Cranbrook: “Estate rent charges”: another developer cash cow?

There is much controversy in Cranbrook, where householders are hit with a double whammy: “estate rent charges” AND council tax.

In an effort to clear up confusion, the town council offered an explanation for the difference between the two:

The estate rent charge covers the maintenance of communal areas in Cranbrook before those are transferred from private into public ownership, including the management of the Country Park, road maintenance, litter picking, bin emptying, maintenance of play parks and street lighting.

Now Owl, being a cynic thinks: Why would developers want to transfer the management of the country park, road maintenance, litter picking, bin emptying, maintenance of play parks and street lighting to the town, district or county councils when they can get the money them from residents AND charge administration fees and overheads on these same costs? An extra 25%-40% is a ball-park figure for such extra costs, which do not have to be explained.

As an example, should roads be handed over to DCC and developers wreck them with plant and machinery movements, digging trenches, etc the DEVELOPERS would have to pay those costs.

More worryingly, why would they want to transfer the country park management to the district council when, if they hold on to it long enough, they might gain legal ownership of it and get permission to build on it (flood plains can be raised …). Owl is no lawyer, but bets developers know their rights down to the last crossed t and the last dotted i.

Also, the county, district and town councils will likely drag their heels as, once taken into public ownership, costs will necessarily have to be passed on to council taxes. Both sides therefore benefit from the status quo, the only losers being residents.

Owl recalls that police could not stop boy racers in Cranbrook because roads had not been adopted by Devon County Council so were private land. Is this still the case?

With all these worries, no wonder town councillors are dropping out at an alarming rate.

“Battered Bovis eyes sell-offs as profit pain rises”

Possible closure of business outside the south-east … hhhm. Might be a good time for EDDC to do due diligence …

“… Schroders fund manager Andrew Brough is said to have urged Berkeley Homes to put Bovis out of its misery with a bid earlier this year, but sources close to Bovis stressed the review was likely to focus on land sales rather than a sale of the overall business.

Clyde Lewis of Peel Hunt said: “In our view, the likelihood of the company being bought by any other industry players looks remote given the liquidity in the land market.

“Therefore, the key to the shares performing better will be the group’s ability to turn itself around operationally. Without knowing who the chief executive will be to lead this charge, we see no need to get involved.”

Shore Capital’s Robin Hardy added that a review of the firm’s structure could also mean a “closure of operations outside the South-East and a retrenchment to a smaller and more regional business”.

Bovis held the dividend payout unchanged today in a bid to assuage shareholders but Hardy added that the problems could “have deeper roots” and take more than a year to resolve.”

http://www.standard.co.uk/business/battered-bovis-eyes-selloffs-as-profit-pain-rises-a3471121.html

Bovis: share price falls, housing output forecast reduced, dividend raised

“Under-pressure housebuilder Bovis Homes PLC (LON:BVS), whose boss quit in January just days after the firm warned it would not meet market expectations, saw its 2016 profits fall by 3% after a “difficult year” and said it will build fewer homes in 2017

The FTSE 250-listed firm saw its pre-tax profits fall to £154.7mln for the full-year to December 31, down from £160.1mln a year earlier and below the firm’s own forecast of £160mln-£170mln, even though revenues rose by 11% to £1.054bn.

In reaction to the profits fall, Bovis shares dropped over 9% in early trading, down 75.5p to 765.5p, dragging other houserbuilders lower in its wake.

Bovis surprised the market at the end of December by saying it would miss market forecasts after failing to build the volume of homes it anticipated in 2016.

The group built nearly 4,000 homes last year but said it expected volumes to fall by between 10% and 15% in 2017 before a return to “normal industry production,” despite almost all its peers building more homes and posting bumper profits.

Earl Sibley, Bovis’s interim chief executive said: “We have a clear set of operational priorities for 2017 and are fully committed to improving our levels of customer service and delivering high quality homes this year and in the future.

“The fundamentals of the business remain strong with a robust financial position and high quality land bank.”

In a note to clients, analysts at Liberum pointed out: “Management has warned that to resolve the quality issues that hit 2016, it will slow production down by 10-15% in 2017 and that costs will rise as it invests in its processes once again.

“This suggests that 2017 consensus EPS estimates could fall by around 25%.”

However, repeating a ‘hold’ rating and 775p price target on the stocks, they added: “The 2016 NAV of 757p should act as a support for the shares, and management has pledged to maintain the 45p dividend in 2017.”

