that it's being managed well. And I said I'd come back to sort of selling prices, and in the context of costs, we would continue to say that the improvement we've seen on selling price over the last 12 months relative to the additional cost is giving us sort of a slight tailwind rather than a slight headwind. So we're getting a little bit more from selling price than we are on cost. We were cautious at the half year because you could have created a scenario where selling prices would flatten and costs will continue to rise. The first of those haven't happened, the second perhaps has. So -- but overall, that same dynamic of slightly sort of slight help rather than slight hindrance overall. So I think overall, a very straightforward statement reiterating where we are for this year and the key drivers for next year and beyond. There's plenty going on out there to say it's hard work for our teams, but they're doing a very good job of delivering the business plan that we have set out. Chris, anything that I have missed that I should have covered.

No, nothing to update.

Great. Lydia, if we can open up for questions then, please.

[Operator Instructions] Our first question today comes from Brijesh Siya of HSBC.

So I have 2 questions. The first one is on labor. Your comments on build cost is helpful. But when this supply chain situation kind of improves, how does the labor availability plays? Do you see there is any risk coming in terms of inflation towards earlier next year when things kind of normalize, so there is more supply availability. So that's probably my first question. And the second one is on land. You made a comment that the land market is competitive. We are hearing from a few competitors that a few of the house builders are putting a house price inflation when they're trying to bid for land. So if you can give a little more color on that, what you see in the market actually.

Yes. So I think it's a fair hypothesis on labor, Brijesh. And I think if we -- yes. I wouldn't give a formal forecast, but if we look at next year's balance of cost inflation, I think we would expect to see less significant material cost inflation, particularly as you see some sort of additional service in timber already start to come back because where it is pure commodity-driven inflation, then I think there's a reasonable argument that it's going to sort of reduce not just go flat. But probably a slightly bigger component from labor, both because sort of pressure on wages is well documented in the country as a whole and because at the moment, if -- particularly for smaller developers, build is limited by material availability then it's one of the reasons why the pressure on labor has been less than you might otherwise would have expected. So I see it as being different components going into next year. But I think given the sort of volatility we've seen on material supply and costs, I don't look at next year and I think net-net that there's a bigger risk there, if you see what I mean. I just think the pressure points will be in slightly different places. And on the land market being competitive, I mean, just to be clear, we do not put house price inflation in our land appraisals. We never have, and we certainly won't in my time, and that sort of the senior team. It's just a dangerous game to get into. I think it's far more important to be ready brutely honest with yourself. If it's difficult, you look at it and say, is it difficult? What is the right decision for us to take? I haven't picked up that as a dynamic with competitors. You do -- you have seen sort of some smaller competitors particularly. And I've said this before, particularly where people kind of mid-tier companies are opening a new region, sort of they definitely will make a more bullish assessment of both selling prices and costs and probably sort of be less sort of firm on the margin they will accept. So we have seen some higher bids. So we have definitely seen an environment with a bit less disciplined than we've seen through most of the last few years. I'd say already in the back end of 2021, we've seen that lessen a bit. I think everybody was playing catch-up sort of on land in the first sort of half of the year. And I think some of that pressure is eased. But it's not going to go away overnight, particularly with a more challenging planning environment in the short term.

Our next question today comes from Rajesh Patki of JPMorgan.

I've got -- firstly, on the order book, I appreciate you providing the value and unit figures, albeit in rough figures. Could you help us breakdown the private and affordable components within it? And also sort of understanding in how the private in the order book has changed over the last 12 months? And secondly, on net cash, can you confirm the previous guidance? And are there any incremental moving parts to those mentioned in the first half?

Yes. I'll defer to Chris on both of those. But to give him a second to think about it, I would say, overall, there's been no big change in the complexity -- in the buildup of the order book, sorry. It's sort of broadly the same mix as we have had through the last year. But Chris, order book and kind a view on cash?

Okay. Rajesh, I'll take the cash first. So we continue to expect year-end net cash to be similar to the end of 2020 at around GBP 700 million, subject to the timing of land payments. So the risk, if there is any, would be to the upside. On the order book, what Pete just said is absolutely right. The broad makeup of the order book is very similar to last year. I think on volume terms, you see, overall, it's 8% down year-on-year. Obviously, 2020 was an unusual period, and it is up on 2019. But if you look at that 8% and you apply it across to the private, it is a very similar level of movement, so yes.

