It would appear that the house builders’ share price rise since the financial crash of 2008, has been built on the same dodgy foundations as some of their houses are. A business model built on selling sub-standard houses to sub-prime borrowers.
This was illustrated during the first two days of trading following the UK’s historic vote leave the EU. Worst hit in the initial market panic were Banks and shares in the listed house builders. Despite this, some ever-greedy directors used the Friday crash to buy more shares on the cheap, known as “catching a falling knife” and promptly lost another 15%! Taylor Wimpey Non-Exec director Dame Kate Barker, 59, who produced the Barker Review on housing supply in 2004 – which resulted in the industry setting up the HBF Customer Satisfaction Survey two years later, but has failed to have any impact on improving either supply or quality – bought 20,000 Taylor Wimpey shares for £26,953 but the shares closed down 15% leaving her with a paper loss of £3,800.
“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those that have too little.” …Franklin D Roosevelt
I was disgusted when I first reported on Persimmon Long Term Incentive Plan (LTIP) in April 2013 – I still am.
This week, Persimmon’s LTIP bonuses have come into further criticism and were the subject of universal widespread condemnation. Apart from their PR company spokesperson, no one can possibly agree that bonuses on this scale can be justified, even if there has been exceptional performance. Investment giant, Royal London Asset Management said Persimmon was being insensitive when many were suffering from their failure of house builders to construct enough homes, Mike Fox went further saying the payments were “too high in all circumstances”. The LTIP payments have been critically publicised this week in The Guardian, Daily Mail, Telegraph, Independent and on the BBC website.
Beleaguered Persimmon buyers across the country must have recoiled in disgust when they learned of the scale of the projected payments that 150 Persimmon executives will trouser over the next five years if, as seems likely, the twice extended, Help to Buy gravy train keeps on running all the way to house builders’ bank accounts until 2021.
Persimmon issue counter claim to recover cost of repairing new house in Sunderland.
Persimmon Homes, rated just three stars by their own customers in the industry’s “satisfaction survey,” appear go out of their way to be confrontational and intransigent to any customers who take issue with the builder. The phrase “the Customer is always right” isnt even on their radar if this story from the North East Evening Chronicle is anything to go by.
An unhappy Vince Wareham outside his Persimmon new home at Alexander Park in Sunderland.
New homebuyer Vince Wareham told the Chronicle about his shock when he learned Persimmon were taking legal action against him in an £8,000 counter claim, after he decided to take the house builder to court, claiming £2,950 in compensation for remedial works carried out on his new home.
“The council do not adopt new housing estates anymore”
Private roads (as defined by Sections 203 to 237 (Part XI) of the Highways Act 1980) are a highway not maintainable at public expense. The local highway authority is therefore under no obligation to pay for its maintenance. Responsibility for the cost of maintaining a private road rests with the frontages – the owners of properties with frontages on such roads.
Bovis development – Homes finished but not the road!
It is now becoming increasingly common on new housing developments that roads and other public areas are not being taken over and adopted by Local Authorities. With the roads and landscaping areas remaining private ownership, all new-build homebuyers on these developments are legally responsible for their maintenance, repair and insurance, paid for via years of ongoing, potentially ever increasing, annual management charges.
Dear Mr Boles,
You recently said that you regard house builders as the “unacceptable face of capitalism” after seeing first hand the shoddy workmanship of two house builders in your own constituency, adding housebuilders “need to design beautiful places that respect the local environment, and they need to build houses to a high quality which will stand the test of time. If they don’t, I cannot and will not defend them.”
I have been campaigning for 8 years via my website www.brand-newhomes.co.uk and my blog www.new-home.blog.co.uk to make the public more aware of the poor quality and design of new homes and housebuilders’ poor and often non-existent after sales service.
Your government has done more for the house building industry than any other government and continues to be the “gift that keeps on giving”. Only this week, stamp duty was reformed. Whilst this is good news for the majority UK house buyers and very welcome, it is also particularly good news for housebuilders, now able to increase their prices even more now that stamp duty threshold ‘chokes’ have been removed. This follows the 20% discount on new homes for first-time buyers under 40, in addition to: NewBuy, FirstBuy and the biggest taxpayer subsidy of all: “Help to Buy” which has ‘helped’ house builders to record profit rises by increasing average selling prices by 20%. Furthermore, your government has relaxed planning rules, requirements to build affordable housing, Section 106 obligations, Community Infrastructure Levy and the zero-carbon homes policy. There has never been a better time to be a major British home builder. Ask, and ye shall receive!
