Taylor Wimpey looks to build margins rather than more homes

 

So, the truth finally revealed?  ‘Sell fewer homes to improve margins’. Owl bets they are not the only developers thinking this, just the first to actually say it.

Louisa Clarence-Smith  www.thetimes.co.uk 

One of Britain’s biggest housebuilders has said that it will sell fewer homes this year as it focuses on improving margins.

Taylor Wimpey sold 16,042 homes last year, the most since it was formed in 2007 from the merger of Taylor Woodrow and George Wimpey.

It said that volumes this year were “expected to be slightly lower” and that it would be “targeting a slightly lower sales rate as we focus on capturing value”, despite reporting “improved” customer confidence since the general election.

Taylor Wimpey has the largest land bank of any listed housebuilder, with about 140,000 plots, of which 76,000 have some form of planning consent and about 36,800 have implementable consent and are being developed.

Pete Redfern, chief executive, said that the business had set out to accelerate delivery on sites “by as much as can reasonably be managed, both by the market in terms of building and building to quality”.

He said that the company could not deliver more homes as it needed to “build in a high-quality way . . . to get the resources and have the sites open and be able to deliver those homes properly and build the infrastructure”.

Taylor Wimpey’s profit margin fell to 19.6 per cent in 2019 from 21.6 per cent a year earlier as average prices remained flat — at about £305,000 — while build cost inflation rose from 3.5 per cent to about 4.5 per cent. Mr Redfern, 49, said that the inflation comprised a mixture of higher material costs and higher spending on labour, including introducing managers to oversee quality at each division and giving staff more time and resources to get things right.

The company expect its operating margin for the first half of 2020 to be affected by pressures from last year, including long-term investment in quality and business improvement, before improving in the second half.

This week Robert Jenrick, the housing secretary, said that builders that wanted to access the government’s Help to Buy loan scheme from April 2021 would have to sign up to a new homes ombudsman to ensure that buyers can seek redress for shoddy building work. About 34 per cent of Taylor Wimpey sales involved Help to Buy last year. The company’s shares fell 6½p, or 3 per cent, to 212½p, last night.

 

Much good in draft Environment Bill but I think it can be more ambitious still

 

Neil Parish MP’s thoughts on the environment bill.

Neil Parish  www.devonlive.com

“Yesterday I spoke in the second reading of the Environment Bill. This is the first Environment Bill since 1995 and a great opportunity to shape the future of our landscapes, biodiversity and human health. 

Broadly, this Environment Bill sets out the Government’s 25 Year Environmental Plan, announced when Michael Gove was Secretary of State. Its ambitions are commendable and urgently needed.

For instance, I welcome the introduction of the new framework for Local Nature Recovery Strategies, which will direct investment into green infrastructure projects across the country. Projects such as this can help areas rich in natural capital, like ours.

I also welcome clarity on the waste and resource strategy – including the setting up of deposit return schemes, charging for plastic bags and commercial waste. The government has grasped the nettle on these issues.

But outside the EU, we will also need a domestic enforcement agency to ensure targets are met. The Bill rightly introduces a new Office for Environmental Protection (OEP), which will hold public bodies to account for breaking environmental law.

With this in mind, it’s vital the  right  long-term targets, structures and incentives are set in law. On the environment, successive governments need to work towards common objectives because businesses, who will make the real difference, need to plan effectively. Whether it is plastic packaging, nitrogen dioxide from cars or gas boilers in homes – we need clear and achievable targets in place with a route to get there.

My hope is this Bill becomes a landmark ‘25 Year Environment Act’ – implementing the principles of the 25 Year Environment Plan for decades to come.

Let’s not forget, only last year we became the first country to make a legally binding commitment to ‘net-zero’ carbon emissions by 2050. As a result, businesses are already making changes. The same clear targets are needed in this Environment Bill.

For example, the Environment Bill should include commitments to adopting 2005 World Health Organization guideline limits for tiny particulate matter, which are harmful to human health. This key recommendation was made in the 2018 Joint Select Committee report, “Improving Air Quality”, which I chaired. The Government has already carried out a feasibility study which shows this target can be met, so let’s get on and put it in law.