Our next question today comes from Will Jones of Redburn Partners.

Three hopefully from me, please, but just quite quick. The first was around just Help to Buy. I think in the first half that you talked about around 1/4 of the sales, like 27% being under Help to Buy. If you could just update us maybe on the latest flow on that scheme. When you think about the Scottish business that you highlight which I think we're now over 6 months in from the end of Help to Buy there, will the Scottish business perform to budget even without the support this year, do you think? And just how has that kind of played through there? Second one was just on build rates and whether you could help us on whether the pace of build has changed in the second half versus the first. I appreciate there's seasonality in there, but has it got slightly faster perhaps? And where do you expect to end the year in terms of the look forward around WIP? And then the last one is really just pulling together price and cost in the context of your prior margin targets ambitions. Would it be fair to say that what you've had so far this year and maybe you said it yourself with a tailwind comment, but there's probably you fall on the right side of the line on market assistance in reaching those targets over the next couple of years.

So just on Help to Buy -- Chris -- maybe I'll give you a specific number, but it hasn't massively changed since the first half of the year. I do -- I would expect sort of as we go through December completions sort of and into next year, it will climb back up again because I think 2021 will end up being the lowest year. Because there's a mix of things that have affected 2021 that have continued to affect it through to October, including the handover from sort of Help to Buy 1 to Help to Buy 2, the length of the order book coming into the year, sort of all had an impact that have kept it lower. So I think that sort of we're still in the 20s. But it sort of -- I do think it reflects a subdued year rather than that's what it will be now till the end of the scheme. So I expect it to be somewhere in the 30s next year, probably the bottom half of the 30s, but hard to call. And on the Scottish business, will they perform to budget? Our Scottish business always performs to budget. You've given me the chance to sort of price them there. Yes, we have a very good, very strong Scottish team, sort of it's very -- yes, one of most resilient teams and that they're in a good place and actually have gone through the Help to Buy shift without sort of any material -- I think it's sort of helped by the fact that they haven't been able to depend on Help to Buy as a totally consistent underlying part of that structure historically. So I don't think it's a complete sort of guide for what will happen in England. But I do think it's indicative. I think touching on Help to Buy in a bit more depth. The key thing, because I would not want -- I wouldn't want you to take my comments overall to say that the early 2023 risk from Help to Buy is 0. It's negligible. It's something we need to keep an eye on. I think the key thing is the underlying resilience of the market at that point in time. If we're in anything like the kind of market conditions we're in at the moment with good underlying demand, real need for the move-up customer, real need for product for move-up customer, sort of which has been some of the product that's been sell to first-time buyers and the Help to Buy this year and interest rates not at the current level, but not massively different today then I think I have a pretty high degree of confidence it doesn't make too much difference, particularly with the length of order book that we have. And we would view our order book as being at an artificially high level at the moment, but would expect to probably keep it that way through 2022. And one of the reasons for that, it's just a weather eye on Help to Buy in early 2023 and then probably try and actively ease it back because we think better dynamic for us on the balance of price and cost with a slightly shorter order book and sort of a better dynamic for customers in terms of the consistency of product delivery and timing and risk. So I think our comments on the order book is probably as high as we would ever want it to be, still withstand and Help to Buy is one of the things that has us keep it there because it feels like the wrong time to shorten that because of that slight risk. But as I say, I think the overall risk that I've seen for a number of years is one of the more significant market risk, I think, has reduced and the evidence for that has been pretty good. I think on pace of build, I mean, we were saying at the half year, we didn't see any meaningful constraint from COVID. The limit on pace of build is around material availability. I wouldn't say it's particularly increased over the course of the last few months. I'd say it's about the same and continues to be. Hard work for the team to sort of focus on delivering year-end plots and the right level of WIP going into next year is key and not easy for all them. On pricing cost, yes, I would say that we've had a slight headwind, it is slight. And we've talked for some time about the regulatory impact of future home standards and the like. And said it's one of the moving parts that we're dealing with. So if we get a positive against that, then we will definitely take that. We're not changing our 21% to 22% medium-term guidance. We still believe it's the right guidance. We expect to make margin improvements next year. The rough size of that hasn't changed in terms of our sort of internal forecast. There's lots of moving parts, but fundamentally, we're still expecting to get to that level over the kind of time frame we've talked about before. But we'll talk in a bit more detail about our view of margin for next year, sort of, with the prelims, I'm sure, in early March.

