“Property giants pay bosses £63m while ‘exacerbating housing crisis’ by sitting on enough land for 470,000 homes”

“Property giants have been accused of rewarding bosses for “exacerbating the housing crisis” after spending £63.6m on chief executive pay last year while sitting on more than 470,000 unused plots of land.

The chief executives of Britain’s 10 biggest housing developers raked in a combined £63.6m, earning a median sum of £2.1m, according to figures compiled by the High Pay Centre. Four FTSE 100 companies handed £53.2m to their top bosses in total, a median pay packet of £5.7m.

The 10 firms completed and sold 86,685 homes last year, but hold planning permission for 470,068 other plots of land on which homes have not been built. The UK needs an estimated 340,000 new homes a year to meet demand.

Councils have repeatedly complained of developers taking longer to build on sites which have been earmarked for housing, with the Local Government Association calling for powers that would allow local authorities to seize unused land.

The High Pay Centre said its findings raised questions about whether executives “should receive such vast sums of money, particularly given the many criticisms levelled at the big housing developers regarding the extent to which they are exacerbating the housing crisis”.

Luke Hildyard, the think tank’s director, told The Independent: “Homes are a public good and housing companies are charged with quite an important social responsibility. If the housing companies don’t play their part in delivering enough homes then we have real problems.

“There is something particularly unseemly about people who are supposed to be providing a public good raking in millions or even tens of millions.”

The 10 companies, which are all FTSE 350-listed, paid a combined £150m to chief executives and other directors last year. The four FTSE 100 house-builders – Barratt, Berkeley, Persimmon and Taylor Wimpey – accounted for £131.1m of that sum.

The average UK construction worker is paid £24,964 a year, 89 times less than the median pay packet of the 10 housebuilders’ chief executives, according to the union Unite.

The pay disparity was greatest at Persimmon, where chief executive Jeff Fairburn earned £39m – equivalent to the average pay of 1,561 construction workers – last year. He was forced out of the firm in late 2018 after a public outcry over his £75m bonus.

The pay ratio between Berkeley’s chief executive and the average construction worker was 331:1, at Taylor Wimpey it was 126:1, and at Barratt it was 113:1.

Support free-thinking journalism and subscribe to Independent Minds
Labour MP Siobhan McDonagh, who cited the figures during a debate in parliament on Thursday, said the “vast scale of inequality” showed “the British housebuilding industry is broken”.

She added: “In the midst of a national housing crisis, how can it be right, just or fair, for the top housebuilding CEOs to walk away with such astronomical sums while there are workers are seeing their salaries stagnate?

“These companies have a land bank of a simply staggering 470,068 plots but completed just 86,685 homes between them. Is that really a record worth rewarding?”

Barratt, Berkeley and Taylor Wimpey all declined to comment.

Persimmon did not respond to a request for comment.”

https://www.independent.co.uk/news/business/news/property-developers-housing-crisis-homebuilding-chief-executive-pay-ftse-100-a9093676.html

Big developer CEOs offloading large blocks of their shares …

“Barratt Developments’ boss follows Berkeley founder’s lead and sells more than a third of his shares for £3.3m.

Barratt Developments’ boss has sold more than a third of his shares for £3.3 million.

David Thomas sold 500,000 shares for 660p each. He still has 823,000 Barratt shares worth £5.3 million.

The move came just weeks after Berkeley founder Tony Pidgley cut his stake in his company by a fifth – cashing in £37.2 million of shares.

The sales raise concerns that housing bosses believe the market has peaked.

And Taylor Wimpey warned rising costs and ‘flat’ house prices were putting pressure on its profits.

It reported first half sales of £1.7 billion, almost unchanged from the previous year, and said profits fell from £301 million to £299.8 million. The firm has proposed a 2019 dividend of 18.34p per share.”

https://www.dailymail.co.uk/money/markets/article-7306879/Barratt-Developments-boss-sells-shares-3-3m.html

When is a public footpath not a public footpath? At Plumb Park, Exmouth

Owl has been passed a copy of a letter (from the writer) sent to EDDC:

“Dear Sir/Madam – I have recently made several visits to this development (EX8 2JB) with a view to our family buying at least 2 purchases there.

