Nationwide refuses to grant mortgages on new leasehold houses and flats in ground rent scandal

Overnight, Nationwide building society has made hundreds, and possibly thousands, of new-build flats and houses almost unsaleable – and they should be roundly applauded for doing so.

In a surprise intervention into the scandal of leasehold flats and houses sold with spiralling ground rents, the society said that from this Thursday it will stop lending against any new-build leasehold flat or house where the ground rent is more than 0.1% of the value of the property. It will also refuse loans on new flats with lease lengths of less than 125 years or new houses with less than 250 years. Developers will now be forced, if other lenders adopt the same policy, to slash the absurd ground rents or find that they simply can’t get any buyers.

Take, for example, Berkeley’s 60-acre development south of Reading called Kennet Island. Prices for the remaining leasehold flats start at £249,950, but when we rang the sales office it told us the ground rent was £350 and would increase with RPI. That’s more than 0.1% of the value of the property – which means buyers won’t now qualify for a Nationwide mortgage. Either Berkeley cuts the ground rent or finds that buyers will melt away, unable to find a loan.

Coming so soon after Taylor Wimpey said it had set aside £130m to compensate buyers caught in the ground rent trap, it’s another small victory in the battle against leasehold abuse.

Robert Stevens of Nationwide said: “As a mutual building society that looks to protect its members, we have decided to make changes to the way we value new-build properties on a leasehold basis. We are doing this to address the practice of using leasehold tenure where this is unnecessary, particularly for new-build houses, and to ensure that onerous leasehold terms, including ground rents, are properly considered and controlled in order to safeguard our mortgage members.

“Nationwide is taking a proactive, leading position on this issue to address a significant risk facing our members and to challenge what we believe to be poor practice in the new-build market.”

The society is one of the biggest lenders in the UK, and hopefully this will now set a benchmark for other providers to follow.

Remember, we are not talking about service charges here. When leaseholders pay a service charge, at least they get something in return – such as the maintenance of the common parts of the building. When leaseholders pay a ground rent they receive absolutely nothing in return. It is little more than a medieval tax and should have been outlawed decades if not centuries ago. An ugly industry has built up among financiers who snap up leaseholds with ground rents, because in an era of a 0.25% base rate a stream of income guaranteed to go up by RPI – or double every 10 years in some cases – is an extremely valuable commodity.

The big developers reassure unsuspecting young buyers that the 999-year lease is “almost the same as freehold”, but then they sell it on, typically for 15-20 times the ground rent. It’s a lovely little earner for the developers but spells misery for the flat dwellers.

It’s great that Nationwide has set a new benchmark, but we need to go further. There is no reason why a ground rent should be any more than a peppercorn – say £5 a year. That would kill off this grubby trade overnight. Developers who trapped buyers in ground rents that double every 10 years should be forced to buy them out in the way that Taylor Wimpey has agreed to compensate its buyers.

Amazingly, giant builders such as Persimmon are still knocking out new-build estates where houses are being sold as leasehold, for which there can be no justification. Meanwhile, apartments should only be sold on a commonhold, not leasehold, basis. The legal structure is already in place – it just needs political will to force it on the developers.”

https://www.theguardian.com/money/2017/may/06/nationwide-housebuilders-leasehold-new-builds

Bovis slow down will hit East Devon hard

“… Bovis faces the humiliation of being the only major housebuilder to report falling volumes this year as it attempts to recover from a series of blunders and a major profit warning … a 15% drop in completions … dividend cut … damaged reputation …”

Sunday Telegraph Business section

This will have a major knock on effect for East Devon, where the company is heavily involved in Axminster, Seaton and Cranbrook. Bad news, too, for the Local Plan, which similarly relies on the company to boost its numbers.

Bovis compensates buyer for 9 month completion delay on new home

Letter in Guardian:

“We reserved a Bovis home in February 2016 and exchanged on 6 June. However, after signing the contract, we were informed the completion date had been delayed from October 2016 to March 2017. This was a complete surprise as we weren’t made aware of any issues. It’s since been further delayed to May 2017.