The next question today comes from Emily Biddulph of Credit Suisse.

I've got 3 questions, please. Firstly, just coming back on planning delays. When you're talking about your incremental 50 sites by sort of mid-2023, and that sort of being kind of still an achievable target? Like -- are you kind of basing this assumption on the idea that planning delays you're seeing at the moment are likely to ease in the sort of relative short term? Or if we're still in the sort of same situation where you're kind of -- you're still seeing the same sort of delays you are now in sort of the middle of next year. Do you start to worry about that? Or is there enough contingency built in and that sort of still feels very achievable? And secondly, I just want to come back on demand. You usually give us some nice stats on sort of website traffic and sort of other lead indicators there. And I just wondered how they are trending. And then back on the private order book, like if you sort of end this year where you expect to be and sales rates sort of continue as they are, can you just give us a sense of how far forward sold you're likely to be for 2022 and sort of how that compares to where you normally are.

Yes. So on planning delays, I mean, just to be clear, we -- in sort of nearly 21 years in the business there's never been a year where we're not worried about our openings and planning delays. So of course, we -- it's the thing that as you've heard others sort of perhaps be a bit more open about than they normally are over recent weeks. It's always a challenge. I do think it's a bit more of a challenge at the moment. But we kind of knew that when we talked to you at the half year and that was factored into our guidance, which is why we're not changing anything but it is something that our teams will have to continue to work out and strive. We're not, I don't think, factoring in things getting better in the short term. I think I will be disappointed if in a year's time, we're not seeing that normalized, particularly where it relates to resource requirements, a little bit where it relates to the national focus on housing volumes. But we're certainly not kind of thinking we get into January next year everything normalizes. But it is certainly something that we continue to have to really work hard at, and it is the key area of focus for all of our management teams. But we get back to -- we secured a lot of sites when others weren't in the market that gives us choices. It doesn't give us perfect risk coverage, but it puts it in a different place. And I think that sort of is important. And so it's never fully in our control, but it's also always partly in our control. And I think I'm pretty pleased with how our teams are focused and performing on it at the moment. In terms of websites, I haven't gotten to hand, but there's no reason for particularly excluding them. Generally, we've continued to see sort of high levels of interest, good appointment bookings, sort of a good website interest because we've switched to a largely appointment-only model. We still see lower levels of visitors per site than we would have done pre-pandemic, but that's more of a structural change rather than anything else, and we see higher conversion rates. So we will update graphs we've given you historically, but there's -- there's nothing that would tell you would concern you. And then in terms of the order book and forward sold and where we are now in terms of how far ahead, we're selling, won't have changed very much in December. I mean just to be clear, we're not selling anything for December at the moment. We are selling probably on an average site about 7 months sort of ahead. And that is as far as we would ever want to sell. And I think -- if you take my comments around once we've gone through the kind of Help to Buy change in 2023 and if we're actively trying to normalize it, the range is somewhere between 5 and 6 months, probably in the perfect theory, it's 5. But the reality is, the opportunity is there to be a better ahead than I think it helps your pricing dynamic. So it's that range of 5 to 6. So it's not a massive shift. But I do think it's important to understand that sort of where we are now is at the top end of the range in terms of length of order book.

The next question today comes from John Bell of Deutsche Bank.

I've got 2 questions actually. You've commented on the land market. I think at one point, you used to give us the contribution margin on new input land, I just wonder where you might see that today in general terms? And the second one is, could you give us an update on post mark to what extent you've seen sales pick up since London reopened? And how is pricing?

Yes. So I mean we wouldn't normally give a contribution margin on a trading update. But I think the sort of sense of where we are in terms of land acquisition margins, it's very much in line with where we are at the half year. There's been no big change. I mean, Chris, you tend to be closer to post mark than I do. So I'll leave that one to you. But overall sense of London is, it has started to improve. I'm fairly upbeat about London, if you look over the next 2 or 3 years. But I'd still say it's still lagging behind sort of the market as a whole, that's not a specific postmark comment, which I'll leave it to Chris, but it's a general London comment.

