Average Home Sale Netted Owner £110k Profit In First Year Of The Pandemic

      ·         Home sellers made an average of over £110k profit in the year to May             2021, £15,587 higher than the year previous

·         Sellers in the South East saw the biggest increase in gains, up £18,739 to £141,538, followed by the South West where the average profit rose by over £18,000

·         Detached home sellers made an average gain of £166,586, £22,588 higher than a year previous, while sellers of flats saw their average return increase by less than £1,000

·         Strongest sales activity came from those selling in the 3-7 year period of ownership (38.3%)

Read more on the Savills website.

https://www.savills.co.uk/research_articles/229130/318859-0

Right To Buy Faces Further Criticism

New rules provide local authorities with more flexibility with regard to how Right to Buy receipts can be spent -  councils are now permitted to use RTB receipts to cover up to 40% of the costs of building new homes, as opposed to the previous 30%. Also, the deadline for utilising the proceeds of Right to Buy sales was increased from three to five years. The scheme, however, is facing mounting criticism over the extent to which the Treasury has profited from RTB sales, to date more than £47 billion. Official figures regarding how much has been invested directly into the social housing infrastructure have never been fully disclosed, leading many to conclude that the government is using RTB as a cash cow. Read more on the Real Business website.

Right to buy faces further criticism due to social housing shortages - (realbusiness.co.uk) 

Grenfell Firm Took Some Of Cladding Savings For Itself

The main contractor on the Grenfell Tower refurbishment secretly “pocketed” £126,000 while switching the cladding to cheaper, more combustible materials, the inquiry into the deadly fire at the building has heard. Rydon was bidding for the project in March 2014 when it told the landlord of the council block that it could save £293,368 by switching from the originally specified zinc cladding to plastic-filled aluminium panels, which the inquiry has heard had “significantly worse” fire performance. Rydon knew that the actual saving from the switch would be £419,627, but kept this from the client and “took some of the savings for themselves”. Read more on the Guardian website.

https://www.theguardian.com/uk-news/2020/jul/20/grenfell-firm-rydon-promised-five-times-to-appoint-fire-safety-advisers-inquiry-told

Pre-Tax Surplus Drops 11% Among Associations

Britain’s largest housing associations (HAs) saw a significant decrease in their pre-tax surplus during the 2018 financial year. Social Housing has analysed the sector’s 2017/18 global accounts, which are published by the regulators in England, Scotland and Wales. Our analysis has shown that total surplus for the year before tax was down 10.8 per cent to £3.96bn. This figure was driven by drops in pre-tax surplus across all three countries. Read more on the Social Housing website.

https://www.socialhousing.co.uk/insight/special-report-pre-tax-surplus-drops-11-among-british-associations-62511?utm_source=Housing60&utm_medium=email&utm_content=article_link&utm_campaign=H60

Fears Over Rogue Landlords 'Making A Quick Buck' From Most Vulnerable

Landlords have been urged to take more care of their tenants and not just look to “make a quick buck” by letting out substandard properties. In 2017/18 Bradford Council’s Housing Standards Team received 1,827 service requests relating to the poor condition of housing in the district. This was a seven per cent rise on the previous year. And in the first nine months of 2018/19 the service has received 1,590 service requests. Mould, poor heating and fire risks were the most common reason for call-outs, and officers can force landlords or property owners to bring the buildings up to standard. Most of the properties in question were privately rented. Read more on the Bradford Telegraph & Argus website.

https://www.thetelegraphandargus.co.uk/news/17531787.fears-over-rogue-landlords-making-a-quick-buck-from-most-vulnerable/

Right To Buy Homes Made £2.8m In Profit 'In Weeks'

A total of 139 former council tenants bought their homes under Right to Buy and resold them within one month, the BBC found. Those resold homes created a £2.8m collective profit. Opponents of the scheme said too many people had profited from a policy that had "much bigger social ambitions". Supporters said Right to Buy helped people climb the housing ladder and secure their families' financial futures. The former tenants were allowed to buy their homes at prices below the market rate. However, those who sell within five years of purchasing, should have to pay back some or all of the discount they received. Read more on the BBC website.

