This week five national plc house builder’s reported record profit rises as they cash in on the state sponsored Help to Buy feeding frenzy. According to recent figures from the DCLG , 89% of the Help to Buy loans have gone to first-time buyers since the scheme began in April 2013. With an apparently never ending stream of undiscerning, naive first timers flocking to builder’s sales offices, buying whatever is available, what incentive do house builders have to improve quality of the homes they build?
You also have to question why the government is currently advertising it’s Help to Buy scheme on national television, when the figures released by these major national builders during this week demonstrate that this advertising is totally unnecessary.
Greed is good and greed is back, as both builder CEOs and their shareholders receive payouts from the excessive profits generated from the government’s Help to Buy subsidy. New Home Blog saw this coming!
Builder’s report record profit increases – but not improving quality!
Here we go again: “Profitability, Cash generation, Completions, Average selling prices, Earnings per share, Land banking, Trading outlook” yada-yada! The only house builder to make any meaningful statement regarding a commitment to improving quality and customer service was Barratt, with reference to their consistent HBF “customer satisfaction” 5-Star rating and their record 102 NHBC quality awards in 2013.
Persimmon has confirmed it has sold over 3,000 new homes under the government’s Help to Buy Equity Loan scheme launched in April. This equating to approximately a third of the group’s total completions in 2012.
The second, and more controversial, part of Help to Buy was brought forward and launched in October, offering indemnity guarantees to lenders for their 95% mortgages for new and existing homes. Many are saying the scheme risks causing a housing bubble.
Persimmon confirmed that the impact of Help to Buy (2) mortgage indemnity, had “been muted due to the higher level of interest rates being charged with only a limited number of lenders involved in this second phase so far.” They anticipate that sales supported by these guaranteed mortgages will increase as interest rates begin to reduce as more lenders enter the market over the next few months.
In a statement Persimmon said: “We believe mortgages associated with the Help to Buy equity loan scheme will remain the preferred choice for the majority of customers of the house building industry given that interest rates for this product are significantly more competitive than those available with the Government guarantee.”
Persimmon Homes buyers Mr and Mrs D Barlow of Harleston in Norfolk moved into their new home in November 2012 and began to notice problems “within hours.” Having written a letter to the Daily Mail to warn others they said:
“Persimmon has reported record profits, might some of this have been achieved by reducing the quality of their buildings” “The clean-up after construction left a lot to be desired. The paintwork had been damaged, the front door didn’t fit and an upstairs window had a gap so large you get your fingers in it.”