Yes. And you've called me, Jon, without having actually had an update recently from postmark, but I would agree with Pete's comments. Generally, London and certainly, Prime London is slightly sort of lagging the market, but nothing that is sort of outside our expectations for that development anyway.

No. And I think we will continue to expect to earn a decent return on postmark sort of despite the sort of the various market uncertainties in London. I am not flagging in my broader comments on London. We're certainly about to make huge investments. It still remains quite difficult to get the investment risk balance right overall in London because I still think there is greater planning risk. And probably the Help to Buy risk in London greater. So we continue to have a London strategy that's focused on lower price points than we would have been a few years ago. But a general sense of the London housing market, which is sort of increasingly positive.

Our next question comes from Gregor Kuglitsch of UBS.

Can you hear me?

Yes, we can hear you, Gregor. yes. We can hear you.

Hello?

Hello, Lydia, do you want to talk to Gregor, just in case you can hear you, but not us.

Yes. Unfortunately, we're having some problems with Gregor's line. So I'll move on to the next question. The next question comes from Gavin Jago of Barclays.

Just few from me, please. Yes, the first one is just on Help to Buy and just maybe just to explore just a few things. I mean just to think about the timing and you're talking about kind of how forward sold you are, would it be right in thinking that you'll pretty much only be taking reservations for Help to Buy falling to the middle of next year because completion is got to be done by December. Is that right?

yes, a bit later than the middle of next year. But certainly fairly early in half 2, yes, we'd expect them to be minimal.

Yes. Okay. And then I guess, just following on from Will Scotland comments. Are you able to put a number on what proportion of the Scottish reservations that Help to Buy was when it was in place? And then the final one on this was just any views on whether or not Michael Gove's appointment has, I guess, presented any upside risk to Help to Buy actually being extended beyond March '23 given the levelling up agenda and I guess the relative low use of Help to Buy given the price cuts in the North and the Midlands at the moment?

Yes. So I can't give you a number on Help to Buy, Scotland. And as I touched on earlier, sort of Help to Buy in Scotland has always been more volatile in the sense that we've always gone through periods of 6 months where it was available, but it was always rationed. So it would have been lower than England, but it was material at different points. And as I said earlier, I wouldn't point Scotland as being perfect evidence. I actually think they impact the price caps and the level of sales sort of as we went from Help to Buy 1 to Help to Buy 2 in England, probably in some ways more important. And collectively, you take all of those data points together, it's that just makes me feel and I've probably been at the more cautious end and me feel a bit more relaxed than I would have done. So I wouldn't just point to Scotland. I think if you look at -- we effectively didn't have Help to Buy at all as a sales tool for reservations from, and Chris, correct me if I'm wrong, but effectively from sort of late September last year until sort of middle of December and then we had a bit of a catch-up in the middle of December, sort of that's about right, isn't it? so we've already gone through a period in England where we didn't -- and whilst we saw a dip because people were waiting for Help to Buy to be available, actually, even given that the dip was sort of much smaller than I think we would have imagined. But that has been in the context of a good market. And I'll get back to my comments about what's important is the underlying market strength at that point. Then go on to the question about Michael Gove. I haven't seen any specific signs that, that drives a change in Help to Buy. I mean one thing I would reiterate is whatever happens, if there is a government-driven sorts of replacement, it won't be called Help to Buy even if it looks quite like it because I think there's quite a significant stance on coming to the end of the scheme. I do still feel there's a place for a much lower sort of number of completions that are means tested to really help first-time buyers who might otherwise sort of go into more directly government-funded housing, but we will see. But I come back to -- I'm still at the view that I've been in since the beginning, helped by the more the industry can stand on its own 2 feet the better for the long term even if we have to manage sort of the transition in 2023. And given the strength of the underlying housing market where rates sit and are likely to continue to sit and the length of order books, I think we're in a good place to do that.

Very good. And I wonder if I just have one quick follow-up just on the future home standard, just thinking about the supply chain and kind of the labor pressures there. Are you getting any more clarity as you move to the interim stage and then full future home standard of what sort of cost increases you might be faced with all other things being equal?

