The land sale will see Barratt purchase 2,480 plots of undeveloped land with planning consent across six sites for £64.2 million.

Proceeds from the sale will be received in cash in four tranches over the next four years and will be used to accelerate the removal of the group’s outstanding bank debt and to capitalise on the significant growth opportunities emerging in the North of Scotland.

As a result of the land sale, which will be completed by 31 May 2025, Springfield said it expects to report profit for FY 2025 significantly ahead of market expectations and reach a net cash position in FY 2027.

In addition, Springfield and Barratt have entered into non-binding discussions regarding the possible sale of additional future land holdings on a number of other prospective sites.

The land and the prospective land is from the group’s future land pipeline and is primarily located across Central Scotland. Following the land sale, Springfield said it will continue to have a large high quality land bank, providing over nine years of activity (based on owned and contracted land), and will continue to operate in Central Scotland, including delivering homes at the Bertha Park and Dykes of Gray villages.

Following the land sale, Springfield’s strategic growth focus will be on opportunities in the North of Scotland amid the substantial need for new housing to cater for the high population and economic growth expectations in the region, being driven by the UK Government-financed green infrastructure development in the North of Scotland.

SSEN is investing £31 billion into upgrading the electricity network in the region and the project will require around 5,000 worders at its peak in 2027. In addition, the Inverness and Cromarty Firth Green Freeport is expected to create more than 10,000 jobs locally with new investment of over £3bn. Springfield said it has commenced discussions with key stakeholders about how to meet the demand for the new housing required to cater for the significant population growth.

The directors believe that Springfield is “uniquely placed” to capitalise on these opportunities thanks to its large land bank across the Highlands and Moray, with a majority of plots already having planning in place, and its established position in the region. 

Innes Smith, chief executive officer of Springfield Properties, said: “This profitable land sale will enable us to realise the value of our assets, accelerate our plans to remove bank debt and focus on the significant opportunity in the North of Scotland where we are uniquely positioned to excel. New housing is required to cater for the thousands of workers needed to deliver the substantial green infrastructure development coming to the region and the ongoing population growth as result of the economic stimulus these projects will bring.

“With significant land holdings across the Highlands and Moray and an established presence, we are excellently positioned to capitalise on this opportunity. In addition, we continue to have a large high quality land bank, with this deal demonstrating the long-term value of that asset. Accordingly, and with a significantly strengthened balance sheet, we continue to look to the future with confidence.”

Announcing its interim results for the six months ended 30 November 2024, Springfield said adjusted profit before tax increased by 90% to £3.8m (H1 2024: £2.0m), primarily reflecting the improvement in affordable housing gross margin, sustained focus on cost control and land sales.

Total completions reached 361, while gross margin increased by 300 bps to 17.7% (H1 2024: 14.7%), due to profitable land sales and completion of legacy affordable contracts at the end of the prior financial year.

The land sales coupled with a sustained focus on cost control contributed to a “substantial” reduction in net bank debt to £62.9m (30 November 2024: £93.4m).

Innes Smith added: “Trading for the first half of the year was in line with our expectations. The strategic action taken in the previous year to reduce our debt, along with sustained cost control in the period and further profitable land sales, delivered a substantial reduction in our net bank debt compared with the prior year. We also significantly improved our gross margin and achieved a strong increase in profit.

“While we are disappointed that some of our affordable housing projects were delayed due to uncertainty over availability of public funding, we are encouraged by the increase in activity in this area following the Scottish Budget in December. The housing market continues to be influenced by the wider economy and subdued confidence resulted in a dip in reservation rates from mid-December. However, we are currently seeing an increase in visitor levels, bolstered by the reduction in interest rates earlier this month, giving us optimism that reservation rates will recover in the near term.

“We are pleased to have signed this profitable land sale agreement with Barratt, which demonstrates the value of our large, high quality land bank. The proceeds will accelerate the removal of our debt and support our strategic focus of capitalising on the unprecedented growth opportunity in the North of Scotland. The requirement for new housing in the Highlands and Moray is substantial, driven by the need to house the increased population resulting from the incoming green infrastructure and the economic growth in the region. With significant land holdings across the Highlands and Moray and an established presence, Springfield is uniquely placed to deliver on this increased demand for homes.”