Category Archives: Persimmon

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7 Jan 2017

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Affordable and Social Housing, Persimmon

Persimmon’s “very affordable homes” claim examined

““Buying a new-build home remains a compelling choice supported by competitive mortgage offers which continue to make a new home purchase very affordable.”

So said Persimmon Homes, on the back of its latest trading statement. An update that made the company the belle of the stock market ball. Revenues for 2016 were 8 per cent higher than in 2015 and the group completed 559 extra sales. Happy days for its investors.

But let’s take a closer look at that quote. Is an average Persimmon home really “very affordable”?

Now, the company said that its average selling price increased by 4 per cent to £206,700 in 2016. To put that in perspective, the median average British wage, which has been increasing at something more like 2 per cent per annum, stands at £28,200.

To find out whether Persimmon’s average home is indeed very affordable to an average family (if there is such a thing) I created one of my own.

The Smiths have £500 each on their credit cards (after Christmas) and they spend £100 a month on loan repayments. That makes their level of debt rather modest by British standards.

John Smith works full time earning £28,200. Jane Smith works two and a half days a week and makes half that on a pro rata basis. I haven’t factored in any child care costs because we’ll assume relatives help out.

Between them, they’ve scrimped and saved enough for a 10 per cent deposit which comes to £20,670. Feeding those details into NatWest’s handy mortgage calculator, I was told that they could borrow a maximum of £169,200.

If Jenny Smith were to work three days a week, earning £16,920, that gets us to £180,400. That’s still just under £6,000 below what it would take to make Persimmon’s average home barely, and not very, affordable.

It looks like Jane Smith will either have to take on more hours, or the family will have to save a bit more and hope that their savings catch up with the rise in average house prices. Perhaps they’ll get lucky and find a lender willing risk the wrath of its regulators to play ball with them. I’m sure Persimmon will be only too happy to point them in the right direction.”

http://www.independent.co.uk/news/business/comment/persimmon-says-its-homes-are-very-affordable-does-that-stack-up-a7510746.html

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5 Jan 2017

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Accountability, Affordable and Social Housing, Barratt Homes, Developers/ Development, Persimmon, Taylor Wimpey

Developers on a big roll – but still far too poor to provide truly affordable housing

Owl believes that the Conservative government’s policy is to destroy affordable and social housing in favour of private renting, where housing benefit is payable direct to landlords and councils have no responsibilities for their poorest residents and their families.

Current “affordable housing” provided by developers (at 20% less than average prices on the same site) are actually much smaller houses, with basic and/or cheap fittings on the least pleasant parts of sites – e.g. near main roads, parking areas, etc and require such discounting.

“[Persimmon] reported an 8 percent revenue rise, and said that the sales rate was up 15 percent between July and December, confounding the notion that the Brexit vote could take the wind out of property-related companies.

However, the stock remains down 9.2 percent since the referendum last June.

Sector peers also rose on Thursday, with Taylor Wimpey (TW.L) and Barratt Developments (BDEV.L) both up nearly 3 percent.

“This latest positive update from a sector major adds to yesterday’s positive UK PMI Construction read and improving mortgage approvals data while the UK mortgage market remains highly competitive and government initiatives supportive,” said Mike van Dulken, head of research at Accendo Markets.

“Although house price data does remain notoriously mixed, the post-Brexit crash foreseen by many simply hasn’t materialised and prices held up remarkably well”.

http://uk.reuters.com/article/uk-britain-stocks-idUKKBN14P0YK

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12 Dec 2016

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Affordable and Social Housing, Barratt Homes, Bovis, Developers/ Development, Housing (local), Persimmon, Redrow

“Builders make billions as housing crisis escalates”

… Multi-million pound executive pay
The rewards enjoyed by bosses are significant.

As well as their £141m wages, Tony Pidgley and Rob Perrins of Berkeley are also sitting on shares in the company worth £440m.

They are not alone. Two executives at Persimmon, another of Britain’s biggest house builders, have shares worth at least £105m as part of their company incentive plan.

Our investigation – published days after the Chancellor Philip Hammond announced more than £5bn of government money would be spent increasing affordable homes and speeding up house building – also shows that Taylor Wimpey CEO Peter Redfern has been paid more than £24m in the past five years. …

… Planning documents kept secret
Previous in-depth reporting by the Bureau highlighted how the UK’s planning system allows developers to reduce their affordable homes targets while keeping their justifications secret.