Yes. So I think we've talked before about the cost impacts in 2023. And so we haven't changed that view. It's a bit lower than we had first talked about back in 2020 as we've gone through the standards and our teams have sort of worked out more detailed costings. I don't think we've got really clear stance because we don't really know the measurement framework for 2025 changes. So I don't think we can give you any more guidance on that. But we are working very actively on both labor and supply chain on how we execute the various different parts of that. The classic one that gets talked about sort of we would have sort of flagged 6 or 9 months ago, if not more, is around heat pumps. But talking with basically both the supply chain on the equipment supply, but also really thinking about accreditation, workforce, how we work with some of our bigger, more professional, regional subcontractors to make sure that they're investing in the right skills and people sort of in whether we effectively going to a degree of partnership with them over the next 2 or 3 years to do that. Yes, those conversations have been moving on at pace. We see -- and this is a broader sustainability point, sort of in a broader climate change, both regulatory and other things point. we really see sort of this next year as working through a lot of detail on how we execute. And for the first time, we also see, I think, some market upside, as I think we see customers actually really starting to understand the cost implications of new homes versus second homes, the environmental performance in new homes versus second homes and the adaptability of new homes. So I think it is a big topic, but it's gone from being a pure regulatory cost driven thing to sort of a more balanced, some market and execution driven sort of things. And so I feel we're in a good place. There's an awful lot -- we have quite a lot of projects running in the business at the moment. And yes, I think people feel they're really getting to grips with what they need to do and what they need to change, we move from theory to practice.

Gregor from UBS has registered a question again.

Can you hear me?

Yes, we can hear you, Gregor.

Okay. Well, here we go.

We could hear you before. You just couldn't hear us to tell you we could hear you.

I see it. Okay. All right. Well, here we go. So my question is on volumes. And I guess it's the sort of ramp-up profile. If you could just maybe perhaps, I mean, firstly, obviously, guide for next year, if you could perhaps elaborate, I think previously, your modest comment was 4%, 5%. I don't know if you're confirming that today, but just wanted to double check that. But then to -- I guess, the medium-term question is to get to that target of 17,000, 18,000 units. If you care to maybe perhaps elaborate a little bit on the time line and perhaps the site count that you think you need to actually achieve that? So that's my question.

Okay. I mean I think it is an important question, Gregor, but we're not sort of either changing our guidance or going to go in a more detail on a trading update. We still see our guidance for modest growth next year to be right. We would, as we always have done counsel the stronger the volume performance in our own range this year, our number for next year isn't suddenly going to change up because of that. It's about sort of site availability, material availability more than it's about the market and that we see material growth in 2023. I am sure we will -- in completion. I'm sure we will talk about it in more detail both with the prelims and through the half year next year and give you a bit more of a flavor. But it's not -- we're not changing our sort of expectations today. And I don't think there's a lot more detailed granularity we can give you sort of today on how that profile will work.

Okay. And then can you remind us what you're budgeting for the sort of 2 phases of the environmental regs?

So we haven't given a number for the second phase, as I touched on earlier, because we still think there's too much uncertainty around how -- we know what it will look like. We don't yet know how it is measured. And so we know some of the things that we will do, but it's very hard to pin down a number. And Chris, on the first stage.

Yes, it's around about GBP 3,500. So a bit less for 3 beds, so more close to the GBP 3,000 per plot and a bit more for 4 beds closer to the GBP 4,000 per plot for the first stage in 2023.

[Operator Instructions] Our next question today comes from Clyde Lewis of Peel Hunt.

A couple, if I may. One around, I suppose, the land market and whether or not you're seeing, I suppose, sort of different types of sellers coming on sort of post budget and sort of changes that we've seen and whether you are seeing any real differences regionally or sort of by site size, I suppose, around the sort of inflation level in the land market at the moment. The second one was around, I suppose, sort of cancellation rates and mortgage valuations and whether, again, you've seen any sort of change in pattern in the last couple of months in those 2 factors?