https://www.bbc.co.uk/news/uk-47443183

Outrage As Help-To-Buy Boosts Persimmon Profits To £1bn

Housebuilder Persimmon made a record-breaking £1bn profit last year – equal to more than £66,000 on every one of the homes it sold – with almost half of its house sales made through the taxpayer-funded help-to-buy scheme. The builder, which sparked widespread public and political outrage for attempting to pay its former chief executive Jeff Fairburn a bonus of £110m, posted pre-tax profits of £1.09bn. The huge profit – the biggest ever made by a UK housebuilder – means Persimmon banked £66,265 from every one of the 16,449 homes it sold last year. The average selling price was just over £215,000. The profit from each house it sells has nearly tripled since 2013, when the government introduced the help-to-buy scheme. Read more on the Guardian website.

https://www.theguardian.com/business/2019/feb/26/persimmon-profits-help-to-buy-scheme

Persimmon Expects Higher Profits As Help-To-Buy Props Up Prices

Persimmon has upgraded its annual profit forecast after building more houses and increasing its prices, with nearly half the homes sold using the government’s help-to-buy scheme. Britain’s second-biggest housebuilder reported a 4% rise in revenues to £3.7bn in 2018. The average selling price for private homes rose 2% to £238,877. The company said the housing market was underpinned by robust employment levels, low interest rates and competitive mortgages. Persimmon is one of the main beneficiaries of the taxpayer-funded help-to-buy scheme, which supported 48% of the firm’s house sales last year, similar to 2017. Read more on the Guardian website.

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

NHF Picks A Fight With Landowners ‘Pocketing Billions In Profit’

Landowners are pocketing billions of pounds of profit every year just for getting planning permission, which raises prices and makes it harder than ever to buy land for new social housing, according to a new report from the National Housing Federation (NHF) and the Centre for Progressive Policy (CPP). But as the NHF launches its national housing summit, the CLA says such “false claims” distort the view of how the value of land is captured. The report kickstarts the  summit with its call for a radical overhaul in land sales. Read more on 24housing.

https://www.24housing.co.uk/news/nhf-picks-a-fight-with-landowners-pocketing-billions-in-profit/

Reform Help To Buy To Encourage More Homes Over Profit

Help to buy needs to be dramatically reformed in order to stop housebuilders from using it to boost their profits irrespective of how many homes they build, according Avant Homes. The scheme, which is intended to support would-be first time buyers in their efforts to get on the housing ladder, must be dramatically changed in order to encourage a “social conscience” among housebuilders, the housebuilder said. An average of 39pc of the new homes sold by top national housebuilders in 2016 were purchased with Help to Buy and yet the same housebuilders increased their volumes on average by only 6pc over the same period, Avant claimed. Read more on the Daily Telegraph website.

https://www.telegraph.co.uk/business/2018/03/12/reform-help-buy-encourage-homes-profit-housebuilder-avant-says/

Grenfell Builder Rydon's Profit Soars Despite Deadly Fire

Rydon Group, the company responsible for the refurbishment of Grenfell Tower in London where at least 71 people died in a fire last June, said its profits jumped 50 percent to 19 million pounds last year, helped by an increase in sales. The privately-owned company said in its accounts that it had considered its position in respect of the disaster and did not see a reason to make a financial provision for potential losses or expenses. Rydon was the main contractor responsible for a 2014-2016 refurbishment that included the application of cladding on the outside of the high rise building which government ministers said did not comply with regulations. Read more on the Reuters website.

https://uk.reuters.com/article/britainfire-contractorprofit/grenfell-builder-rydons-profit-soars-despite-deadly-fire-idUKL5N1QQ2PU

Persimmon Sales Soar As Boss Takes Home £100m Payout

Persimmon hoped to put controversy over its executive pay scheme behind it by reporting that full-year profits will beat market expectations after revenues soared last year on the back of “healthy” demand. The FTSE 100 housebuilder sold 16,000 homes in 2017, 6pc more than the year before, helping push revenues up 9pc to £3.4bn. Its average selling price climbed 3pc to £213,300. Persimmon said it "continued to experience healthy customer demand for new homes through the autumn sales season", adding that forward sales at the end of the year were 10pc higher than in 2016 at £1.4bn. Read more on the Daily Telegraph website.