Developers carry out financial viability assessments for their proposed developments, which often conclude that meeting the affordable housing targets set by local authorities would reduce their profits to a point that the scheme would be worth their while. However those assessments are kept confidential, with even councillors unable to see them.

In order to make sure schemes goes ahead, the local authorities typically reduce their targets or accept payment from the developer in lieu of the affordable homes. That money is supposed to be invested into social and community projects, or the council’s own affordable housing schemes. …

https://www.thebureauinvestigates.com/2016/11/27/uk-housing-crisis-house-prices

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29 Nov 2016

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Affordable and Social Housing, Barratt Homes, Developers/ Development, Land banking, Persimmon, Taylor Wimpey

“The Economist” finds circumstantial evidence for land banking by developers

THE average price of a house in Britain has doubled since 2000, as supply has lagged behind demand. Successive governments have aimed to put up 250,000 dwellings a year, but none has done so since 1980. Some blame housebuilders for this sorry state of affairs. The firms are accused of “land banking”, hoarding undeveloped plots to push up prices. Last month Sajid Javid, the communities secretary, told builders to “stop sitting on land banks, delaying build-out: the homebuyers must come first.”

There is plenty of unused land. The Local Government Association, which represents councils, recently identified sites for half a million homes in England which had been given planning permission but were yet to be built. Three of the largest builders, Persimmon, Taylor Wimpey and Barratt, have 200,000 plots of land that are “ready or close to ready” for development, according to an official report. Last year in England permission was granted for 250,000 housing units—enough to meet the target—but only 140,000 got under way.

To some, all this looks like anti-competitive behaviour by the big developers, eight of which build over half of Britain’s houses. A report from Sheffield Hallam University found that in 2012-15 the biggest private housebuilders increased construction by a third, but their profits trebled.

The builders protest that their critics misunderstand the economics of housing. Some land banking is inevitable: in order to show shareholders that their business has viable prospects, builders need a stock of land for future development. Builders’ profits have risen partly because they acquired land when it was cheaper than it is now, and the price of houses has increased.

Furthermore, the builders say, they are victims of bureaucracy. Even after planning permission is granted, there are conditions to meet, such as outlining plans for flood defences. “Back in my day, you only had to tell the council the colour of the bricks you planned to use,” says Ian Burnett of United Living, a property firm. Planning departments have shed staff following deep cuts to councils’ budgets. The lag between receiving planning permission and building being completed has risen by 12 months since 2007.

All this does not entirely exonerate the builders. Lately the government has become keener on large-scale housing developments. They tend to be farther from NIMBY-ish residents, and local authorities find it easier to manage one big project than lots of small ones. But they can give large builders local monopolies. To maximise profits on a plot, the builder may ration supply, putting up houses gradually rather than completing them all at once.

There is circumstantial evidence of this process at work. One study in 2014 looked at sites in London where more than 500 homes were earmarked and found that it was rare to build more than 100 of them a year. Research by Nathaniel Lichfield and Partners (NLP), a consultancy, suggests that as the size of a plot goes up, the annual rate of building gets relatively smaller. One development of 3,000 homes near Winchester, managed by two firms, saw only 526 constructed in six years, according to NLP (the companies insist they are developing the sites without delay).

These problems are not intractable. Councils could allocate smaller plots to a bigger range of builders, making the drip-drip style of construction more difficult. Andrew Lainton, a planning consultant, says that an obligation to build within a given deadline could be attached to planning permission. And ministers could get their own houses in order: one of the biggest hoarders of land suitable for residential development is government itself.

Source: The Economist, 24 November 2016 via Timekeeper newsfeed

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26 Nov 2016

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Affordable and Social Housing, Barratt Homes, Developers/ Development, Persimmon, Taylor Wimpey

Greedy housebuilders make billions while getting taxpayer subsidies – yet fail thousands of homeless families

The Chancellor has been blasted for giving more taxpayer ­subsidies to greedy housebuilders – who rake in billions while making the homes crisis worse.

In his Autumn Statement, Philip Hammond ploughed another £1.4bn into the affordable homes programme as well as £1.7bn for developers building on public sector land.

Yet the biggest builders – Persimmon, Taylor Wimpey, Barratt and Berkeley Group – have all missed affordable housing targets set by councils in recent years, while watching profits soar.

They even plan to pay out £6.6bn in extra shareholders’ dividends by 2021, the Bureau of Investigative Journalism found.

Now housing experts are ­questioning why builders need subsidies when the top four raked in more than £2bn in pre-tax profits last year – with their bosses getting immensely rich.

