After freehold leases another scam: unadopted roads

Rumour has it there are many such roads in our part of the world …
http://www.midweekherald.co.uk/news/practical-advice-issued-for-sensible-parking-in-cranbrook-1-3999229
and
https://eastdevonwatch.org/2017/02/20/cranbrook-estate-rent-charges-another-developer-cash-cow/comment-page-1/

Owners of new homes are living on potholed roads with no street lights or rubbish collection as housebuilders and councils shun the responsibility for road maintenance.

Developers can save thousands by dodging the legal agreements that pass the roads on to local authority control, allowing builders to make roads narrower than usual, for example, and leaving homeowners to pay for the road’s upkeep or see it fall into disrepair.

People living on these unadopted streets have been forced to seek approval from road management committees before selling their homes and say it is harder to find buyers.

The government is to ban new houses from being sold on a leasehold basis to tackle onerous ground rent charges, yet owners of freehold houses on unadopted streets are being “held to ransom” by management companies that charge households up to £660 a year for road maintenance.

“We seem to be rewriting the rules on the way that roads are looked after,” says Derrick Chester, a councillor for Littlehampton and Arun in West Sussex.

Normally housebuilders have new roads “adopted” by the local authority through a legal agreement under Section 38 of the Highways Act 1980, while the sewers underneath are covered by a similar Section 104 arrangement. When the road is left unadopted, homeowners on the road are responsible for its upkeep, and often the sewers and facilities such as playgrounds and parks.

Halima Ali, 30, and her husband bought their freehold four-bedroom home in Rochdale, Greater Manchester, from Persimmon, the developer, and believed that the road would later be adopted by the local council. Seven years later the streets around the 120 flats and houses remain unadopted and are deteriorating.

“The street lights have not been fixed for years, so there are areas that are in complete darkness; it is quite scary at night. A neighbour has had a problem with a sewer cover, which is in danger of collapse,” she says. “There is a children’s playground and, even though it is a public park, residents are required to maintain it. The public come and trash it and we can be made to pay for its maintenance, which is outrageous, and we are paying council tax on top.”

Another homeowner, 56, bought a three-bedroom freehold house in Kettering, Northamptonshire, from SDC Builders nine years ago. “At the time it was sold to me as a benefit, your own private neighbourhood, which would be passed into the residents’ control once the developer had left,” she says, “but, as an unadopted road, we have no street lighting, the bin men won’t come down and we are liable if anyone has an accident on the communal land.”

She has been trying to sell her home, but buyers pulled out when they found out about problems with the unadopted road.

She says that SDC Builders set up a limited company for managing the development, which was passed to residents, who elected two neighbours as directors. She was not aware that if she wanted to sell her property it would require the directors’ approval, and they have refused permission over what she says is a trivial disagreement about parking.

Christine Hereward, the head of planning at Pemberton Greenish, the law firm, says councils and highways authorities will only adopt roads if they are built to their standards. Section 38 agreements are also backed by a lump sum, sometimes running to hundreds of thousands of pounds, put down by the housing developer as a bond against the road not being finished properly. Developers receive their bond back only when the road is adopted. Ms Ali says: “Persimmon has not built our road to the required standard. The council won’t adopt it.”

Critics say developers are choosing not to enter into a section 38 agreement so that they can bypass local authority standards; roads can be narrower and car parking spaces smaller than regulations require, for example. They also save tens of thousands by not making the required bond payments.

In 2009 the government estimated that it would cost £3 billion to bring the country’s thousands of unadopted streets up to an adoptable standard. “Developers can achieve cost savings and make their lives easier. It does enable them to construct a substandard highway. It is a shortcut. To be fair to the developers, it is up to councils to enforce the standards,” says a source who did not want to be named. “There is very little sanction.”

The public come and trash the park and we can be made to pay for it
Mr Chester says councils and housebuilders are colluding over the issue because it saves both parties money. “It fits into the narrative about local authority budget cuts,” he says.

Phil Waller, a former construction manager who runs the website Brand-newhomes.co.uk, says: “I know of one development where a fire engine was unable to access a fire because of parked cars and the layout of the road.”

Unlike private roads, which are often gated, unadopted roads appear as ordinary streets. Whether the public has right of way can be uncertain. Mark Loveday, a barrister from Tanfield Chambers in London, says he frequently hears from homeowners who did not realise that their property was on an unadopted road. “What very often happens is nothing is done to the road for many years and it is only when potholes appear and someone living on the road says, ‘hang on, someone should be maintaining this road’”, he says.

Buyers of new-build homes ought to check the specifics of the road before the sale. “This is an important thing that should be flagged up by the solicitor,” says Mr Loveday. Those who are unsure about the status of their road can apply to the Land Registry for details.

Steve Turner of the Home Builders Federation, the trade association, says housebuilders are increasingly in dispute with local authorities and planning departments over the specifications of newly built roads, which is causing delays in local authorities adopting them. “The resolution typically involves the authority demanding more cash,” he says.

‘We may have to pay for the road upgrade’

Residents of unadopted streets often need to take out public liability insurance in case someone is injured on the street.

Keith Beattie used the government’s flagship Help to Buy scheme to buy his house in Haydock, near St Helens, Merseyside, from Westby Homes North West. In February 2014, when he moved in, the road was unfinished, with tarmac not properly laid and potholes filling up with water. The housebuilder went into administration in August. “The administrators have informed us that they won’t be completing the road and paths. St Helens council will not enter a section 38 until the road is brought to an adoptable standard, which it is not,” he says. “As residents, we may have to pay to have the road completed to the council’s standard.”