in terms of the land market, not a material kind of shift in terms of new sellers. We did see a few weeks ago, and it's probably still a bit more commentary around some land sellers coming to market, just being a little unsure about kind of capital gains tax. And often pre any budget, it's just that sense of I want to get it done now just in case. So we saw a bit of that. I don't think any major change. I do think there are some underlying changes. I think it's a more difficult environment, for instance, for land promoters to do their jobs. So there are some sites in the strategic land environment that are coming to us rather than necessarily going to land promoters because the dynamics for them are not particularly sort of good at the moment. On site size, it's not a new dynamic. I mean still that same sense that sort of large sites are less competitive. I think we did see -- and I'm going back to the kind of first half early in the second half, we did see some of our larger competitors being more aggressive in the land market that we've seen for a while to catch up. I do think there's a little bit -- and I'm not going to go into individuals. So it varies depending on the region, the month, the individual kind of competitor. I think there was a bit of we've got to get something done and then back off [ in time ]. So it's behind the comment that I would say it's kind of normalized a little bit over the last sort of 6 weeks or so. But no big change in sellers and on site size. It's still the sense that larger sites are less competitive for obvious reasons, but not fundamentally different. And regionally, the only dynamic is the one I've touched on many times around when we see a competitor open up a new business, it will distort regional competition. But we're not seeing sort of being fundamentally different in sort of the North or the South or anything like that. And on valuations and cancellations, very robust, very low levels of cancellations -- sorry, yes, very low levels of valuation issues and total normal cancellation levels, sort of nothing unusual at all, very much the normal kind of pattern. Valuation is probably running below any kind of long-term norm, but they have been for a while as in down valuations running below normal levels. And I would say -- and this includes in the sort of buildup to the MPC's interest rate decision when 1 or 2 mortgage deals were getting more expensive. We get a genuinely sanguine sense from the Mortgage lens about their view of the housing market. If we go back to sort of August, September 2020, a bit of a sense from some mortgage lenders of things getting sort of too heated sort of as we got the kind of rebound post pandemic whereas actually roll forward to 2021 and actually, they're competing for market share. They're seeing very comfortable to lend it to the U.K. housing market. And that is reflected in that low level of down valuations and relatively sanguine view from valuers about price increases. If you look at -- you go back to the immediate post-financial crisis period, it was very much valuers who kept sort of a cap on prices for a period because they almost didn't want to believe the prices could go up. I think at the moment they are doing their job site by site and looking at actual demand, which generally is pointing to prices going up.

And our final question today comes from Ami Galla of Citi.

Can you hear me?

Yes, we can hear you.

Just a couple of follow-ups from me. The first one on -- if you could update us on the -- how the remediation claims are going through? And how should we expect the utilization of provisions over the next 2 years? And the second one, related to cash flows really as we think about the growth in outlets in 2022 and '23 that you flagged, how should we think about working capital investments in the business?

Both for you, I think, Chris.

Yes. So on the provisions, looking at the leasehold provision, Ami, at the end of June, we have GBP 56 million remaining, I think, since then, so in the sort of 4 months to the end of October, we paid GBP 2.4 million of cash. I think that's a decent run rate to go with the end of -- towards the end of this year. We'll update our guidance on that when we get to the prelims. And similarly, with the cladding provision, at the end of June, we had GBP 150 million of that provision remaining. We paid GBP 3.3 million in the period since the end, so the provision now sits at GBP 146.2 million, and you can take that run rate certainly for the balance of this year. And then that is one that we will have more specific detail on when we get to the prelims in terms of the unwind, I mean in terms of -- I think you effectively asked about WIP investment. We came into 2021 with GBP 1.66 billion of WIP, and that obviously reflected the delay of Q4 completions from 2020 into 2021. The WIP levels reduced at the half year to GBP 1.54 billion. And for this year-end, I'm expecting to sort of land somewhere between the two. And as Pete has already said, we're working hard with the teams to sort of push on and try and get as much within the ground as we can. And then as we go through next year, I'd probably expect in line with the investment in opening new outlets to see a bit more investment in WIP, which is entirely consistent with the plans that we set out earlier.

Thank you very much. There are no further questions in the queue. So I'll hand back to Chris and Pete for closing remarks.

Thanks, Lydia, and thanks, everybody, for the time this morning. There's not a lot to add. As I said at the beginning, I think a fairly straightforward update that we're very much in line with where we expect it to be. I'm pleased with the work of our team in what's a pretty difficult operating environment on the build side, but they're doing a very good job of it and look forward to catching up again in early 2022.

This concludes today's call, and thank you for joining us. You may now disconnect your lines.