We’ve not been given any explanation. Meanwhile, the sale of our flat completed and we are incurring large costs renting a home and paying for our furniture to be in storage. My wife has also given birth to our baby, who we’d planned to have in our new house. Bovis insists the original October completion date was realistic. At the end of January, it finally offered us £1,100 to cover storage and commuting costs, but our total costs are nearer £16,700 including the early mortgage termination fee we were forced to pay.” RJ, Watford Herts

ANSWER

“Since you wrote in, the completion date has been put back by another month. This means you will have to apply for a new mortgage as your current offer expires in late May.

Bovis has offered to let you withdraw from the contract but that would mean you have to start searching for a new home from scratch. It blames “operational issues”, but declines to explain how problems great enough to cause an eight-month delay had not been identified when you signed the contract the day before the completion date was postponed.

It has now agreed to your demand for £6,000 to help with some of your costs, but you are still in suspense, wondering whether you and your new family will have a proper home in June.”

2-year old bottles of urine found behind bath in Bovis home at Cranbrook

Mandy Greeves, 50, found three bottles of ‘urine’ stashed behind a bath panel at her house in Cranbrook, Exeter.

A resident of a new build home was horrified to discover bottles of suspected urine hidden behind a bath panel – nearly two years after she moved in.

Mandy Greeves, 50, says she is grateful now that the containers of yellow liquid have been removed by Bovis Homes , which built her property.

The ‘disgusting’ discovery came to light when Mandy called a plumber friend in to repair a tap at her house in Cranbrook new town near Exeter, Devon.

When the plumber removed the bath panel to fix the problem he discovered three plastic bottles full of a yellow liquid underneath the bath.

The bottles had been covered up by the panel.

Mandy was baffled. “I looked at them, and I thought, ‘Oh my god’. First of all I thought was it milk that had been left there? But it wasn’t.

“You could see that it was urine. I was disgusted. It was just horrible. I couldn’t believe that someone could leave something like that behind.

“I thought, do I throw it away or do I keep it? Then I thought, if I throw it away, I’ve got no evidence.”

Mandy told her friend to put the bath panel back on so that there was evidence to show Sovereign Housing which co-owns the house, and Bovis Homes.

Mandy is the house’s first occupant, and moved in to the property in July 2015.

One of the bottles is dated March 15, which, says Mandy, would tally with the house’s interior being fitted.

“I can’t understand a human being being like that,” said Mandy.

“If they want to go to the toilet, why can’t they do it in the garden? The lawn wasn’t down by then it would have just been mud.

“Why did they have to do it in a bottle and leave it and then put the bath panel back on? It might have been the builders. The guy that put the panel on. Why did he not notice it? It’s not nice.”

A Bovis Homes spokesperson said: “Our regional customer care team were not aware of this matter but now it has been brought to their attention they will contact Sovereign Housing immediately and investigate this situation further.”

http://www.mirror.co.uk/news/uk-news/homeowner-makes-disgusting-discovery-bathroom-10220768

“Competition watchdog to examine warranties for new homes”

Too late for the many people in Axminster and elsewhere in East Devon, sadly.

“The Competition and Markets Authority is examining payments between housebuilders and the providers of warranties for new homes as part of a review of NHBC, the largest warranty provider.

The CMA announced last month it was reviewing undertakings made by NHBC, the standard-setting body for new-build properties in the UK and the main warranty provider. These 22-year-old undertakings were designed to improve competition in the warranty market.

The review was announced amid concerns that NHBC is compromising its independence by paying millions of pounds to developers every year. However, the CMA said it was launching the review following a request from NHBC and that it would not consider the “wider issues” relating to the organisation. …”

https://www.theguardian.com/business/2017/apr/07/competition-authority-to-examine-warranties-for-new-homes

Bovis gets a new boss … same old merry-go-round

“Bovis Homes today snubbed a £1.2 billion takeover bid from rival Galliford Try — and lured its former chief executive to be the new boss. …

… Fitzgerald admits he is obsessed by work, though he does find time to listen to Level 42. He told the Sunday Times in 2015 that he has “never read a book”.

At Bovis he will get a basic salary of £650,000. Bonuses and incentives mean he could make up to £7 million in the first three years.”

http://www.standard.co.uk/business/bovis-fends-off-galliford-and-nabs-its-old-boss-a3507821.html

Who will help people in sub-standard new build homes?

