Taylor Wimpey making nearly as much profit as Persimmon (£811 m)

“… The strong results came a day after rival Persimmon reported a £1.09bn profit for last year, the biggest ever made by a UK housebuilder. For every home sold, Persimmon made a profit of £66,265, compared with £53,073 at Taylor Wimpey.

Housebuilders have profited hugely over the past five years from the taxpayer funded help-to buy-scheme, which allows buyers to put down a deposit of as little as 5% on a new build home, while the government lends the buyer up to 20% of the value of the property (40% in London), interest free for the first five years.

More than a third of the homes sold by Taylor Wimpey last year were through the scheme, at 36%, although this was less than the 43% in 2017. The average price of a private home sold by the company was £302,000 – up 2% – while the overall average selling price, including social housing, was flat at £264,000.

Taylor Wimpey’s profits have trebled since the beginning of help-to-buy in 2013. It defended use of the scheme, noting that 77% of sales made through it were to first-time-buyers.

Greg Beales, campaign director at Shelter, said: “Taylor Wimpey joins Persimmon as the next developer making massive profits funded by taxpayer cash whilst doing very little to address the housing crisis in this country….”

https://www.theguardian.com/business/2019/feb/27/taylor-wimpey-reports-811m-in-profits-boosted-by-help-to-buy

Clinton Devon Estates and Taylor Wimpey forced to halt construction at Plumb Park Exmouth due to foundation problem

“Construction work has been halted in one area of a new homes development site after foundation issues were discovered.

Work began on the Clinton Devon Estates and Taylor Wimpey’s Plumb Park development in Exmouth back in November 2017 with planning permission granted for 264 new homes. Work is expected to finish by the end of 2022.

However, it has emerged one plot – which is currently unoccupied – has foundation issues, but it has not been confirmed what they are.

Taylor Wimpey have stated the plot will not be sold until investigations are complete, or until any subsequent remedial work is carried out to the foundation.

The developer is currently is working closely with consultant engineers to carry out ongoing ground investigation works in the vicinity of affected plot.

It means construction work has been postponed in the area while those investigations take place.

Taylor Wimpey confirmed there are no issues in any occupied homes.

A Taylor Wimpey spokesperson said: “We are investigating a foundation issue that relates to one unoccupied plot at our Plumb Park development.

“This issue was identified as part of our ‘pre-construction testing of ground conditions’ on subsequent plots, and as part of our stringent quality checks. We can confirm that no occupied houses nor any public areas are affected.”

https://www.devonlive.com/news/devon-news/work-stopped-taylor-wimpey-homes-2573195

Have we reached ‘peak industrial estate’ in East Devon? Seems so

If industrial estates are essential sites and supposedly we don’t have enough of them, why is Taylor Wimpey being allowed to build more than 200 houses on the former Parkhurst Close Industrial Estate in Exmouth – the largest town in East Devon?

“Persimmon expects higher profits as help-to-buy props up prices”

“… Persimmon is one of the main beneficiaries of the taxpayer-funded help-to-buy scheme, first launched by George Osborne in 2013. When the scheme was extended in 2017, a report by Morgan Stanley found that the £10bn of taxpayers’ cash had mainly benefited housebuilders, rather than buyers, by pushing up prices.

Persimmon said it was in an “excellent market position” ahead of the key spring selling season, despite “increased levels of uncertainty” due to Brexit. It had £1.39bn of forward sales reserved at the end of last year, up 3%. Rival Taylor Wimpey was also upbeat about its outlook last week.

Both housebuilders are more cautious when it comes to buying land. Persimmon said it was taking a “selective approach” and Taylor Wimpey revealed that it had walked away from or was trying to renegotiate 2,000 plot purchases – amounting to about 11% of the total land it bought last year. …”

https://www.theguardian.com/business/2019/jan/15/persimmon-profits-help-to-buy-prices

“New homes ‘crumbling due to weak mortar’ : affected householders gagged about repairs

“Hundreds of new properties have been built using weak mortar that does not meet recommended industry standards, the Victoria Derbyshire show has found.