I also believe the new OEP should have a wider remit and stronger teeth. It must be sufficiently independent of government, with a multi-annual budget, like the Environment Agency or Office for Budget Responsibility (OBR). If we are to build on our Conservative record for strong action on the environment, the setting up of the OEP will be crucial.

Over the coming weeks, I will be putting forward my amendments to strengthen the Environment Bill. The Government has done well to include so much good in the draft Bill – but I think it can be more ambitious still.”

 

Budleigh car park to be resurfaced with 48,000 plastic bottles 

 

Innovation in Budleigh? Whatever next – Owl.

A Budleigh Salterton car park is being resurfaced by East Devon District Council this week using an innovative new material.

Callum Lawton  www.exmouthjournal.co.uk

Instead of conventional asphalt, an alternative type of surface incorporating non-recyclable plastic waste, in place of a portion of bituminous binder material, will be used.

This product, which is produced by MacRebur, has several advantages.

From an environmental perspective, incorporation of ground-up non-recyclable plastics into the surfacing removes the need to incinerate these materials or send them to landfill by giving them further use.

The addition of these plastics to the bitmac reduces the amount of bitumen (a material obtained from crude oil and used to bind aggregate in road surfacing) required. When the surfacing reaches the end of its life, the surface can be excavated and recycled into a new surface.

The addition of plastic is also beneficial to the surfaces’ properties, making it more flexible and durable, and extending its life.

Independent laboratory testing has proved that MacRebur does not leech microplastics into the environment, and does not produce additional hazardous fumes in comparison to regular surfacing. The manufacturing process also ensures that no plastic granules, sometimes known as ‘nurdles’ enter the environment during construction.

Plastic granules produced at MacRebur’s factory are sealed in bags for transportation to the local asphalt manufacturer, who then add the granules to the bitumen in controlled factory conditions, where it is heated and blended into the mixture.

As a result, the granules are already melted by the time that they reach site, and there is no loose plastic present on site. This resurfacing project will recycle 600kg of waste plastic – the equivalent weight of 48,000 plastic bottles – which would otherwise be disposed of, will reduce fossil fuel extraction for the surfacing by 6 per cent, and save 580kg of carbon emissions which is the equivalent of either:

Councillor Geoff Pook, East Devon’s portfolio holder for asset management, said: “Construction activities contribute over 10 per cent of the UK’s carbon emission and so this is a key area to cut down on.

“We will continue to research, trial and use more sustainable materials wherever possible.”

 

Persimmon chief executive to stand down from company

The boss of homebuilder Persimmons – which has worked on sites across Devon and Cornwall – has confirmed he will be leaving the role after just a year in charge.

George Thorpe  www.devonlive.com

The Financial Times reports that chief executive David Jenkinson has told the company that he will step down in “due course” but will stay in the position while the board searches for his replacement.

Jenkinson took the job in February last year and has been at the firm for 23 years.

“I will remain fully committed to both the chief executive role and to our programme of change until my last day in the job,” Mr Jenkinson said.

Following the announcement, shares in Persimmon dropped by 4% in early trading.

In recent years, the homebuilder has been at a number of issues with an independent review, which was launched after complaints about the company’s work and pay, saying Persimmon needed a “fundamental change in culture”.

The report also highlighted problems including insufficient fire protection at its properties, which affected some of its homes built in Truro which had safety barriers missing.

Yesterday (February 26), it was reported that Torbay Council had ordered the company to stop work on a controversial building site after claims that an ancient Devon bank, trees and parts of their gardens had been removed.

A spokesman for Persimmon Homes said they were working with the council to review the situation at Kings Ash Hill, where it has planning permission to build 68 properties.

On top of this, a number of complaints have been made by residents in Devon about the overall quality of their homes built by the firm.

Meanwhile, Plymouth Trading Standards launched an investigation in October over claims Persimmon Homes were “mis-selling” homes on estates in Plymstock and Ivybridge.

The company strongly refuted these claims.