Help-To-Buy Scheme Aids Some Buyers, But Boosts Builders Even More

Housebuilder Redrow says it’s looking forward to working with government to consider the future of the help-to-buy subsidy scheme beyond 2021. You bet it is. Since former chancellor George Osborne in 2013 committed to helping homebuyers purchase new properties with a deposit of only 5%, Redrow has reported record profits every year. The latest annual numbers – and a share price that has improved threefold since 2013 – shows how wonderful life has become for big housebuilders. Operating margins are running at 19% and return on capital employed has hit 26%. About 40% of its private sales are to help-to-buy purchases, which is typical for the sector. Read more on the Guardian website.

Developers ‘Underestimating Profits’ To Avoid Building Social Housing

Tens of thousands of people in England and Wales are urging their local councils to stop housing developers from purposefully avoiding building affordable housing. The 38 Degrees campaign, started by 27 members across England and Wales, comes after leaked documents revealed developers are deliberately misleading councils on expected profit. Current planning law in England and Wales states that if a developer will not make ‘competitive returns’ – typically assumed to be 20% profit on a new development – they can ignore the council’s regulations about building affordable and social housing. The developers’ leaked documents have shown that the calculations they use to work out their profit margins are purposefully misleading. Read more on 24housing.

Builders Make Billions As Housing Crisis Escalates

Britain’s biggest housebuilding firms and their executives have pocketed billions of pounds as the country’s housing crisis escalates and affordable homes targets are missed. The four most powerful companies – Persimmon, Taylor Wimpey, Barratt and Berkeley Group – together made more than £2bn in pre-tax profits last year and are planning to give £6.6bn extra in dividends to shareholders by 2021. Meanwhile the number of affordable homes built fell to a 24-year low this year. Housebuilders argue that affordable housing targets are financially unviable. House prices have risen five times more than average wages in the last five years.  Our calculations also show that just eight directors working for major housebuilders together earned £230m in the last five years. Read more on the BIJ website.

Help-To-Buy Loan Scheme Nets Treasury £213m In Paper Profit

Rising house prices across much of England mean a government scheme to help buyers of newbuild property may have made more than £200m for the Treasury in its first two-and-a-half years. The help-to-buy equity loan scheme gives buyers an interest-free loan for five years in return for a percentage stake in their property. When the home is sold, the buyer returns the same percentage of the sale price, meaning that any fall or rise in house prices affects the return. Analysis by Hometrack suggests that a surge in house prices means the total value of homes bought through the scheme since its launch in April 2013 has increased by more than £1bn.  Assuming each buyer took the maximum 20% loan to buy the property, Hometrack said the government’s stake is worth £213m on the £2.7bn it has put up through loans. Read more on the Guardian website.

Rents Set To Sky-Rocket Because Of Osborne’s Tax Grab

Landlords across the UK have already started to increase rents for current tenants as a consequence of George Osborne’s attack on the private rental sector (contained in Clause 24 of the Finance Bill). When a similar policy was adopted in Ireland in 1998, rents increased by almost 50% over the subsequent three years.  Top economist, Professor Philip Booth said that Clause 24 ‘didn’t make sense.’  The reason for this is that landlords will pay tax on interest payments they have paid to the mortgage lender as well as tax based on actual profit; landlords will in effect be taxed on an amount of fictitious profit, and the Government will tax the same money twice, as the lender already pays tax on it. ‘Private’ landlords’ businesses will also face the unique situation in the business world of not being able to offset the main cost of creating a taxable profit. Read more on Property 118.