Eight directors of major housebuilders together earned £230m in the past five years.

Meanwhile, the number of homeless families in temporary accommodation in England has risen 45% since 2010 to 73,120.

Two bosses, Tony Pidgley and Rob Perrins, of Berkeley, have taken £141m in pay and share sales since 2011. They have shares totalling £440m.

MPs and campaigners have accused the top firms of keeping housing supply low to drive up prices.

The big four built 50,000 houses between them in the past year, but are sitting on 450,000 empty building plots.

Joanna Kennedy, chief of housing advice firm Z2K, said: “Only a fool would imagine the big volume builders work in the national interest.”

Shadow Housing Minister John Healey said: “We need much tougher rules. Non-developing firms should forfeit planning permission.”

The big four are all in the Home Builders Federation, who told us: “House building is a high risk business.”

http://www.mirror.co.uk/news/uk-news/greedy-housebuilders-make-billions-getting-9342409

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7 Nov 2016

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Affordable and Social Housing, Barratt Homes, Developers/ Development, Land banking, Persimmon, Planning System, Taylor Wimpey

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Channel 4 “Britain’s Housing Crisis” – notes

476,000 outstanding GRANTED planning permissions not commenced.

28% rise in planning permissions, 10% more completed homes.

Average delay from granting planning permission to starting construction up from 21 to 32 months.

Developers build out big sites very slowly to maximise profits says MP Clive Betts.

Oxford – most unaffordable city – land is being hoarded says Ed Turner, Oxford Councillor and a housing spokesperson for the Local Government Association. Developers “making a fast buck”.

Big developers have made serious money –

Persimmon profits up from £638 MILLION – up 34% on the previous year.
Taylor Wimpey £604m – also up 34%
Barratt Homes – £682m – up 45%

(these 3 builders provide a quarter of all new homes, the eight next largest more than a half, small builders around a quarter). In the 1980’s small builders built two-thirds of homes each year.

Community Secretary Javid talks the talk but isn’t walking the walk – said he wants to “break the stranglehold of developers”.

Home Builders Association – weasel words – 30% more new homes in last 2 years, industry not sitting on land banks – no reason why they would delay. Nothing their fault.

Reporter puzzled by that statement – it includes existing houses turned into multiple flats and shops converted to housing. Official government data shows in 2013 133,000 new homes built – lowest figures in over half a century. 2015 – 152,000 new homes – up only 14% over 2 years NOT 30% and from a very low base. Over this summer housebuilding actually fell.

Javid “determined to do something about it”!

Small builders feel shut out – no land particularly in London, only small sites available. Developers have too cosy a relationship with councils says one small builder. Public sector land is not being released to small builders.

Last year the Big 3 house builders completed 44,360 homes and had planning permission to build a further 200,823 homes. They have strategic land holdings that could accommodate a further 278,600 more homes.

“Option agreements” are common – paying landowners if planning permission is granted – but only they can buy the land – no-one else.

A farmer near Gatwick told his story – first approach “a chat” to sell an option for exclusive development. They offered £275m which the farmer rejected, saying the developer already has land nearby they can develop. But options are not always recorded by the Land Registry so it is hard to know who controls such land.

So what is Javid going to DO, asked the reporter – a White Paper next month – we can’t have a market dominated by big suppliers, more small developers needed. But no idea how he is going to do it!

Reporter pointed out that the big house builders are major donors to the Tory party.

The big house builders are not impressed by talks of fines for not starting new builds more quickly. The bloke from their association said that if you start restricting the house building industry they will react by reducing output. The reporter asked if that was a threat – the spokesperson denied that. He said that, if the big builders had to forfeit land with planning permission but not started, house builders will restrict the flow of planning applications.

Land banking taxes may be needed says reporter, as the system is broken.

Nasty.

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29 Oct 2016

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Affordable and Social Housing, Developers/ Development, Persimmon, Taylor Wimpey

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Latest developer housebuilding scam: cost of converting a house lease to freehold

“When Clare Budgen bought her first house in Ellesmere Port in 2009 for £155,000 the last thing on her mind was the lease. Taylor Wimpey, the developer, arranged the lease on a 999-year basis, so what could the then 22-year-old possibly have had to worry about?

But just seven years later, when she looked into buying the freehold (to enable her to sell the home more easily in the future) she was astonished to find that, first, Taylor Wimpey had sold her freehold to another company, E&J Estates, and, second, it wanted £32,000.