See also:

Persimmon shareholders have dodged a bullet

Nils Pratley www.theguardian.com 

David Jenkinson will depart housebuilder Persimmon with shares in the company worth roughly £45m, his prize from the same absurd incentive scheme that bestowed £75m on his predecessor as chief executive, Jeff Fairburn.

Perhaps Jenkinson, only a year after replacing Fairburn, wants to spend more time with his winnings. Or perhaps he’s just recognised what was blindingly obvious to outsiders: Persimmon’s claims to cultural reform, and its pledge to improve the quality of its houses, lacked credibility while a veteran of the old regime was at the helm.

Any doubt on the latter point evaporated with the damning independent report that the board, to its credit, published last December: in short, Persimmon had been building too many shoddy homes that had fire risks; box-tickers ruled the roost; and the company saw itself as “land assembler and house-seller rather than a housebuilder”.

Customers now come first, says chairman Roger Devlin, and, if you look closely at Thursday’s full-year numbers, there is circumstantial evidence to support the boast. An extra £213m was invested in “work in progress”, the cost of actually finishing the job, rather the handing homes to buyers when they’re full of snags.

Harder evidence of true reform, and commitment to reputational improvement, can only judged over time. It is why Devlin would do well to appoint a non-insider to replace Jenkinson. Better still, go for somebody from outside the housebuilding industry, an insular sector that enjoys nothing more than marking its own homework.

In the meantime, Persimmon’s shareholders should count themselves lucky. In a normally functioning market, there would be a heavy price to pay for pursuing a strategy that short-changed customers but made executives as rich as Croesus. Instead, Persimmon is still achieving pre-tax profits of £1bn and still has a return on capital employed of 37%. Help to buy has a lot to answer for.

 

Fair Society, Healthy Lives

 

Owl has tracked down the sources of the recent press comment on declining health and health inequality.This post places these on the record, with summaries below. (Serious read, not for the faint hearted).

In 2010 Sir Michael Marmot’s strategic review of health inequalities in England post- 2010 was published under the title “Fair Society, Healthy Lives” . In the review, recommendations were made in six domains:

  • Give every child the best start in life 
  • Enable all children, young people and adults to maximise their capabilities and have control of their lives
  • Create fair employment and good work for all
  • Ensure a healthy standard of living for all 
  • Create and develop healthy and sustainable places and communities
  • Strengthen the role and impact of ill health prevention

https://www.parliament.uk/documents/fair-society-healthy-lives-full-report.pdf

This February a “ten years on”  report has just been published which shows that, in England, health is getting worse for people living in more deprived districts and regions, health inequalities are increasing and, for the population as a whole, health is declining. The data that this report brings together also show that for almost of all the recommendations made in the original Marmot Review, the country has been moving in the wrong direction. 

HEALTH EQUITY IN ENGLAND: THE MARMOT REVIEW 10 YEARS ON

https://www.health.org.uk/sites/default/files/upload/publications/2020/Health%20Equity%20in%20England_The%20Marmot%20Review%2010%20Years%20On_full%20report.pdf

Report Conclusions and Summary of Recommendations

In 2008 the Commission on Social Determinants of Health, with Sir Michael Marmot as chair, published Closing the Gap in a Generation. The title was meant to reflect the fact that the Commission’s assembled evidence showed that, if acted on, the health gap – inequalities in health within and between countries – could indeed be closed within a single generation. The cover of the report read: “Social injustice is killing on a grand scale”. It was the Commission’s firm view that not acting on the evidence was deeply unjust to the billions of people whose health was made worse by social conditions they had no part in creating.

It was in this spirit that the Marmot Review team approached the task of assembling the evidence to show how the conclusions of the Commission on Social Determinants of Health could lead to recommendations for reducing health inequalities in England. Because we judged that social justice should be at the heart of policies to improve health, we gave the 2010 Marmot Review the title, Fair Society, Healthy Lives. Put fairness – social justice – at the heart of all policy-making and health would improve and health inequalities diminish.