There are reports of homes with the fault on at least 13 estates in the UK.
The full extent of the industry-wide problem is hard to measure as some homeowners have been asked to sign gagging orders to claim compensation.

The industry says mortar performance is a complex issue and can be affected by a number of factors.

One of those homes was owned by Vincent Fascione, 70. He says he was watching football on TV one evening in 2016 when he heard a loud cracking noise from the external walls of his house.

The next morning, he found a sand-like substance all over his front path and driveway. Photographs and video from the time appear to show growing cracks in the mortar holding his bricks together.

Mr Fascione, from Coatbridge outside Glasgow, bought his semi-detached property in 2012 for £112,500.

He complained to the homebuilder, Taylor Wimpey, and to the NHBC, the industry body that signs off and provides the warranty for most new-build houses.

‘Disastrous’

Under NHBC guidelines, mortar in most areas of the UK should be made of one part cement to 5.5 parts sand.

In severe weather areas such as Coatbridge, there should be even more cement in the mix to make it stronger and more durable.

Laboratory tests on samples taken from parts of Mr Fascione’s home showed the amount of sand was almost three times higher than recommended.

“I’m the guy who retired and decided to buy a new-build house,” he said. “I’ll never buy a new-build house again – never. It’s just been disastrous for me.”

After 18 months of complaints, the NHBC bought back Mr Fascione’s home at the market rate and he is living in alternative accommodation.

The organisation said it had done so because the performance of the company it had employed to repair the property had not been good enough and “in consideration of Mr Fascione’s personal circumstances”, not because of the original issue with the mortar.

‘Widespread and serious’

The Victoria Derbyshire Programme has heard about new build properties in at least 13 estates from Scotland to Sussex, built by different companies, with what appears to be a similar problem.

In one single estate in the Scottish borders, it is thought Taylor Wimpey has agreed to replace the mortar in more than 90 separate properties. The homebuilder says an assessment by engineers found “no structural issues” with the homes.

“This is both widespread and serious,” says Phil Waller, a retired construction manager who has blogged about the problem.

“It cannot be explained away by the industry as a few isolated cases.”

Exactly why the weaker building material may have been used is unclear.
In some cases, the housebuilder may have simply used the wrong type of mortar. In other cases, errors may have been made mixing and laying the material on site.

Some construction experts also blame the switch to a new type of factory-mixed mortar, which might pass a different strength test in the laboratory but not always be strong enough in the real world.

Non-disclosure agreements

Faced with what could be an expensive repair bill, many homeowners have been told by their own solicitors not to go public until the issue is resolved.
In some cases, customers have ultimately had their houses bought back by either the homebuilder or the NHBC.

In others, it appears repairs have been made and compensation paid as part of a deal that involves the signing of a non-disclosure agreement or gagging clause.

One homeowner in the north-west of England told the programme: “The only comment I can make is no comment. I’d like to speak out but at the end of the day I have to protect my investment.”

A gagging clause may stop the property owner talking not only to the media but also to neighbours in the estate who may be facing similar problems.

“It’s going on, it’s just not being talked about,” says Mr Waller.
“Non-disclosure agreements should be banned full stop. If it’s all covered up, more victims are likely to be drawn into the net and make the same mistakes.”

An NHBC spokesman said it included a confidentiality clause in a “small number of rare circumstances” but declined to disclose the number.
He added: “We work with builders to help them improve the construction quality of the homes they build. However, it is the builder who is ultimately responsible for the quality of the new homes they build.”
Taylor Wimpey apologised to Mr Fascione for the issues experienced with his home.

A spokesman said: “We are committed to delivering excellent quality homes and achieving high levels of customer satisfaction. On those occasions where issues do arise, we endeavour to resolve those issues as soon as practically possible.”

https://www.bbc.co.uk/news/business-46454844

Developers (“Cranbrook Limited”) still seem to hold all the cards in the town

From Town Council website:

“For distribution – question: What is “Cranbrook Limited” referred to in the last line?