“There are rising concerns that the rush to build new homes is causing housebuilders to cut corners. Many firms have set tough targets to cash in on huge demand.

There are rising concerns that the rush to build new homes is causing housebuilders to cut corners. Many firms have set tough targets to cash in on huge demand — and meet the Government’s pledge to build 200,000 new homes a year.

Thousands of victims of poor workmanship have formed groups on social media websites such as Facebook, including Taylor Wimpey Unhappy Customers, Avoid Persimmon Homes and Bovis Homes Victims Group.

Hundreds have posted on Snagging.org — named after the jargon builders give to the task of finishing a project — citing problems such as creaking floors, scratched windows and stained carpets.

Campaign groups want a new homes ombudsman who can step in when families are let down. Buyers should also be given a chance to inspect their new-build before being handed the keys, they say.

Paula Higgins, chief executive of HomeOwners Alliance, says: ‘You have more consumer protection when you buy a toaster.

‘The industry is tilted too far in favour of developers, and the complaints system is too confusing.’

A report by the All-Party Parliamentary Group for Excellence in the Built Environment found more than nine in ten buyers report problems to their builder.

Oliver Colvile, chairman of the parliamentary group and Conservative MP for Plymouth Sutton and Devonport, says: ‘There have been too many reports of new homes that are quite simply uninhabitable.

‘We need to ensure there is a clear process whereby developers can be held to account and are responsible for correcting any below-par workmanship as soon as possible.’

Britain’s biggest house builders nearly all reported soaring profits last month. Persimmon reported a pre-tax profit of £783 million for 2016 — a 23 per cent increase on 2015.

Barratt Developments saw a 20.7 per cent rise to £682.3 million, Bellway a 36.5 per cent rise to £492 million, Redrow a 35 per cent rise to £140 million and Taylor Wimpey a 21.5 per cent rise to £733.4 million.
Bovis reported a 3 per cent fall in profits but still made £154.7 million.
Bovis has been forced to set aside £7 million to compensate buyers who have complained about the poor quality of its homes.

In January the firm was revealed to have offered up to £3,000 to buyers who moved into their houses by December 23 as it struggled to meet targets.
Sales have been boosted by the Government’s Help to Buy scheme, which has helped 100,284 first-time buyers onto the property ladder since 2013.
All the firms reported an increase in both the number of homes built and average selling prices. …

… A spokesman for the National House Building Council says: ‘We carry out spot check inspections at key stages during construction… [but] the builder is responsible for ensuring homes conform to building regulations and our standards.’

A Taylor Wimpey spokesman says: ‘We recognise that we do sometimes get things wrong, but we are committed to resolving those issues.’
A Bovis spokesman says: ‘We are putting more resource into customer care and reviewing our processes to ensure a focus on quality.’

http://www.dailymail.co.uk/money/article-4314028/Who-help-families-forced-live-half-built-homes.html

More money to be made from land than building houses

“Analysts at Liberum believe both Redrow and Galliford could both pay up a little more for Bovis, but added that they may choose not to as they “earn better returns from buying open market land” …

… The analysts pointed out: “Both Redrow and Galliford Try have cited economies of scale. Merging with Redrow would create a 9,000 unit a year builder, and with Galliford a 7,000 unit a year builder (ex regeneration), meaning that the enlarged entity would be the fourth or fifth biggest builder by volumes.”

However, they added: “The merger wave of the 2000s was driven in part because builders with more scale got better terms for materials, but we wonder if this is still true as manufacturers are more consolidated and tend to have limited spare capacity – making incremental volumes less valuable to them.”

Noughties gone …

Back in the noughties tight planning and excess competition meant that land was scarce and land price inflation was running much faster than house price inflation.

It made sense then to buy large chunks of land through acquisition rather than buy it expensively on the open market.

However, the Liberum analysts noted that the land market is now benign with Steve Morgan, the boss of Redrow “himself observing that the land market is now the best it has been in 40 years.”

Therefore, a fresh wave of consolidation in the sector would probably look to be unlikely, particularly given the uncertainties opened up for the housing market by last June’s Brexit vote, with the moves for Bovis a special case.”

https://t.co/VQ2AuOQVdY

“More than half of new-build homes in England ‘have major faults’ “

” … More than half of the buyers of new homes have experienced major problems with their properties, according to research, which comes after Bovis Homes agreed to pay £7m compensation to customers for poorly built houses.