Paula Richmond is in a similar boat. In 2015, she bought a four-bed house built by Taylor Wimpey in 2011 for £122,000, thinking she had bagged a bargain. Again, the original lease was for 999 years and with 995 more years to go, it was the least of her concerns. At the time, she understood that buying the freehold would cost no more than £2,000-£3,000. But, like Clare, she has found that her lease has been sold to E&J Estates by Taylor Wimpey and has been told by surveyors that she will have to pay up to £40,000 for the freehold – one-third of the house’s value. Paula can’t afford it and says “the house is almost unsaleable”, with solicitors warning potential buyers to stay away.

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Like thousands of others in England and Wales, buyers like Paula and Clare (not their real names) have been trapped by a controversial trend among developers to sell homes as leasehold when they previously would have been freehold. The buyers are given reassuringly long 999-year leases – usually it is leases of less than 60 years on flats that are a worry – but later find that buying the freehold is prohibitively expensive.

One surveyor Guardian Money spoke to in Manchester said a client had just been forced to pay £38,000 to buy the freehold on their recently built home, despite its long lease.

The trap for unsuspecting buyers comes from the escalation in ground rent in the small print of long leases. Initially, it looks affordable. The developer gives the buyer a 999-year lease, with the ground rent set, in Paula’s case, at £295 a year. The contract says the ground rent will double every 10 years. This may look innocuous – after all, most people move every seven to 10 years. But to the company that buys the freehold, the income is valuable….

…Campaigners say issues around ­leasehold properties will be top of the agenda for an all-party parliamentary group on leasehold and commonhold next month. It has attracted 43 MPs and lords, and is chaired by Labour MP Jim Fitzpatrick and Tory Sir Peter ­Bottomley. Members include Sir Keir Starmer, Emma Reynolds and Barry Gardiner.

Sebastian O’Kelly of support group Leasehold Knowledge Partnership says: “It is disgraceful that plc ­housebuilders are building leasehold houses that ­ordinarily – and until recently – would have had freehold title. This is an ­erosion of the wealth of ordinary people at the expense of the rich.

“Young people, after years of paying rent, finally buy a home and then find they are still, in fact, tenants – which is what a leaseholder is – with all the ­vulnerability that that implies.”

He adds: “The housebuilders are evasive over this issue and it beggars belief that the ­outrageous ground rent multiples come from household-name builders. There is no attempt to justify the adoption of leasehold tenure for these houses, which are not complex communal sites such as blocks of flats.

MP Justin Madders is calling for a ban on leasehold for estates of houses. “It is clear this system is being abused to drive huge profits at ordinary ­homeowners’ expense. There is no need for there to be leasehold properties, particularly those on an estate where the properties are mainly detached houses.

“They need to be banned – it may be a convenient way for developers to get extra profit from their building work, but once they get in the hands of these private equity companies the profit motive overrides any considerations that there are real people living in their homes, who are being asked to stump up eye-watering sums.”

http://www.theguardian.com/money/2016/oct/29/new-builds-house-buyers-leasehold-property-trap

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3 Sep 2016

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Barratt Homes, Developers/ Development, Persimmon

“‘Rabbit hutch’ homes should be consigned to the past, say architects”

“Barratt and Persimmon singled out as worst offenders in survey of new homes on 100 developments”

More than half of family homes under construction by private housebuilders in the UK are too small, architects have said.

The typical new three-bedroom home is missing space equivalent to a bathroom while many are missing as much as a double bedroom when judged against minimum reasonable space standards launched by the government in October.

Homes outside London are the worst affected by what the Royal Institute of British Architects (RIBA) attacked as “rabbit hutch” homes after it measured a sample of new homes on 100 developments.

RIBA singled out two of the leading housebuilders as the worst offenders. From a sample of new three-bedroom homes surveyed, it found Barratt homes were on average 6.7sq metres smaller than minimum space standards and Persimmon homes were on average 10.8sq m too small – about the size of a double bedroom.

“Tiny rabbit-hutch new-builds should be a thing of the past,” said RIBA president Jane Duncan. “But, sadly, our research shows that, for many people, a new home means living somewhere that’s been built well below the minimum space standard needed for a comfortable home. The government must take action to ensure a fairer minimum space standard is applied to all new homes across the country …”

http://www.theguardian.com/society/2015/dec/02/rabbit-hutch-homes-should-be-thing-of-the-past-say-architects?CMP=Share_iOSApp_Other

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23 Aug 2016

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Developers/ Development, Persimmon

Persimmon – profits up 12% – see how they achieve it

“Persimmon saw first half pretax profits climb to £352.3million as revenues increased by 12 per cent to £1.49billion, with its private sales reservations up 17 per cent.”

http://www.dailymail.co.uk/money/markets/article-3754172/Housebuilder-Persimmon-sees-profits-rise-29-despite-Brexit-worries.html

AND STILL THEY CAN’T AFFORD TO BUILD AFFORDABLE HOUSING!

