UK shares: Vistry leaps on affordable homes award, Melrose rallies on GKN site reopening timeline

Vistry gains on grant

Vistry jumped to the top of the FTSE 250, rallying as much as +18% on news the housebuilder has won a £350mn government grant to build 3,000 affordable homes.

Vistry is one of the largest UK housebuilders with a focus on social housing in particular though the move clearly anticipates a greater government focus on delivering on its pledge to build more homes. Other housebuilder shares such as Taylor Wimpey and Persimmon advanced +1.5% on the read across, with Barratt Redrow +1%.

The grant is the first allocation of funding made available as part of the government's £39bn Social and Affordable Homes Programme (SAHP), a ten-year scheme designed to create more affordable homes.

The grant is the biggest possible at this stage in the programme comes after shares were hit after the company said it would make a loss of £30mn in the first half as heavy discounting lowered average selling prices and weighed on margins. Vistry received total funding of £278mn from the 2021-26 affordable homes programme, which it used to build 3,500 homes.

It comes as PM Andy Burnham waters down his council house commitments, with ministers announcing today to spend an initial £10bn from the 10yr scheme on a mix of subsidised housing types, with about 40% now to go on types of homes like sheltered and shared ownership, Burnham having previously said it should all be on social housing. We await updates from the Budget in October but the government moves indicate a constructive environment for housebuilders, though the macro outlook, weak economy, poor jobs market, slack consumer confidence and higher bond yields remain headwinds for the sector.

Melrose boost

Melrose shares were also on the up after the company said its GKN Aerospace division would resume operations at the Garden Grove facility in California next month and that it’s set up a $100mn claims programme for residents affected by the evacuation in May. Melrose also said US authorities have dropped their criminal investiogation without bringing any charges. 

Production at the site in Los Angeles was halted in May after an overheating tank sparked fears it could explode. Melrose says GKN has permanently decommissioned the tank involved in the incident and has made substantial investments in safety enhancements at the facility. GKN is targeting 28 September 2026 to resume full manufacturing operations with a phased return to full capacity and customer deliveries during the fourth quarter. 

The update is clearly as positive catalyst for shares, with MRO stock +10% on news that removes a significant overhang for the stock.