If it was not for the dogged determination of Kirsty Burton and her neighbours, perhaps you would never have witnessed first hand the dire quality standards at a Persimmon estate in your constituency. You personally also discovered the complete contempt housebuilders have for anyone calling them to task over the quality of their homes and their indifference to dealing with defects in their customer’s homes. Quite frankly, if a government minister is unable to get a satisfactory response from Persimmon CEO Jeff Fairburn, what chance have the buyers of this company’s new homes?
But please do not make the mistake that this is a new phenomenon, restricted to just one or two housebuilders on a handful of developments. It is a national epidemic!
Posted in Help To Buy, New Homes, Persimmon, Snagging and Quality
Tagged barratt, bellway, customer care, help to buy, house builders, new homes ombudsman, persimmon, quality, snagging, standards, taylor wimpey
Buyer Cara Waligura reported a nasty smell emanating from the bathroom of her new Persimmon home soon after she moved into her new home on the South Shore estate opposite Blyth beach. But Persimmon failed to resolve the drainage problem until recently – nine months after it was first reported!
She told “Mr Justice” of the Evening Chronicle how Persimmon’s contractors left a “gaping hole” in the bathroom whilst trying to identify the source of the stench. She said: “Our new home stinks and so does Persimmon!”
Defective “Durgo” was the cause
“Since moving into our newly-built home in January we have had to endure a horrible drainage smell in the bathroom. We are now nine months into complaining but we are getting no joy. After many calls and tears we still have a hole in the bathroom wall and an awful stink in all of the upstairs.”
Apparently even the NHBC issued three warnings to Persimmon to carry out work that is required under their Buildmark warranty.
John Eynon, deputy managing director for Persimmon Homes North East, told the Evening Chronicle: “This issue has been on-going for some time but time-scales have been agreed for it to be resolved. I would stress that the design complied with building regulations and NHBC technical guidance at the time of occupation and was accepted by the NHBC. Subsequent investigations and works to try and remove the smell have been ongoing and the final solution was agreed with the NHBC to vent the soil pipe to the atmosphere, in lieu of the durgo valve that had been fitted. Unfortunately, there was a delay in completing the works due to organising suitable sub-contractors to minimise disruption. We apologise that the problem was not quickly identifiable but the solution should resolve the matter now. I have personally made several attempts to contact the customer whilst my customer care team have been dealing with the issue.”
The Daily Mail reported this week that three Persimmon directors are in line to receive a staggering £100 million pay windfall. This is part of a £400 million bonus pot linked to a long-term incentive plan equating to around 10% of Persimmon’s market value.
To qualify for the huge payout, Persimmon must give shareholders 620p in dividends between now and 2021. The rewards plan 2012 – around 30million shares in Persimmon, will pay out to several directors. Chief executive Jeff Fairburn, finance director Mike Killoran and southern regional director Nigel Greenaway all stand to share around £100 million. To qualify for the payment, Persimmon must pay certain dividend amounts by the end of 2015, 2017, 2019 and 2021. For 2015, the required amount is 170p. The firm has already declared dividends of 145p and has announced an intention to pay 95p in 2015. So job done for the first tranch of shares! If any biennial target is missed the scheme folds, although they will be able to keep any shares already secured from achieving earlier targets, but they will have to pay to get their shares. If all the targets are met by 2021, they get the shares for free.
Persimmon say the scheme was drawn up when the share price was 620p and that the directors would have to double the size of the company in ten years to benefit. A spokesman for Persimmon told the Daily Mail:
“The analysis simply assumes that the share price in 2021 will be the same as it is today and ignores the challenge of returning £1.9billion to shareholders, while simultaneously growing the business to deliver an increase in the ex-dividend share price performance period of almost ten years……..This is a long term plan which is designed to drive outperformance through the housing cycle and there remains a very long way to go”
Picky Persimmon pulls plug on plots planned north of Pontardawe to Pontypridd.
House builder Persimmon, has announced it is to stop building new homes in parts of south Wales saying it does not make enough profit on developments north of Pontypridd because of lower selling prices. The company builds around 1,000 homes a year in Wales, has now confirmed that their Coed Dyffryn development in Aberdare, will be its last in the valleys
Persimmon has introduced what it refers to as a “snowline” – the point at which nothing grows because of perpetual snow and ice – running across south Wales on a level with Pontypridd. Their “snowline” is from Pontardawe to the west to Pontypool in the east. Persimmon said it has stopped buying any land in this area, because it says it cannot make sufficient profit due to the comparatively low selling price. A three-bedroom home on a development in the valleys would be priced at around £120,000 but the same house would sell for £160,000 nearer to Cardiff, Newport or Swansea.