On Wed 10th July at around 1230 I attended to see how work was going on and walked the public footpath through the site.

The public footpath runs SSE from Buckingham Close to the vicinity of Green Farm and is marked on OS maps as a Public Right of Way. The building works are all to the south and west of this boundary path.

There was no statutory notice saying that the pathway was closed nor was an advised diversion promulgated. Both these requirements are, I believe, legal requirements, to advise closure.

There were numerous signs warning about the adjacent building site, but from the safety of the public path I was better able to see the areas of build I was interested in. At no time was I in any danger from works vehicles. I passed several workers going to lunch – none of whom commented on my presence.

When I got to the end of the path/works I was rudely shouted at by an operative in a dumper truck who demanded to know what I was doing. I simply replied I was looking at the works from a public footpath. He became more authoritative and aggressive so I walked away on the way back. He then had the effrontery to demand a worker escort me “off the premises”. This chap showed me lots of notices such as “Do not enter site”, “Report to site office” but nothing regarding the public footpath. I pointed out to him the several small statutory yellow discs displaying “Public footpath”. But all to no avail.

So what is the position about this footpath? Why are there no statutory notices closing it – the developers Taylor Wimpey surely cannot unilaterally close it. Indeed is the footpath legally closed at all?

I would have thought a clear notice one way or the other is required.”

[author’s name and contact details given]

Developers holding Help to Buy purchasers to ransom

Just when you think all the juice had been extracted from buyers, another scandal pops up.

“Contracts for new-build homes and the industry-led code of practice that informs them are heavily weighted in favour of the developer. The Consumer Rights Act does not include new builds, giving buyers less protection than high-street shoppers, and each year hundreds of purchasers are left in limbo when a home is not finished in time. They can’t pull out and reclaim their deposit until building works look likely to exceed what’s known as the “long-stop” date – the final date by which a property can be finished, which is often buried in the small print.

This can be up to six months later than the legal completion date cited in the contracts, and the legal completion date is often months later than the estimates given when contracts are exchanged. Most mortgage offers are only valid for three months.

While purchasers are legally bound to the developer’s timetable for the exchange and completion of contracts and face substantial penalties if they delay, developers allow themselves generous leeway.

A completion date only becomes legally binding when the home is ready and a “completion notice” is served, after which purchasers have seven to 10 days to pay up or else face interest charges on the balance.

Nor are developers obliged to pay compensation for delays, unless the developer exceeds the “long-stop” date. Purchasers who have to proceed with the sale of their old home after exchanging contracts, or to rearrange a mortgage when their offer expires, can be left heavily out of pocket. …”

https://www.theguardian.com/money/2019/jun/23/new-build-homes-buy-delay-bill-developers?

Leasehold houses: promise of fix … one day, maybe

“Housebuilders are to be investigated over the mis-selling of thousands of leasehold properties after a U-turn by the competition watchdog amid pressure from ministers.

The Competition and Markets Authority (CMA) said it would examine the scandal surrounding new-build homes sold on leases that were subject to substantial increases in ground rents and the charging of “permission fees” for home improvements. Developers and freeholders could face legal action if the watchdog finds evidence of leasehold mis-selling. The watchdog said it would decide whether the practices constituted “unfair terms”, a breach of consumer contract law.

James Brokenshire, the housing minister, has previously called on the CMA to use its influence to tackle the “culture of consumer exploitation rife in the housing industry” with an inquiry into the estimated 100,000 homes sold with “extortionate” leases.

However, in November, the CMA told the minister it would not investigate the issue, citing the legal complexities surrounding historic cases of mis-selling. In a letter seen by The Times, the watchdog also noted it does not have the power to fine companies using its consumer powers and blamed Brexit preparations for it not being able to prioritise problems in the housing industry.

The U-turn comes after the Commons housing committee published a damning report on the scandal in March, calling for the law to be changed to help people stuck in leasehold properties with crippling fees that they are unable to sell on. It also criticised solicitors for failing to warn clients about the unfair deals, accusing some of being too close to developers.