This ’10 years on’ report shows that, in England, health is getting worse for people living in more deprived districts and regions, health inequalities are increasing and, for the population as a whole, health is declining. The data that this report brings together also show that for almost of all the recommendations made in the original Marmot Review, the country has been moving in the wrong direction. In particular, lives for people towards the bottom of the social hierarchy have been made more difficult. Some of these difficulties have been the direct result of government policies, some have resulted from failure to counter adverse trends such as increased economic inequalities or market failures. 

The purpose of this report is to show what can be done, in a spirit of social justice, to take action on the social determinants of health to reduce these avoidable health inequalities. It is not enough for the Government simply to declare that austerity is over. Actions are needed in the social determinants to improve the lives people are able to lead and hence achieve a greater degree of health equity and better health and wellbeing for all. While our approach emphasises the social determinants of health, there is much that the NHS can do to address the social needs of patients. Similarly, Public Health England should be taking a lead not only in action on traditional public health concerns but on the causes of inequalities that we have highlighted in this report.

But efforts to reduce health inequalities will require more than the NHS and Public Health England. Experience shows that action, across the whole of society, will require the commitment of the Prime Minister and the whole of government. The justification for whole-of-government action is that it is the route to reduction of health inequalities. There are two further reasons for the whole of government to act. First, as we said at the outset, health and health inequalities are good measures of how well society is doing: how well it is creating the conditions for people to lead lives they have reason to value. Second, there will be other benefits from the actions we recommend here. Investment in improving early child development, and reducing exposure to adverse child experiences, will reduce antisocial behaviour and crime in addition to its beneficial effects on mental and physical health. Improving education will lead to more capable citizens as well as a more qualified workforce. Creating healthy environments will be good for meeting climate change targets. Reduction of poverty is a good thing in itself, quite apart from its beneficial effect on reducing health inequalities. A more equal, cohesive society is simply a better, healthier place to live.

Although we have had much to say on the increasing levels of poverty in England – in some areas of England more than one child in two is growing up in poverty – the social gradient in health must remain in focus. The gradient has become steeper. Action must be taken not only to improve living conditions for the worst off, but also for those who are relatively disadvantaged. The aim of all policies should be to level up, for everyone to enjoy the good health and wellbeing of those at the top of the social hierarchy – hence our reiteration of proportionate universalism: universalist policies with effort proportionate to need. We extend this to include investment – over the last decade government allocations of funding have declined most in poorer areas and this must be reversed. Funding should be allocated in a proportionate way – those areas that have lost the most and are more deprived must receive renewed investment first and at higher levels. 

We repeat: we neither desire nor can envisage a society without social and economic inequalities. But the public thinks that inequalities have gone too far, and evidence from across the world suggests that the level of health inequality we see in England, is unnecessary. We welcome action from local and regional governments to tackle social determinants of health. More action of the type we have described here will be necessary. It is not, though, a matter of action by either central government or local government: we need both and we need leadership. If we leave this for another 10 years, we risk losing a generation. 

Our main recommendation is to the Prime Minister – to initiate an ambitious and world-leading health inequalities strategy and lead a Cabinet-level cross-departmental committee charged with its development and implementation. We suggest that the new strategy is highly visible to the public and that clear targets are set.

As we write the final words of this report, the world is demanding urgent action on climate change. It is of grave concern that such actions to mitigate climate change should not lead to wider socioeconomic inequalities. We need to bring the agendas of climate change and of social determinants of health and health equity together.

In effect, this report is calling for a reordering of national priorities. Making wellbeing rather than straightforward economic performance the central goal of policy will create a better society with better health and greater health equity. [Owl’s emphasis]

Building new homes on land prone to flooding ‘making damage worse’

 

At last Conservative MPs get it, but what about the planners and EDDC DMC? The building of tens of thousands of homes on flood-prone land is worsening the damage to surrounding areas, Conservative MPs have said, as the head of the Environment Agency warned against new developments on floodplains.

Lisa O’Carroll  www.theguardian.com

Tory backbenchers called on Boris Johnson to review the government’s housing policy over concerns that new homes were either not flood-proof or were exacerbating issues in neighbouring communities.

John Redwood, the MP for Wokingham, said building on land most at risk of flooding was “a very foolish thing to do and it’s obviously making the problem considerably worse”.