See an example of the scandal here:

“One of the most controversial developments in Cambridge is set to make millions of pounds more in profit than forecast when the original builder avoided hitting the city council’s affordable housing target, the News can reveal.

We have uncovered the vast discrepancy at the Grand Central development at Rustat Road, between what previous developer Persimmon told the council it was likely to sell the homes for and what current builder Weston Homes is actually selling them for. … “

http://www.cambridge-news.co.uk/revealed-cambridge-development-just-6-social/story-29044199-detail/story.html

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29 Jul 2016

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Axminster, EDDC, Persimmon, Wainhomes

And now Persimmon in trouble for not honouring S106 obligations

Interesting how Plymouth City Council slams an enforcement notice on a developer within a month whereas EDDC asks Wainhomes really, really nicely if the developer could see its way to possibly doing what it was contracted to do in Axminster!

” … the work was scheduled to be completed by Friday August 26, ahead of the new school term, adding: “This will be a huge relief to people living on the estate, especially those with children who have to cross this very busy road every day to get to and from school”.

However, four weeks after the start date and Persimmon Homes had failed to begin any work on the crossing, prompting the threat of legal action by council bosses.

Earlier this week, as still no work had begun, Plymouth City Council announced it had issued a “breach of condition planning enforcement notice requiring developer Persimmon to install a toucan crossing on Billacombe Road by the start of the new school term.”

The council said it reminded the multi-million pound company of its obligations as per the planning agreement, noting how the first homes began being occupied last year.

However, dismissing the threat Persimmon has now blamed Plymouth City Council for the delay, claiming planners had not sat down with the firm for a meeting. In addition, it accuses the council of turning down a plan to create a new access point to the large development.”

http://www.plymouthherald.co.uk/council-issues-house-builder-legal-notice-over-failures-to-build-crossing-lighting-and-solar-panels/story-29565461-detail/story.html

So basically, Persimmon blames the council because it wanted a crossing in a different place – presumably one that didn’t have planning permission and was better for the site rather than the school!

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13 Jun 2016

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Accountability, Asset sweating, Developers/ Development, Persimmon

If Persimmon tells you they can’t afford affordable housing …

… this is why:

“A leading City investor has called on housebuilder Persimmon to cut back an executive pay plan that could see the management share £600m over the next five years.

The scheme is one of the largest ever at a FTSE 100 company outside banking.

The biggest beneficiary will be chief executive Jeff Fairburn, who could earn more than £100m.

Mike Fox, from Royal London Asset Management, said the payments were too high “in all circumstances”.
He called on the board to show restraint in the light of the housing crisis and government support for the housebuilding industry.

When the scheme was put in place, the housing market had begun to recover from the 2008 recession. About 150 managers were given the opportunity to earn shares worth up to 10% of the company’s total value, provided they hit tough targets on returning money to investors.

The company recently said it was running well ahead of those targets, and analysts say it is likely the scheme will pay out in full. Persimmon shares have more than tripled in value since the incentive plan was put in place, rising from £6.20 to about £20.

Disclosure of the size of the payments is likely to stoke the debate over executive compensation.

There has been a string of investor rebellions against pay deals this year, and in April a majority of shareholders voted against a £14m package for BP boss Bob Dudley.

Shareholders cannot veto amounts paid, but do have the final say on companies’ pay policies. …

… The company has defended the payouts, saying that since the scheme was put in place. Persimmon has increased the number of new homes it builds by half and invested more than £2bn in new land. Over the same period it has handed back £1bn to shareholders.

“This is a long-term plan that runs for almost a decade which is designed to drive outperformance through the housing cycle and to incentivise the management to deliver the capital return, grow the business and increase the share price,” the company said.”

http://www.bbc.co.uk/news/business-36501536

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27 May 2016

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Axminster, Neighbourhood Plans, Persimmon

Axminster: Persimmon and Crown Estates meet the neighbours

DEVELOPERS have met with the people of Axminster face-to-face to discuss plans on a massive development to the east of the town.

Persimmon Homes had plans for a large development turned down in January 2015 and are now attempting to right that wrong by consulting with local residents over their plan for the land between Sector Lane and Chard Road.