A YouGov survey for the housing charity Shelter found that 51% of homeowners of recent new builds in England said they had experienced major problems including issues with construction, unfinished fittings and faults with utilities.

The survey, which polled 4,341 UK adults online, was published alongside a Shelter report that concluded that the housebuilding sector is rigged in favour of big developers and land traders rather than families looking for homes.

The current speculative system of housebuilding is failing families by producing expensive, yet poor-quality homes, according to the report, published after the government branded the housing market “broken” in its recent housing white paper.

Eight in ten working families who are renting privately cannot afford to buy a newly built home – even if they use the government’s Help to Buy scheme, Shelter said. The West Midlands ranked as the worst region, with 93% of families unable to purchase an average-priced new home.

In the report, entitled New Civic Housebuilding, the charity calls for a return to building good-quality, affordable homes like the model villages for Cadbury workers at Bournville, the red brick developments of the Peabody and Guinness estates, the Victorian and Georgian terraces in Edinburgh and Bath, and the garden cities of Letchworth and Welwyn.

The YouGov poll showed 41% of homeowners disagreed with the statement “I would prefer to live in a new home rather than an older one”; 29% agreed, and 26% neither agreed nor disagreed. And 45% disagreed with the statement “New homes are built to a higher standard than older homes”; 22% agreed and 23% were neutral.

The findings come amid rising complaints about poor building standards in new homes and the regulation of the sector. Critics claim the National House Building Council (NHBC), which checks new homes for defects and provides 10-year warranties for most new homes in Britain, is too close to the housebuilders and is failing in its duty to protect consumers.

Last week Bovis Homes’ interim boss, Earl Sibley, apologised to customers as the company set aside £7m to pay compensation and to fix shoddily built new homes, with many customers reporting hundreds of “snags” after moving in.

Shelter called for a shake-up of the housebuilding sector, with a bigger role for development corporations, which have specific powers (such as the Olympic Delivery Authority) – they can give planning permission and acquire land, if necessary compulsorily, at reasonable prices. …”

https://www.theguardian.com/business/2017/mar/02/over-half-of-new-build-homes-in-england-have-major-faults

New homes “not fit to live in”

“They might be the most ubiquitous feature of the modern English landscape, and yet they barely attract any comment: those sprawling newbuild housing developments that seem to surround almost every town and city, offering a promise of comfort and security and a vital foot on the property ladder.

More often than not, their avenues and culs-de-sac will have faux-bucolic names often ending in “meadows”, “mead”, or “wood”. The life therein seems profoundly modern: stripped of much history or sense of shared experience so that everything suggests the weightlessness of suburbia. Yet for all the outward gleam, something is wrong.

This week the Guardian reported that Bovis is set to award people who live in some of its newbuild homes a total of £7m in compensation, in response to claims that houses have faulty plumbing or wiring, missing insulation, and other serious defects. Some people say they were offered money to move into homes that have not been completed. When the news broke, the Bovis share price fell by 10%, wiping £100m off its stock market value.

This is just one part of a bigger story of complaints about Britain’s construction giants – and what happens when the rush to build leads to corners being cut and houses left either unfinished or deeply defective. On social media there are hundreds-strong groups telling their personal stories: “The toilet leaked into the living room and when my plumber came to fix it he found the toilet had not been installed correctly”; “having my kitchen ripped out for the second time”; “no insulation in roof”; “mould growing all over the house … too dangerous too live in as I have asthma”.

Meanwhile, the pressure is on to build as many new homes as possible. Even if it is behind on its targets, the government still wants a million to have been put up by 2020. The year 2015 saw a big jump in completed builds: 142,890 homes were finished, a 20% year-on-year increase. Last year the number was put at more than 150,000.

Behind these increases sat policies such as the new homes bonus (which gives councils cash rewards for granting planning permission for newbuild developments) and George Osborne’s help-to-buy scheme – now drastically stripped back, although the fact that interest-free loans are still available for newbuild homes means that the policy will carry on incentivising builders to put up houses.

