Monthly Archives: June 2013

As the NHBC publish the 2013 Quality Award winners its another successful year for Barratt and a disaster for Persimmon Homes

The NHBC has just announced the winners of their 2013 Pride in the Job Quality Awards. From around 13,000 site managers, just 400 won Quality Awards, being short-listed to go forward to the next round, the Seal of Excellence awards. 

The NHBC’s Pride in the Job Awards has nowNHBC PIJOB been running for 32 years, and continues to recognise the UK’s best site managers, building better quality new homes on well-managed sites. The NHBC confirm that “a Pride in the Job award is the highest industry accolade a site manager can receive, most importantly, homeowners who buy a Pride in the Job award-winning home benefit from a high quality product” 

You would think that given the prestige and recognition of quality construction that every house builder would be actively striving to improve quality to win as many awards as they can. But you would be wrong. Unfortunately, year on year many of Britain’s largest house builders pay little more than lip-service to improving the quality of their product and this is reflected in the low number of NHBC Quality Awards they win each year. Our sister website, brand-newhomes.co.uk, publishes league tables for the awards every year, in addition to listing the number of homes each builder actually builds per Quality Award won. 

Whilst Barratt, which includes David Wilson Homes, over the last six years increased their share of awards every year, winning 96 Quality Awards in 2013 up 31% on their total last year, most of the other national listed house builders Taylor Wimpey excepted, win significantly few awards. Especially considering the number of sites they have and the total number of new homes they build each year. 

Whether it is housing boom or a period of recession would appear to have any effect as the number of awards won each year is mostly near the average over the last six years. 

However whilst most house builders win a similar percentage of the total awards to their percentage of the national total of new homes built last year, one house builder bucks the trend, Persimmon Homes. 

In 2013, Persimmon site managers won just nine NHBC Pride in the Job Quality Awards with a further four being won by subsidiary Charles Church. This represents just 3.2% of the total NHBC Quality Awards in 2013, from a company that built 8.5% of the nation’s new homes last year. Worse still, this years total is a massive fall of 38% on the meagre total of 21 Quality Awards Persimmon’s site managers won last year. 

You would think that new home buyers would be mindful of quality when deciding which builder to buy a new home from. However, despite their lack of Quality Awards, Persimmon have managed to increase the number of homes they sold, with profits up by 52% in 2012, due in part to a 6% uplift in the average selling price of their homes. 

To put this into perspective, new home buyers are nearly six times more likely to buy a Quality Award winning home from Barratt than they are from Persimmon. In addition Barratt have been rated 5 stars in the HBF customer satisfaction survey for the last four years, whereas Persimmon have only ever achieved a 4 star rating. 

With the new home industry ever keen to dispel the terrible reputation it has for building new homes riddled with preventable defects, it is surprising that these benchmarks of quality are not considered more by every prospective new home buyer. At the end of the day there is a choice and as the table below indicates you have a better chance of a quality buying a Barratt home than you do buying Persimmon, which may not have been the case ten years ago.

Housebuilder

Total homes built in 2012

Percentage of overall number

Number of quality awards 2013

Percentage of total awards

Average awards last 6 years

Number of new homes built per award

Barratt

12,637

11%

96

24%

70

131

Taylor Wimpey

10,886

9.4%

68

17%

51

160

Bellway

5,526

5%

27

7%

20

193

Redrow

2,458

2%

12

3%

11

204

Crest Nich.

1,882

1.6%

7

1.7%

10

269

Berkeley

3,712

3.2%

10

2.5%

8

371

Linden

3,039

2.6%

7

1.7%

4

506

Bovis

2,355

2%

4

1%

4

588

Persimmon

9,903

8.5%

13

3.2%

25

761

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End Help-To-Buy ‘subsidies’ for house builders

 Time to end Help-To-Buy : The government’s state house builder subsidy.

It is a sad fact that homes remain unaffordable and it is difficult to get a mortgage unless you have managed to save a substantial deposit. “Help-To-Buy” the government’s “solution” is to subsidise the new home industry. 

Since the first “state aid” for house builders ‘FirstBuy’ in March 2011, all the major house builders shares have soared, with many doubling in price and more! With the latest “incentive” ‘Help-To-Buy’ house builders do not even have to contribute anything, resulting in the biggest rise in their share prices since it became available in April 2013 (see the chart below.) 

Barratt Share Price 1

All three government schemes have helped house builders sell houses without having to reduce prices. This has resulted in a 50% plus increase in reported profits over the last year. As new home buyers now only have to find 80% of the price asked by house builders, many builders are actually increasing prices as the increased demand is not being matched by an increase in the number of new homes being built. Before the last property bubble burst in 2007, 200,000 new homes were built. The house builders currently estimate they will build just 110,000 this year, many on cheap land acquired during the last recession increasing profit margins even more. 

Any increase in interest rates would cause a major problem for anyone buying these over priced state subsidised new homes, as a big fall in house prices is likely. Indeed this, together with the Help-To-Buy mortgage underwriting scheme has all the hallmarks of a government-sponsored house price bubble. There is a correlation between interest rates and house prices. As interest rates go up, prices fall and vice-versa. Keeping interest rates at artificially low levels can only further inflate house prices. 

The Chancellor should impose a windfall tax on all house builders using Help-To-Buy on profits above 20% of turnover, with anything above being taxed at 80%. Failure to do so would leave many drawing the conclusion that costly government support for house builders and their wealthy shareholders, means we are most definitely not “all in it together” assuming we ever were!

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