Persimmon Homes said: “East Devon District Council have a newly-adopted Local Plan – Persimmon submitted proposals in the form of a planning application in January 2015 to commence the process of implementing the council’s strategy. EDDC refused the applications.

“We are aware that Axminster Town Council is preparing a Neighbourhood Plan and wish to hear how Persimmon’s proposal might contribute to that. We wanted to hear views in the issues that are important to Axminster.”

The application site forms part of the Local Plan and is allocated for mixed use. The site is available for the delivery 650 dwellings, employment land, community and open space facilities, a primary school and a north/south relief road. A road linking through the scheme would act as a relief road to traffic from the A358 Chard Road to the north and Lyme Road to the south.

At the public meeting Persimmon laid out some of the positives of the site and also how they will deal with some of the constraints.

They stated that the site benefits from its green surroundings, there are good existing road links to provide access, an existing public footpath provides walks to the countryside, plenty of views to the surrounding hills and a provision of a relief road would ease congestion in the town.

Persimmon said: “Existing significant trees and hedgerows on the site boundary will need to be protected; Weycroft Hall and Mill Brook at the north of the site both require sensitive treatment. Residential edges would be dealt with carefully and industrial edges of the site will need buffers.”

The Crown Estate, who owns around 50 per cent of the land Persimmon hopes to build on, were also at the public consultation and explained their role.

The Crown Estate said: “We are committed to working with the local community, other landowners including Persimmon and the district and town council to deliver the vision set out in the Local Plan.

“We understand there are realistic concerns about traffic levels and are looking at options to address this, including a possible relief road. We will look to carry out further public consultations on our emerging proposals later this year and will announce more details nearer the time.”

Plans for the original development were turned down in January last year for several reasons, including an unacceptable masterplan that had not been subjected to meaningful consultation.

There was also a failure to provide an acceptable level of affordable housing.

Persimmon Homes will look to re-submit plans for the new development later this year factoring in details that have arisen from meeting with local residents.

http://www.viewnews.co.uk/housing-developers-face-public/

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17 May 2016

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Affordable and Social Housing, Developers/ Development, Persimmon

Next time developers tell you they are too poor to build affordable housing …

… show them this article:

“FTSE 100 climbs nearly 1% with Taylor Wimpey leading the way
Housebuilder pleases investors with news of new special dividend

Leading shares are heading higher again, helped by the continuing strength in the oil price and positive moves in the US and Asian markets, and shrugging off weaker than expected UK inflation figures.

Taylor Wimpey is topping the risers, up 11p at 195.9p after the housebuilder announced a special dividend amid a strong property market. The move means it plans to pay investors £1.3bn by the end of 2018, higher than the expected figure of around £1.1bn. Analysts at Canaccord Genuity said:

Ahead of its capital markets day today, the group has announced a very positive update to its dividend policy as well as stretching its medium-term financial objectives.

It has increased its ordinary dividend to around 5% of net assets to be paid through the cycle from 2017 and announced a special dividend of £300m to be paid in July 2017 (it had already announced £300m to be paid in July 2016). The group has also increased its medium-term financial targets, covering the period 2016 to 2018, given the strength of the market and the group’s performance. It now expects an average return on net operating assets of 30%, an average operating margin of around 22%.

Included in its financial targets it also targets a total of £1.3bn of dividends to be paid to shareholders over the period 2016-18. This clearly signals another special dividend in 2018. Consensus unlikely to move significantly at this point, although the low end may move up but the news on dividends should be well received and consensus dividend expectations will likely rise. Over the next 14 months the shares offer dividends per share of around 22.5p – which implies a yield of around 12%.

On trading the company said:

The UK new build housing market remains very positive across most of our geographies, with a healthy and controlled lending environment providing good accessibility to mortgages at competitive rates. Consumer demand and confidence remain high. In central London, the market continues to be stable.

This confidence has helped other housebuilders, with Barratt Developments up 15.5p at 553.5p and Persimmon putting on 57p to £20.37. …”

http://gu.com/p/4j96k

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15 Apr 2016

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Affordable and Social Housing, Developers/ Development, Persimmon

Persimmon: company doing badly, directors doing very well, thank you

“Fears over slowing sales at Persimmon, one of Britain’s biggest housebuilders, have caused a sharp drop in its share price.

In a trading update on Thursday morning ahead of its annual meeting at York Racecourse, which could involve protests over executive pay and other issues, Persimmon said sales revenues had risen 8% to £2.15bn since the start of the year. Weekly private sales per site were 6% ahead of last year as the company sold 7,598 new homes, with an average selling price of £220,000, up 5.8%.