But in privately owned developments and new social housing, and the mixed-tenure places that combine the two, problems abound. Last month I spent two weeks reporting on the case of the Orchard Village estate on the Essex/east London border, and properties split between homeowners and tenants whose problems – with leaks and damp, and allegedly faulty fire protection and dangerous levels of methane – are mind-boggling.

Since then I have been contacted by people in other newly built developments who have suffered similar problems. The most spectacular case is that of a development called Solomon’s Passage in Peckham, south London: four housing blocks completed in 2010 that were plagued with leaks, fire protection issues and defective balconies, until the housing association in charge – Wandle, which owns about 7,000 homes across the capital – decided to tear two of them down and start again. …”

https://www.theguardian.com/commentisfree/2017/feb/23/building-millions-new-homes-not-fit-to-live-in-regulation

“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

Diviani steps down from DCC “to concentrate on being Leader of EDDC”

Honiton and Tiverton Conservative constituency has announced its candidates for DCC elections:

We have now completed the selection of our candidates to stand for the Conservative Party at the Devon County Council elections in May 2017. Paul Diviani has withdrawn his candidacy to concentrate solely on Leading East Devon District Council.

Therefore the candidates are as follows:-

Axminster, Ian Hall
Seaton and Colyton, Helen Parr
Feniton and Honiton, Phil Twiss
Whimple and Blackdown, Iain Chubb
Tiverton East, Colin Slade
Tiverton West, Polly Colthorpe
Willand and Uffculme, Ray Radford,
Cullompton and Bradnich, John Berry

https://www.tivertonhonitonconservatives.co.uk

Oh poor, unlucky DCC to be missing out on all his experience …

And Councillor Moulding presumably needs to keep his eye on those Bovis builders in Axminster, some of whose purchasers are none too happy with the quality of their homes.

Still, with his work on increasing housing numbers for the Local Enterprise Partnership AND all the developments going on all over East Devon, those developers will be needing a firm hand … AND there is “Greater Exeter” to be sorted too …

Bovis … creek … no paddle?

Bovis is currently constructing all over East Devon, including in large numbers at Axminster, Seaton and Cranbrook.

The company has recently seen the creation of the Bovis Homex Victims Group Facebook site:
https://eastdevonwatch.org/2016/09/08/bovis-homes-victims-group-facebook-page/

Could it be that this has also contributed to their woes?
https://eastdevonwatch.org/2016/12/23/axminster-and-cranbrook-slums-of-the-future-says-councillor-hull-whilst-councillor-moulding-says-nothing/

A City attempt to lay the foundations of a £5bn merger of Bovis Homes and Berkeley Group is on shaky ground, with Berkeley understood to have rejected the idea.

Schroders, Bovis’ biggest shareholder, wrote to Berkeley proposing an all-share merger following a difficult trading period for Bovis which claimed the scalp of its chief executive David Ritchie.

Bovis had issued a surprise profit warning at the end of 2016, saying that pre-tax profits were likely to be flat this year at between £160m and £170m, below analyst predictions of £180m, due to a slowdown in the rate of building and sales in December.

The string of events prompted Schroders to target a merger with Berkeley, which mostly builds homes in London and the South East. Bovis’ activity is also concentrated on that area.

But Berkeley sources said the company had dismissed the call, instead choosing to concentrate on growing through partnerships with the likes of the National Grid, with whom it signed a £700m joint venture to develop new homes on disused land owned by the power provider in 2014, rather than mergers.

Other housebuilders, such as rivals Redrow or Persimmon, could still be in the frame to buy Bovis, which has struggled in recent months with slowing sales of its homes amid wider market uncertainty.

Berkeley itself has not been immune to a slump in the market: last month it amended its five-year dividend plan to return some cash through share buybacks instead. It also said in December that the number of reservations for its homes had fallen by a fifth since the referendum, signalling the impact of the slowing London property market on the company.

It hit out at Government policy which it said was increasing demand rather than supply, saying while it had helped in some areas, it was having “a negative effect on the capital”.