He said the risk to residents had been “greatly increased” by building on floodplains in his Berkshire constituency, and added: “I think [the government] should certainly review their planning policy and I think they should take the Environment Agency’s advice more seriously on appeal and regard it as a very important factor.”

Two severe flood warnings remained in place on Tuesday night, in Hereford and Ironbridge where homes were evacuated as the River Severn was expected to reach near-record levels. Residents were also evacuated in the town of Snaith, east Yorkshire, after the River Aire burst its banks.

There were 250 flood warnings and alerts in place across England, from Devon to Cumbria, with a further 10 in Wales following one of the wettest Februarys in 254 years of records.

The government has come under pressure over its aims to build 300,000 homes a year by the mid-2020s to help ease a chronic shortage across the UK. Local authorities say they are struggling to meet these demands because of a shortage of available land, leading to one in 10 of new homes in England being built on high-risk flood sites since 2013.

The Guardian revealed on Sunday that more than 11,000 homes were planned in areas the government considers a high flood risk in the seven English regions swamped by Storms Ciara and Dennis.

The government says its planning policy is clear that housing should be located in the areas least at risk of flooding and, when development in a risk area is absolutely necessary, “sufficient measures should be taken to make sure homes are safe, resilient and protected from flooding”.

However, a series of experts, MPs and local authorities have said that these new developments often increase the flood risk to surrounding areas because water that would be otherwise absorbed by the land instead runs off more quickly into rivers that then burst their banks.

The Tory MP Laurence Robertson said two huge housing developments were under construction in his Tewkesbury constituency, comprising 2,500 homes, and that one of them was currently under water.

“All of that [new housing] is just going to make [the flooding] so much worse,” he said. “I don’t think there’s been any adequate demonstration that they can contain the water in the new buildingwork. I’ve got other examples in my constituency where houses have been built, particularly on slightly elevated land, which throw the water downhill. They suffer [in surrounding areas] and that’s what I fear.”

Kieran Mullan, the newly elected Conservative MP for Crewe and Nantwich, said housebuilding on floodplains was “asking for trouble and I would need a lot of convincing to find that is ever justified”. He said a recently built housing estate had caused a road in his constituency to flood and that residents’ concerns about the dangers had been ignored. “It is no surprise concreting over fields can make localised water drainage worse,” he said.

Ahead of a speech in London on Tuesday, the head of the Environment Agency, Sir James Bevan, said properties should not be built on the floodplain “as far as possible” and that some developments should never have been approved.

Speaking on BBC Radio 4’s Today programme, Bevan also raised the possibility that some vulnerable communities on the coast and in river valleys may have to move to avoid repeated flooding.

He said those communities should not be “forced out” but that there needed to be a conversation about how they can be protected in the long term.

In a speech at the World Water-Tech Innovation summit in central London, Bevan said it was unrealistic to ban all housebuilding on floodplains given England’s geography.

However, he added: “The clue is in the name: floodplain. So we can and should insist that development only happens there if there is no real alternative, that any such development doesn’t increase other people’s flood risk … and that properties built on the floodplain are flood resilient, for example with the garages on the ground floor and the people higher up.”

Labour has called for an immediate end to building on land considered to be at high risk of flooding, which equates to 10% of land in England. Analysis by the Guardian found that more than 84,000 homes had been built in these high-risk flood zones between 2013 and 2018, with the annual total having doubled in that time.

The government also came under fire from the National Farmers’ Union, which blamed a “third world” approach to water management for the devastation.

The NFU president, Minette Batters, said the government had done “nothing” in the last eight years to act on its 2012 manifesto involving more reservoirs and a national plan to transport water elsewhere to the country to meet needs.

“Years of neglect has created an urgent problem,” she said, adding that farmers’ efforts with wood dams or the introduction of beavers to naturally manage water flow were part of the solution.

 

Call for English councils to be given powers to regulate Airbnb

 

As Caroline Lucas calls for councils to be given powers to regulate Airbnb, Owl intends running a couple of posts on the subject. It is one many may regard as controversial but in Owl’s eyes looks to have the potential to wreak havoc, particularly in small communities. Although East Devon is not yet as badly affected as North Devon or the South Hams, Owl believes Airbnb has almost wiped out the traditional b&b . The crucial difference between the two is that the b&b owner lives on site and is a permanent member of the local community.