Analysts said the numbers suggested sales had slowed in recent weeks. Charlie Campbell, of Liberum, said: “Persimmon has seen a good start to 2016, with sales rates up 6%, but this implies that growth has moderated in the last seven weeks, to around 2.5%, as comparatives have strengthened.”

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He added that margins were peaking “as selling price inflation moderates and build cost inflation persists”. Persimmon shares fell nearly 6% to £19.07 in early trading.

At the same time, the Royal Institution of Chartered Surveyors warned that the EU referendum in June and recent changes to stamp duty had created a climate of uncertainty that could lead to falling sales and prices in the housing market.

Shares in other housebuilders were also down, with Berkeley Group falling nearly 4% and Barratt down 2%.

Persimmon reiterated that housebuilding was being held back by planning delays. So far it has opened 75 of 100 new sites planned for the first half of the year.

The company’s AGM is one of the first of the AGM season.

Shareholder groups have issued warnings over a share scheme set up in 2012 that could hand an estimated £600m to 150 directors by 2022 – one of the most generous bonus schemes in the City. A retiring senior executive, Nigel Greenaway, who has led Persimmon’s southern division, could pocket up to £9.4m.

Some are also unhappy over Persimmon’s appointment of Nigel Mills as a non-executive director, questioning his independence due to his links with the housebuilder’s financial advisers, Citi.

The company sought to defend the share plan by saying that since the launch of its new strategy in early 2012, it had delivered a 56% increase in new homes built, invested more than £2.2bn in new land, and returned £1.071bn to shareholders – £550m more than was originally planned.”

http://gu.com/p/4tbcp

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11 Apr 2016

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Developers/ Development, Persimmon

“Persimmon facing revolt over executive pay and non-executive director”

“Persimmon facing revolt over executive pay and non-executive director
Investor bodies release share scheme warning amid concerns new board member Nigel Mills is not independent.

Persimmon, one of the UK’s biggest housebuilders, plans to appoint a new non-executive director to its board this week.

Housebuilder Persimmon could face protests over executive pay and the composition of its boardroom at this week’s annual general meeting.

Investor bodies have issued a warning over a share scheme set up in 2012 which could hand out an estimated £600m to 150 directors by 2022.

Some are also unhappy over the appointment of Nigel Mills as a non-executive director, questioning his independence because he is connected to the builders’ financial advisers, Citi.

Persimmon holds its AGM on Thursday, one of the first of the annual meeting season. It comes on the same day as those of miner Rio Tinto and oil company BP, which is also facing some opposition to its pay schemes.

While pay can often cause controversy at AGMs, this year companies may also face scrutiny about pledges made on climate change and any impact of the UK’s possible exit from the EU.

Advisory bodies have raised several areas of concern about Persimmon to shareholders. One, Institutional Shareholder Services (ISS), has advised voting against the election of Mills to the Persimmon board because of his connections to Citi.

This means he is not seen as independent by ISS, which also notes that Mills sits on the remuneration committee, which is meant to be entirely staffed by independent directors.

The Institutional Voting Information Service (Ivis) – which provides corporate governance research to investors – has also highlighted the relationship between Mills and Citi. Ivis does not give advice on how to vote but has issued an amber alert, its second highest level of warning, to raise corporate governance concerns.

Mills’s appointment to the board was announced in January alongside a series of other changes including the departures of non-executive directors Richard Pennycook, chief executive of the Co-operative Group, and Mark Preston, of Grosvenor estates.

Manifest, another advisory body, drew investors’ attention to the structure of the share bonus scheme. Another leading advisory service, Glass Lewis, also recommended voting against the remuneration report.

A Persimmon official said the long-term incentive plan had been approved in 2012. “This is a long-term plan that runs for almost a decade, which is designed to drive outperformance through the housing cycle and to incentivise the management to deliver the capital return, grow the business and increase the share price. Unlike many other schemes, it extends to around 150 executives.”

ISS does not recommend voting against the remuneration report, but Glass Lewis has advised a no vote because of the structure of the scheme, which is based on the premise that 620p per share – a total of £1.9bn – will be returned to shareholders by the end of 2021. The company has since increased its target to 900p per share but has not adjusted the basis upon which the scheme pays out to executives.

On the appointment of Mills to the board, Glass Lewis has been assured that the senior advisor at Citi has not worked on Persimmon business for three years so it would classify him as independent. However, it will monitor the situation.