Schroders declined to comment on the terms of its proposals.”

http://www.telegraph.co.uk/business/2017/01/22/merger-bovis-berkeley-shaky-ground/

“More Hovis than Bovis”

“Like a loaf of bread, the house bullder Bovis is a bit crumbly. Its chief executive has just departed, in advance of some poor financial results. One of the company’s problems seems to be that it can’t build the houses it promised to build.

At the end of last year Bovis issued a profits warning. It stated: “We have experienced slower-than-expected build production across the group’s sites during December, resulting in approximately 180 largely built and sold private homes that were expected to complete in 2016 being deferred into early 2017”[1].

One story not covered in the company’s media releases featured heavily in The Times this morning, and also in the Guardian [2]. This is that Bovis was paying purchasers cash of between £2000 and £3000 to complete the purchase of new homes even though the houses were not ready. Some 650 people are members of the Bovis Homes Victims Group [3] set up on Facebook to share their depressing experiences.

One lesson to be drawn from this story is that reliance on the volume housebuilders to deliver the housing we need is a fool’s errand. Despite its use of standard designs, of as low a density and as a high a price as they can get away with, Bovis hasn’t met its own targets. Moreover, all large housebuilders shy away from building on brownfield – previously developed – land because it costs more to build there than on green fields. And so we get urban sprawl and loss of productive farming land or greenspace for us to enjoy. Meanwhile the government blames local authorities and the planning system for delays, while turning a blind eye to the failings among its own corporate supporters.

At the same time, small and medium-sized housebuilders are having difficulty finding land on which to build homes, as a recent report from the Federation of Master Builders and the Local Government Information Unit showed [4]. The report did aim criticism at local authorities for concentrating on large developments when drawing up local plans, a charge that is certainly true in some areas. This bias against small firms also hinders the development of housing co-operatives which design the housing their members want rather than what the housebuilders tell them they can have.

NOTES

[1] Bovis Homes Group plc press release 28 December 2016 at http://www.bovishomesgroup.co.uk/media-centre/press-releases/press-release-173/pre-close-update/

[2] Guardian story at https://www.theguardian.com/business/2017/jan/11/bovis-accused-of-pressurising-buyers-to-move-into-unfinished-homes The Times is behind a paywall.

[3] https://www.facebook.com/groups/BovisVictimsGroup/

[4] http://www.fmb.org.uk/about-the-fmb/policy-and-public-affairs/new-fmb-research/”

Source: https://petercleasby.com/2017/01/11/more-hovis-than-bovis/

“Bovis accused of pressuring buyers to move into unfinished homes”

Bovis Homes has been accused of pressuring customers to move into unfinished houses before Christmas by offering them cash incentives, a week before it issued a profit warning.

Several Bovis customers said they had been offered cheques of £2,000 to £3,000, or other incentives, if they completed on their house purchases before 23 December.

Members of the Bovis Homes Victims Group on Facebook, which also has a YouTube channel, have swelled to 650, with 244 people joining in the last two months.

Marc Holden, one of the group’s administrators, said: “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.”

He said a group of at least 30 disgruntled Bovis customers would stage a protest at the company’s annual meeting in Tunbridge Wells on 2 May.

A company spokesman said: “Bovis Homes is fully aware of the customer group and their complaints, and we take these issues very seriously. We recognise that in some of these cases we have not provided our best standard of customer service and have taken too long to rectify customer issues, for which we apologise.”

Bovis, one of Britain’s biggest housebuilders, added that a “limited number of customers were offered an incentive to complete before the year end and all homes were habitable with the requisite CML industry certification, with a timetable for outstanding finishing works to be carried out in the new year.”

The firm insisted that no one was forced to move in before Christmas and that the homes only needed some finishing touches. “Customers were clearly free to decide their preferred course of action. The group often offers a range of incentives at sale and completion in line with industry practice,” the spokesman said.

The housebuilder’s chief executive David Ritchie quit on Monday, less than a week after the group issued its profit warning. It warned last Wednesday that it would complete about 180 fewer homes than expected in 2016, blaming operational issues. This will affect profits – Bovis now expects to make an annual pre-tax profit of £160m to £170m, compared with analysts’ forecasts of about £183m.

One couple was offered a post-completion cheque of £2,000 if they could legally complete on their property by 23 December, according to an email seen by the Guardian.

Comments from other customers suggest the homes lacked more than just finishing touches.