Despite the 2016 profits fall, Bovis still raised its dividend to 45p per share, up 13% from the 40p paid in 2015.

In its statement, he firm said: “Whilst there will inevitably be an impact on our earnings and cashflow from the actions we are taking in 2017, the Board intends to recommend maintaining the dividend at the level declared for 2016, confirming its confidence in the future potential of the business.”

http://www.proactiveinvestors.co.uk/companies/news/173370/bovis-homes-drops-as-2016-profits-fall-by-3-after-a-difficult-year-expects-to-build-fewer-homes-in-2017-173370.html

The perils of “new build” homes

A commentator on the post below on the Guardian website says:

Because they are all about volume and speed. They’re usually predominantly timber framed, dry lined wooden boxes. I don’t believe they’ll stand the test of time.

They bang them up as quickly as possible and the perception is that there’s more money in doing that and sorting out the inevitable snagging problems later than there is in taking the time to do it properly in the first place.

The rooms are too small – did you know they use furniture that is smaller than standard in the show homes to give the illusion of space? When you put your own double bed in the biggest bedroom there’ll barely be room to walk round it.

Land is a valuable asset so your garden will barely be big enough for a swingball.

There are also now stories about homes being sold leasehold with the freeholds being sold on to third parties and not made available to the homeowners so that remortgaging or selling after a few years requires a new lease which the freeholders can charge a mint for. All sorts.

I realise that many people don’t have much choice but if you do, I recommend that you steer clear.”

and

1,400 out of 4,000 is 35% and a better description than ‘some’ which suggests a lot less than 1 in 3.

Pre-fact world headline: ‘Customers ripped off as 1 in 3 Bovis homes sold unfinished’ “

and

How these developers can get away with this is beyond me. Isn’t this a con? How can you sell a cardboard box for £200k + and receive government incentives for the privilege?”

https://www.theguardian.com/business/2017/feb/20/bovis-to-pay-7m-to-compensate-customers-angry-at-poorly-built-homes

“Bovis to pay £7m to compensate customers angry at poorly built homes”

Owl wonders how many affected homes are in East Devon, given the coruscating remarks made about the company here recently – particularly in Axminster by Councillor Douglas Hull, though Councillor Moulding did not seem concerned.

Oh, and Cranbrook … Cranbrook … poor, poor Cranbrook. Already with district heating problems, estate rents and garages too small for cars …

“Bovis Homes is being forced to pay £7m for “remedial action” to fix customers’ homes, after irate owners spent their own money fixing faults at newly built properties.

Angry homeowners formed a Facebook group with some accusing Bovis of pressuring them to move in to incomplete houses to hit sales targets.

Bovis’s boss on Monday apologised to customers for the poor quality of their houses and promised he would “make sure [we] finish their homes to their satisfaction”.

Earl Sibley, Bovis’s interim chief executive, announced the £7m “customer care provision” as home owners prepare to protest at the company’s annual meeting in Tunbridge Wells in May. …

… More than 1,400 have joined the Bovis Homes Victims Group on Facebook while others have posted a series of videos showing their poorly built homes on YouTube. Marc Holden, one of the group’s administrators, had said: “We are not going to stop our active campaign. There are a lot of unhappy people.

“We were getting a lot of people joining the group just before Christmas who were posting about being ‘encouraged’ to complete by 23 December, some were being offered money and other incentives.”

The company conceded that some customers were “offered an incentive to complete before the year end” but insisted that all of the homes were “habitable”.

Chad Clifton said he and his wife were “forced” to complete on their four-bedroom Bovis house in Brockworth, Gloucestershire, on 23 December and found the fridge had not been fitted and that the hallway was unfinished – just two points out of a list of 115 defects. They were offered £350 and a free move. “We were told we didn’t have much choice – if the house is ready we have to complete on 23 December.”

Rob Elmes said he was offered £3,000 if he and his wife completed on 23 December, but declined the offer because there were so many defects with the £320,000 three-bedroom property in Inkberrow, Worcestershire. “It became one of the most stressful weeks we have endured,” Elmes said. “[It was] not the Christmas we were hoping for.” …

https://www.theguardian.com/business/2017/feb/20/bovis-to-pay-7m-to-compensate-customers-angry-at-poorly-built-homes