Town Council site:

“The Town Council has been advising previously that we have been chasing the Consortium to release householders from the rent charge deed and yesterday we received the following statement:

“The development partners, Persimmon Homes, Taylor Wimpey and Hallam are continuing to work with their agents to conclude the Estate Rent Charge audit process and Deed of Release on final payment of balances due from each household. Please bear with us as we complete these tasks. We will continue to liaise with the Town Council on this and update you further in due course.”

Whilst we are doing all we can to help progress this matter, the Town Council is not responsible for the development and distribution of the documentation which removes the rent charge deed from individual households – it is and remains the responsibility of Cranbrook Limited.

The Town Council will continue chasing this matter on a regular basis.”

“Help to buy” – or help to rip off?

“Britain’s biggest housebuilders have doubled the average profits they make from each home since the Help to Buy scheme was launched.

Analysis by The Times reveals that the top five builders in Britain are making an average profit of £57,000 on each house they sell, compared with a mean average of about £29,000 in 2007.

Barratt, the biggest builder, is making almost double the amount of profit compared with ten years ago but is building only 411 more homes. Another builder, Bellway, is making more than £58,000 profit a house compared with a little more than £30,000 in 2007 but is building 2,000 fewer homes.

At the time of its launch in 2013, it was hoped the scheme would stimulate house-building. When it was extended in 2014, Mark Clare, then chief executive of Barratt, said: “Britain urgently needs more homes and by setting out a longer-term framework for Help to Buy this announcement will enable the industry to deliver just that.” Yet figures show that the total number of new houses delivered has barely changed since the introduction of the scheme.

The profits last year have been compared with 2007 because this was the last full year that housebuilders were at their peak before the financial crash. Annual pre-tax profits were divided by the number of homes built in each year to reach a “profit per house” figure.

Britain is facing its worst housing crisis in generations, with ownership at a 30-year low and a record 1.8 million families with children renting privately.

Housebuilders were quick to point out that underlying growth will have boosted profits, with house prices having risen by 23 per cent across the UK since 2007. They also noted that they were paying huge amounts back in debt each year at high interest rates before the financial crash, compared with today, when they have millions in cash at the end of each year.

However, analysts believe that a large driver of profits is the government’s Help to Buy scheme, which supports about 40 per cent of housebuilders’ sales. Robin Hardy, an analyst at Shore Capital, believes that housebuilders would be making £22,000 less in profit on each house built for first-time buyers if Help to Buy was not in place. “We reckon that homes sold through Help to Buy are 53 per cent higher than in June 2013, whereas house price figures from Land Registry or Nationwide suggest that across all first homes it’s more like 19 per cent,” he said. “That suggests that someone is gaming the system.”

Neal Hudson, a housing expert at Resi Analysts, said that shareholders had become “the main priority” for housebuilders since the financial crash. “The over-arching factor has been big pressure from the City,” he said. “The priority for them is profit margin not the number of homes built.”

Persimmon, Britain’s second-largest housebuilder, made an average profit of just over £60,000 on each house it built in 2017. In 2007 the figure was £36,787. It built only 138 more homes.

The housebuilder made pre-tax profits of £966 million in 2017 and has a war chest in net cash of £1.3 billion. Jeff Fairburn, its chief executive, was paid £75 million in a bonus scheme last year, which was more than the highest paid banking executives on Wall Street.

Lord Best, vice-chairman of the all-party parliamentary group on housing, said: “These bumper profits come at a time of growing recognition of the catalogue of failings of major housebuilders: poor design, miserable space standards, defective workmanship, delaying development to keep prices high . . . and exploiting a loophole in the planning process to renege on their obligations to include affordable homes in their developments.”

However, developers said the type of product they build has changed, with far fewer flats and a much tighter control over what type of land they buy.

A Home Builders Federation spokesman said: “House building is cyclical. After the financial downturn companies posted big losses and had to make huge writedowns on the value of their land. Many companies disappeared. Since 2013 output has increased by 74 per cent, an increase that as well as providing desperately needed homes has given the economy a huge boost.”

Source: The Times (pay wall)