Chad Clifton said he and his wife were “forced” to complete on their four-bedroom house in Brockworth, Gloucestershire on 23 December and found the fridge had not been fitted yet and that the hallway was unfinished, 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 23r December.”

None of the defects have been fixed yet but Clifton said the couple “love the house” and that the customer service had improved vastly after his wife sent a scathing letter to Bovis’s head office.

Another Bovis customer said he and his wife had been offered £3,000 if they completed on 23 December, but declined the offer because of numerous problems (such as the wrong kitchen being fitted) at the £320,000 three-bedroom property in Inkberrow, Worcestershire.

The couple are still waiting for the problems to be rectified and to complete on the purchase. He said they had not been offered any compensation despite the stress caused, time taken off work and the cost of extending storage.

Holden and his wife form part of a group of eight families who bought Bovis homes across the country in recent years and have taken the company to task over defects and the length of time it is taking to fix them. In response, the firm launched a review in December and set up a team from across the business to resolve the issues.

Bovis said: “We recognise that our customer service has to improve and the leadership of the organisation is absolutely committed to getting this right.”

Karen Louise Richardson and her family said it had taken until now, two years after they moved into a four-bedroom house in Norwich, to fix more than 200 defects.

The Richardsons moved in on 19 December 2014 but maintain they were not advised that their house was unfinished until an hour after completion. “I’d never buy Bovis again; I’d never buy a new build again unless I did a lot of research,” she said.”

https://www.theguardian.com/business/2017/jan/11/bovis-accused-of-pressurising-buyers-to-move-into-unfinished-homes?CMP=Share_iOSApp_Other

One reason (close to home) why Bovis CEO resigned?

Axminster councillor Douglas Hull recently went on a tirade against badly-built homes in the town, though he took on the monkey NHBC (the business that issues 10 year warranties for new homes, rather than the organ grinders – the developers who build the shoddy homes in the first place.

Now, news reaches us of a national protest group taking housebuilder Bovis (a major player in Axminster, Seaton and all over East Devon) to task:

“Disgruntled Bovis Homes customers are to protest outside the annual meeting of the housebuilder, whose chief executive David Ritchie was ousted this week.

The Bovis Homes Victims Group has swollen to 650 Facebook members with a litany of complaints, as well as a YouTube channel with more than 9000 views.

Spokesman Marc Holden’s £490,000 Bovis home in Milton Keynes was beset with defects, prompting a company review.

Holden said: “We are not going to stop our active campaign. There are a lot of unhappy people.”

The meeting will be in Tunbridge Wells in May. Bovis warned on profits last month after delays to sales, prompting Ritchie to resign.

A Bovis spokesman said: “Bovis Homes is aware of the issues experienced by a small number of customers and recently established a dedicated team of specialists to resolve them, and apologises to the customers impacted.”

http://www.standard.co.uk/business/bovis-customers-plan-protest-at-beleaguered-builder-s-meeting-a3436836.html

CEO of Bovis Homes leaves suddenly

“The boss of house builder Bovis Homes Group PLC (LON:BVS) has quit his role with immediate effect just over a week after the group warned it will miss home sales targets

The FTSE 250-listed firm said David Ritchie has stepped down as its chief executive officer with immediate effect but will remain with the firm until the end of February to help with the transition process.

Bovis added that Earl Sibley, the firm’s finance director, will be interim CEO as the group searches for a permanent successor to Ritchie, a process which it said will start immediately and which is expected to take several months.

No reason was given for Ritchie’s abrupt departure but it comes after the group cautioned on December 28 that new house sales this year will be lower than expected due to completions in December falling short.

The group said in an unscheduled trading update then that total sales for the year will now be between 3,950 to 4,000, with slower than predicted building times pushing 180 homes due to complete into the next trading year.

In a note to clients, analysts at Liberum said: “Management change could be positive for the Group in due course if the building of homes can be improved, so that the Group can exploit a decent landbank more effectively. …”

http://www.proactiveinvestors.co.uk/companies/news/171312/bovis-homes-boss-quits-with-immediate-effect-just-over-a-week-after-cautious-update-171312.html

In early morning trade, Bovis shares were 2.5% higher, up 20.5p at 831.5p.