The leasehold scandal emerged as developers began to sell houses on leasehold rather than freehold, often without the buyer fully understanding the contracts. In many cases the freeholds were bought by offshore investors who demand large sums from homeowners to buy out the contracts.

Taylor Wimpey, one of Britain’s biggest housebuilders, has set aside £130 million to help its customers escape unfair leases it sold. More than 40 property developers and freeholders this year signed a government-backed pledge to help homeowners affected by the scandal by changing the terms of leases for those with onerous clauses.

Sebastian O’Kelly, of the Leasehold Knowledge Partnership, said: “We welcome the CMA looking into this. It’s long overdue and will be welcomed by the 12,000 owners of new leases with doubling ground rents, and 88,000 where the ground rent is above 0.1 per cent of the sale price and whose properties are unsellable.”

The investigation comes as the industry attempts to improve its public image after criticisms of build quality as well as punitive hidden charges.

Countryside Properties this week became embroiled in a row with Joe Anderson, the mayor of Liverpool, who reportedly told residents he would ban the housebuilder from building in the city due to historic cases of selling leasehold homes with “doubling clauses” for ground rents.

Countryside said it no longer sold leasehold homes, had signed up to the leasehold pledge and took action to fix the doubling of ground rent leases that were in place two years ago. A spokesman for the Home Builders Federation said: “The industry has made huge progress to identify and address the issues raised on particular aspects of leasehold sales.”

Source: Times (pay wall)

Read this before buying a new home (particularly from Taylor Wimpey )

Owl says: surely developers building shoddy or dangerously constructed new homes should be banned from tendering for new schemes and banned from using government subsidies from Help to Buy schemes to sell homes already constructed forever?

“It took seven families two years, but a group of homeowners in Scotland has taken on a housing giant in order to have their “crumbling” new-build homes repaired. It’s part of a broader, UK-wide issue – this is their story.

Sheila Chalmers moved to Peebles with her husband 10 years ago. Her three-bed home was one of 250 built by developer Taylor Wimpey on a new site in the Scottish borders.

For eight years, life went on as normal. Then something strange started to happen. Overnight, families at the top end of the estate started to vanish. But there were no for sale signs and no-one new was moving in. “It became almost a ghost street,” she says. “Houses were empty. People were disappearing.”

Sheila later heard that the properties had been bought back by Taylor Wimpey after problems were discovered. The owners had signed non-disclosure agreements so they could not speak out.

Taylor Wimpey confirmed it did buy back a “small number of homes” to start with. It later sent a letter to all the remaining residents, saying that some houses did have a problem with the mortar holding together their bricks.

Sheila thought she did not have anything to worry about, but she went outside and checked anyway. Patches of mortar were clearly eroding, she says, and in other places it could be scraped out with a fingernail.
She paid for assessments by two different structural engineers, who both said the house needed extensive repair work, though Taylor Wimpey said its own inspections found that was not the case.

Mortar is made up of two key materials: cement and sand. The more cement in the mix, the stronger the mortar, though the more brittle it can be.
The family paid to have their laboratory tests on the mortar carried out by a specialist firm.

The results suggested that there was far more sand in the mix than you would expect for a home in that area, although Taylor Wimpey says the type of chemical test used was “not appropriate” and the results could not be relied upon.

Our investigation in 2018 found similar complaints about weak mortar across at least 13 estates in the UK all built by different companies.

Three doors down from Sheila, live Pete and Jill Hall with their 13-year-old son. Like Sheila, they first learned about the problem two years ago when Taylor Wimpey were buying back the individual houses. They paid for their own tests, which showed only one in eight samples taken from their home met industry guidelines, although again Taylor Wimpey says the test used was “not appropriate”.

“On the garage the tests came back showing it was just sand,” said Pete.
A video filmed by the family after a rainstorm clearly shows the mortar on the back wall falling out when a screwdriver was run gently along it.

Handmade signs

In the end, seven core households became involved – passing on details to a wider community group on the estate. The families worked together to build their case, paying for their own structural surveys and using Freedom of Information laws to demand internal documents from the local council.
They made handmade signs and protested outside the showroom of another Taylor Wimpey estate in the area.

