Shares in Vistry fell sharply on Monday morning after a report that leading credit insurer Allianz Trade has cut cover for the housebuilder's suppliers, intensifying concerns over the company's cash position.

The FTSE 250 housebuilder saw its stock drop by nearly eight per cent to 261p in early trading, bringing its year-to-date decline to more than half of its market value.

The sell-off followed a Financial Times report on Saturday that Allianz Trade had reduced the level of cover it provides to Vistry's suppliers. According to the report, Allianz could cut the cover by as much as 70 per cent, a move that could pressure the housebuilder's cash flow.

Vistry's suppliers use Allianz credit insurance to protect themselves against the risk of non-payment. A withdrawal or reduction of cover could lead suppliers to demand upfront payment instead of offering extended trade credit — a shift that can strain working capital for builders that rely on trade credit to bridge the gap between incurring construction costs and receiving sale proceeds.

The company had already turned to selling off land to strengthen its balance sheet.

Vistry denied that any suppliers had withdrawn trade as a result of the report. A spokesperson said: "Credit insurers continue to provide substantial cover for our supply chain which more than meets the Group's requirements on an ongoing basis."

"We are not aware of any supplier withdrawing trade from Vistry due to credit insurance changes and we have seen no interruptions to our supply chain. We maintain positive relationships with our suppliers as we continue to build at scale and pace, delivering the high-quality homes this country needs."

The current turmoil follows remarks made last week by Duncan Cooper, chief executive of building materials supplier Travis Perkins, who said during a results call that cover had been pulled from a "fairly significant national housebuilder." Vistry's shares fell approximately 10 per cent in the wake of Cooper's comments and continued to decline at the start of this week.

Vistry Seeks to Navigate a Challenging Period

The housebuilder's difficulties have attracted the attention of short-sellers in recent weeks, as the company works to re-establish direction following the surprise retirement of its long-serving chief executive, Greg Fitzgerald.

New chief executive Adam Daniels, previously a regional manager at the company, provided investors with an early look at his forthcoming strategic review through an unscheduled trading update last month. That update revealed Vistry was forecasting a £30m pre-tax loss for the first half of the year, triggering a share price sell-off. On the same day, the company announced that finance chief Tim Lawlor would depart after being recruited by a private firm.

Vistry's adoption of a partnerships-focused business model had previously made it a standout in the housebuilding sector. Under that model, the company concentrated on building mixed-tenure and affordable homes for housing associations and local authorities rather than pursuing traditional open-market sales, positioning itself to benefit from government-backed affordable housing targets. Progress has slowed in recent years, however, raising questions about the viability of the strategy.

Russ Mould, investment director at AJ Bell, said Daniels "must be wondering what he has walked into, having taken over the helm a little less than four months ago."

"The share price reaction shows investors are concerned and this will only ramp up the pressure on the company to pay down debt as it looks to weather a tricky period for the property market."

A Vistry spokesperson said that Daniels's strategic review is "progressing well." The housebuilder expects to hold approximately £100m in net cash by the end of the year, the spokesperson added.

Vistry has also become the UK's most shorted stock, according to separate reporting by City AM.