Helen Pidd  www.theguardian.com

Local councils in England must be given powers to regulate Airbnb and other short-term letting sites in order to alleviate the “intolerable” pressure they put on the availability of local housing, the Green party MP, Caroline Lucas, has said.

Her intervention followed a Guardian investigation that found one Airbnb listing for every four residential properties in some hotspots across Britain. Airbnb has disputed the finding.

Meanwhile, an organisation representing landlords has warned that imminent tax changes will drive an increasing number of landlords towards Airbnb and its rivals, depriving renters of long-term, stable tenancies.

Last month Lucas asked the government to make it easier for councils to impose a 90-day cap on homes let out on Airbnb and other online platforms. Airbnb says the vast majority of properties on the platform are already rented for less than 90 days a year.

She wants the UK government to follow Scotland’s lead. In January Holyrood announced new measures giving local authorities in Scotland powers to regulate short-term lets. This includes a licensing scheme with health and safety stipulations, which would also allow councils to address the concerns of local residents. A tax on short-term lets is also being considered.

“Brighton and Hove city council should be given the powers to regulate this industry, which is having such a serious impact on an already overstretched private rental sector and on more highly regulated hotels and B&Bs, which are being undercut. There needs to be a level playing field,” said Lucas.

“The pressure put on the availability of local housing by Airbnb in some areas of UK is intolerable. Local councils must be given powers to regulate this, so local housing needs are not squeezed out,” she tweeted on Friday.

Airbnb said the Guardian’s data was flawed and that some listings were for hotel rooms, single rooms in homes, and unusual properties such as caravans, meaning their rental did not affect housing stock.

Patrick Robinson, the company’s director of public policy, said: “Airbnb is a good partner to cities and we were the first platform to limit how often hosts in London can share their homes. We are also working with cities across the UK on proposals for a host registration system that we will proactively put to the government later this year to help ensure that rules work for everyone.”

But some critics of the company in hotspot areas say the saturation of their neighbourhoods is changing their way of life. Chris Hayes, a 55-year-old train driver who lives in the North Laine area of Brighton, said his life was being made a misery because five of the 29 cottages in his row were being advertised on Airbnb and similar sites.

“Residents have no way of stopping noise without confrontation. The owners are unknown or uncontactable, the ‘hosts’ do not have contact numbers for out-of-office hours, the council does not have noise abatement officers at night, the police treat it as very low priority,” he said, complaining of being woken by parties and the sound of suitcases being trundled along the alleyway in the middle of the night.

He added: “Airbnbs should be a planning change of use from residential. You need a change of use to convert a home to an office, hotel or shop. Why not to Airbnb?”

In 2018, up to 2,000 homes were being used as short-term holiday lets in Brighton, according to the council – a figure that is likely to have increased since. Between May 2019 and January 2020, the number of active UK listings on the website increased by 14% to 257,000.

The Residential Landlords Association (RLA) warned on Friday that renters were finding it harder to access long-term homes to rent because taxation changes are driving landlords to move into the holiday lettings market.

Last month, research from ARLA Propertymark found that nearly half a million UK properties could be left unavailable for longer-term rent as more landlords exit the market in favour of short-term lettings. Many landlords blame the government for restricting mortgage interest relief to the basic rate of income tax, claiming they will be significantly worse off or even unable to make a profit on their lettings.

The change does not apply to short-term lets, encouraging more landlords to move into that market, according to the RLA. Anyone buying a second home or buy-to-let property has also been hit with a 3% stamp duty surcharge since April 2016 under changes introduced by George Osborne as chancellor.

David Smith, the RLA’s policy director, said: “Government policy is actively encouraging the growth of holiday homes at the expense of long-term homes to rent, which many families need. This is completely counterproductive, making renting more expensive and undermining efforts to help tenants save for a house of their own.

“The chancellor must use his budget to give tenants a better deal by supporting good landlords to provide the homes to rent that they want to live in.”