ShareAction, a charity that promotes responsible investment, intends to use the AGM as an opportunity to encourage the company to consider living wage accreditation.

In February, when Persimmon announced the higher payout target of 900p a share, it had declared it had achieved an “outstanding performance” with a 34% rise in profits (before a goodwill impairment) to £638m. A shortage of new homes and schemes to encourage house buying have helped housebuilders such as Persimmon – although its shares, and those of its rivals, were among the biggest fallers in the FTSE 100 on Monday amid concerns of a slowdown in the economy.”

http://gu.com/p/4t8e5

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22 Feb 2016

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Developers/ Development, Environment (local), Infrastructure, Persimmon

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Beware developers (in this case Persimmon) bearing “gifts”

Would our council have stood its ground the way Plymouth did?

“A LEADING house builder has lost its appeal against councils chiefs who insisted the firm carry out the work it promised on the Plympton homes five years ago.

A planning inspector told Persimmon Homes it had to carry out the work it was initially agreed to – the installation of solar panels on 12 executive homes it had built in Cundy Close, Woodford.

In March last year the firm narrowly avoided being taken to court by Plymouth City Council after residents and the council complained that only three of the houses received the solar panels.

Residents also pointed out the company never installed footpath lighting as agreed with the planning chiefs.

As the council prepared to take Persimmon Homes to court for breach of conditions the hearing was vacated as on the day of trial the building firm submitted an application to vary the condition.

Persimmon Homes applied to amend the energy strategy for the site, claiming the panels were not needed as the homes were energy efficient.

One angry resident wrote to the council’s planning chiefs saying ““Persimmon should have fulfilled their obligation under the original planning permission when these houses were built.”

At the time the council’s joint planning chairs Cllr Bill Stevens and Cllr Patrick Nicholson refused the application as it “does not with the council’s policy on Renewable Energy or deliver the proposals outlined in the applicant’s own energy strategy, approved as part of the planning permission.

“The development should incorporate enough renewable energy equipment to offset at least 15 percent of predicted carbon emissions for the period up to 2016.”

Rather than carry out the work Persimmon Homes chose to appeal the decision.

After months of deliberation, the planning inspector agreed with the residents and Plymouth City Council, telling Persimmon Homes its new energy saving assessment did not mean it could avoid finishing the work it initially proposed to do.

The inspectors report notes how the photovoltaic PV cells “so far installed achieve 6 percent reductions in predicted carbon emissions through on-site renewable energy production”, which was not disputed by Persimmon Homes.

However, the inspector also noted how the council had “two relevant objectives; to reduce energy consumption and thereby carbon emissions, through the use of insulation and good design, and to require the production of on-site renewable energy”

As such, the firm’s proposed measures “would not comply” with the council’s policies.

The inspector said the firm’s proposal fell “considerably short of the 15 percent target for offsetting predicted carbon emissions through on-site energy production by renewable sources” and it would “unacceptably conflict” with the council’s policy.

The inspector also noted how the firm admitted how retrofitting the PV cells “would be technically feasible” and dismissed their appeal.

Cllr Bill Stevens said the planning inspector “quite rightly” backed the council’s planning decision which showed “the benefit of locally appointed people taking these decisions – we know our area better.”

He said the ball was now in Persimmon Homes’ court and he would be meeting with the council’s enforcement officers be updated on the firm’s response.

He said: “It’s the same for every application. The planning process is there to make sure that you can allow appropriate development and we take a robust stance with every applicant, whether they are a multi-million company or a small local builder.

“Everybody has to comply with the rules and to my mind there’s no exception to that.”

Cllr Patrick Nicholson also urged residents of Cundy Close to consult their solicitors, suggesting Persimmon Homes procrastination over the installing of the solar panels may have caused residents to lose out on cheaper energy bills since 2012.

A spokesman for Persimmon refused to rule out yet further action. Daniel Heathcote, director in charge at Persimmon Homes Cornwall said: “We are reviewing the inspector’s findings before making a decision on what action to take.”

In September 2011 the council’s planning committee granted Persimmon Homes permission to build a 1,684 home development at the former Plymstock Quarry site – now named Saltram Meadows – after a £26m package was agreed. The agreement saw the company promise contributions to the local infrastructure, including £1.5m towards sports provision, of which £420,000 will go towards a swimming pool in Plymstock.”

http://www.plymouthherald.co.uk/Persimmon-Homes-told-finish-work-Plympton/story-28784041-detail/story.html