In 2017, they presented their findings to Taylor Wimpey’s lawyers, saying that they would go public if their properties were not fixed, demolished or bought back. They were surprised at the response.

The families’ solicitors received a letter back saying they had decided not to report the group to the authorities under the Proceeds of Crime legislation. “It was accusing us of bribery, effectively,” said Pete. “It took me about 10 minutes to stop laughing. But it was intimidation, a threat.”

By then, Pete and Jill had hired their own engineers to examine the house. They recommended that the couple should stop using the garage because it was at risk of collapse, although Taylor Wimpey denies that there was a structural problem.

The couple bought a giant shipping container, covered it with warning stickers and left it on their front lawn.

That, they say, got Taylor Wimpey’s attention and – two years down the line – an agreement has now been reached for their home to be fixed. “It falls short of where we think a full repair should be, but they have said it’s that or nothing – so we have accepted it,” Jill says.

‘Someone has to stand up’

In December 2018, Taylor Wimpey sent out letters saying all 130 houses in the estate built with the weaker mortar would now be offered “remediation” work.

Properties are being dealt with one at a time. Construction crews are scraping out the old mortar and replacing it with a stronger material.

Taylor Wimpey said it “sincerely apologises” to the all the homeowners affected, is “fully committed to resolving matters” and has “a clear plan in place to remediate affected homes”. “This is a localised issue and falls short of the high-quality standards we uphold,” it said.

The firm has now apologised to Sheila and, even though its own inspections found a full repair is not needed, said work to replace the mortar in her home will start this summer. It will refund the £16,000 she has spent on legal costs and technical reports, most of which she had to borrow.
Repair work on Pete and Jill’s property, which may involve the demolition of the garage, is due to start in mid-July.

Both families say the fight has been time-consuming, stressful and put them off ever buying a new-build home again. “These developers, these companies, cannot be allowed to continue the destruction of people’s lives with building shoddy homes,” said Sheila. “Somebody has to stand up and show them that they cannot get away with it.”

What went wrong?

Maps drawn up by Taylor Wimpey show about half of the 250 homes were built with far weaker mortar than recommended under industry standards

A memo sent to all developers in the UK by the National House Building Council (NHBC) in 2013 warned about this problem

The local council in Peebles says the mortar used was not the type in the original building warrant and was changed later without its knowledge

Taylor Wimpey says the material was “of sufficient strength to meet structural requirements” as “supported by an independent review” by the local council, but accepts it may be “less durable under prevailing exposure conditions”

It says it has now offered to repoint “any home which was constructed with the same mortar, regardless of whether our inspection found this was necessary or not”

https://www.bbc.co.uk/news/business-47816530

“Growing complaints about new-build houses”

” … Research from the organisation, which represents the interests of homeowners to the house building industry, suggest that only two-thirds of new homeowners are happy with the way their builder resolved any defects with their home.

And even the developers themselves acknowledge the problem.

The Home Builders Federation own satisfaction surveys show a rise in the number of customers reporting snags – from 93% in 2015 to 99% in 2018.
That data comes just weeks after the government said they were considering removing Persimmon from the Help To Buy scheme after increasing concerns over the quality of its building work.

‘Major failings’

And there is rising alarm from consumers and experts about the severity of these so-called snags.

Timothy Waitt has become a specialist on construction cases at Anthony Gold solicitors. “I’m not talking about dodgy kitchen units – I’m talking about major structural failings that affect health and safety.”

Mr Waitt is getting enquiries on a near-daily basis on these kinds problems and is fearful a skills shortage in construction means that is just the tip of the iceberg.

“I do not think we’re talking about deliberate decisions to miss out on key expensive structural elements,” he explains.

“This is about carelessness. I think that is arising is that people are making mistakes, potentially because they do not realise the significance of what they are doing, due to a lack of training, a lack of experience and a lack of supervision.” …

A Ministry for Housing, Communities and Local Government spokesperson says the government wants to see more good quality homes: “We know more needs to be done to protect consumers, and our New Homes Ombudsman will protect the rights of homebuyers and hold developers to account.”

https://www.bbc.co.uk/news/business-47826166