Source: Times, pay wall

One of those “too poor to build affordables” posts 30% profit rise

“LONDON (Reuters) – Britain’s second biggest housebuilder Persimmon said its first-half pre-tax profits rose 30 percent to 457 million pounds but it would remain cautious over land buying due to uncertainty around Brexit.

Persimmon, which built just over 15,100 homes across the country in 2016, said its volumes rose 8 percent to 7,794 units in the first six months of the year and that customer interest in its developments remained strong.

The firm said the housing market was still “confident” and its reservation rate had risen 2 percent in recent weeks but it would be prudent about buying land for future building, the biggest cost faced by most builders.

“We will remain cautious with respect to new land investment for as long as the uncertainties facing the market persist, particularly those associated with the risks to the UK economy resulting from the UK’s exit from the EU,” the firm said on Tuesday.”

https://uk.reuters.com/article/uk-britain-eu-court-idUKKCN1B120X

Persimmon and Crest Nicholson shareholders rebel on executive pay rises

“Pirc advises shareholders to abstain on the annual remuneration report because of high pay for the chief executive, Jeff Fairburn: “The CEO-to-employee pay ratio for 2016 is at an unacceptable level of 55:1,” it says.

Mr Fairburn was paid £2.1m for 2016, up slightly from £2m a year earlier but less than half the £5m paid to then-chief executive Mike Farley in 2012.

Persimmon may be insulated from a large-scale pay rebellion because Institutional Shareholder Services, the largest proxy adviser, says shareholders should vote in favour of all motions at its annual meeting.

But the criticism of its pay scheme follows a revolt at Crest Nicholson, where 58 per cent of voting shareholders opposed the remuneration report in March after it cut profit targets at which incentives under its long-term pay plan kick in. It also comes at a time of growing disquiet over UK listed companies’ multimillion-pound payouts to top executives.

Housebuilders have been increasing profits and dividends as their businesses thrive thanks to house price rises, a shortage of new homes in areas of jobs growth, and the Help to Buy equity loan scheme. This programme enables buyers of newly built homes to receive government-backed loans so they can buy with deposits of only 5 per cent. At Persimmon, this scheme supports about 45 per cent of home sales.” …

https://www.ft.com/content/bb8628b8-269b-11e7-a34a-538b4cb30025

Persimmon non-payment for 3 years may lead to loss of bus service

Owl says: if a developer has not kept its side of a bargain and ows money or in-kind payments, with a planning application, surely it should not be allowed to submit further planning applications till the debt has been fully discharged (with appropriate interest).

“The future of a vital bus route could be placed in jeopardy. Persimmon Homes South West has built 334 new homes at Mile End on the Ashburton Road on the A383 at the edge of Newton Abbot, and as part of the planning agreement for the scheme, they would help to fund the number 88 bus service that runs between Newton Abbot and Totnes, via Buckfastleigh, and travels on the A383 Ashburton Road,

But, the developers have been accused of not paying those contribution for 2015, 2016 and 2017 – a total of £225,000.

Teignbridge Council have commenced legal proceedings against the developer to ensure all the signed contributions are met.

But there are fears that unless the developers pay up, the bus route could be placed in jeopardy as there could be no funds for it.”

http://www.devonlive.com/south-devon-bus-service-under-threat-as-developers-have-not-paid-contributions-for-it/story-30282913-detail/story.html

Persimmon loses appeal against Newcastle master plan decisions

Though basically it was just a developer/developer spat – one developer fighting another about who got to build 3,000 houses and where – Persimmon saying that the other developer shouldn’t be allowed to build where it was given permission to build.

Nothing like the right to build masses of houses to bring out the developers’ lawyers!

http://localgovernmentlawyer.co.uk/index.php?option=com_content&view=article&id=30620%3Acouncil-defeats-high-court-challenge-to-masterplan-and-planning-permissions&catid=63&Itemid=31

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

The housing white paper: Guardian nails it!

Not so long ago, the communities secretary, Sajid Javid, sounded like the scourge of the big housebuilders as he complained that current rates of housebuilding were “not good enough”. His white paper on housing upgraded the rhetoric to describe the market as “broken” but it would be hard to conclude the fix-it plan will make life uncomfortable for the likes of Barratt, Persimmon and Taylor Wimpey.

The stick that Javid has chosen to beat the big boys looks more like a twig. Developers will be forced to build on land within two years of gaining planning permission. That is a reduction from the current cut-off of three years but, given that most developers tell us they start building almost as soon they receive permission, the switch may be barely noticed.

At a push, one might say government assistance for small housebuilders could inject more competition. But, if the sight of profit margins at 20%-plus across the sector hasn’t brought forth a rush of new rivals, the problem may go deeper than a lack of official encouragement for the smaller brigades.

Javid’s greater focus seems to be funding more “affordable” homes, to be delivered chiefly by housing associations and local authorities. Since the big boys tend to be uninterested in the affordable end, they’ll be happy to let others get on with the job. Share prices across the sector rose gently, and one can understand why. The big boys can continue building at their current steady rate and their special dividends can keep flowing.”

https://www.theguardian.com/business/nils-pratley-on-finance/2017/feb/07/housing-white-paper-builders-sajid-javid