May 2009 Archives

Housebuilder Taylor Wimpey has just announced to the stock market that investors have agreed to take up 78% of the new shares offered in its £510m share offer.

The relieved developer will use the funds to pay down some of the group's massive pile of debt, currently standing at £1.53bn.

The remaining fifth will be allocated to institutional investors.

Rumours of an equity raising were relentless throughout the last few months, and TW aren't the only ones pegged to tap the market for extra cash.

Barratt ruled out "current plans" for a rights issue earlier this month, but with a whopping £1.42bn of debt, their position is not at all dissimilar to that of TW.

York-based rival Persimmon also denied plans to tap the market for cash in March, despite posting an annual pre-tax loss of £780m.

Analysts remain unconvinced however, and the other big players, who will be watching the success of Taylor Wimpey's cash raising very closely, might be pushed to take another careful look at the books.

The long-running dispute between the National Landlords Association and the NFRL has finally drawn to a close.

Eleven members of the NFRL, or the National Federation for Residential Landlords, to give it its full name, filed a legal challenge against the NLA following the merger of the two last year.

The case became almost farcical, with scenarios of rival landlord groups raiding each others offices, changing locks and stealing computers appearing in the press.

The squabble finally lead to the NLA obtaining a court injunction against Michael Stimpson, the former NFRL president, that forbade him from coming within 100m of its office.

Now, however, landlords can rest easy once again. The court threw out the case this week, leaving the NLA with a combined organisation of nearly 20,000 members and causing relieved NLA chairman David Salusbury to sigh: "It is a relief that this episode is now over. "

The judge also ordered that the victorious NLA would have their legal cost repaid by the claimants - believed to be as much as £8,000...

Boris' latest draft of his housing strategy, published today, doesn't throw up much for the industry to get excited about.

It continues a theme to devolve more power to the boroughs, with some talk of new three-year "delegation contracts" giving LAs in theory the freedom to choose their development partners, sites and the type of housing they build - as long as at the end of this the meet previously agreed targets with the LDA.

This makes a lot of sense in many ways - boroughs will have a much better idea of what their housing needs are than regional or central government.

Also interesting is the section on "reducing overcrowding" in London. By 2016 Boris wants to have halved "severe overcrowding in London's social housing sector by 2016". You might well ask what this means in practical terms - after all, it seems highly unlikely the blond-haired Tory will still be sitting in City Hall in eight years time.

But, anything that improves the standard of housing in the capital will of course be a good thing. Richard Blakeway, the Mayor's director of housing, told me they have a three-pronged plan of attack for tackling overcrowding.

First, pushing developers to build bigger houses (It's an obvious one when you think about it).

Secondly, improving grants for home conversions and extensions.

And thirdly, tackling "under-occupation" - one rather cute scheme I hadn't previously heard of is the Seaside and Country Home project, which aims to help those in big houses in the city move out to the country, freeing up some big townhouses. Blakeway is planning to "scale up" this programme, so watch out if you own a large house.

I suspect this is preparing the industry for the Housing Design Guide, due to be released in the summer, which seems likely to impose some kind of minimum internal space standards on private developers. This won't necessarily apply in all private schemes, but ideas being muted by the LDA and the HCA include minimum sized private units in schemes with mixed tenure housing, or certain requirements for homes receiving public funding.

The question remains however, over who is going to pick up the cost of these more spacious flats. I hope it isn't pushed on to the hard-pressed buyers.

Iain Wright, housing minister, impressed me last night with what seemed to be genuine willingness to hear from the industry about government plans.

I saw Wright and housing minister Margaret Beckett at a rare drinks reception between the two housing ministers and the property press at the House of Commons.

Both Wright and Beckett looked shell-shocked by the day's events in Parliament, arriving a little late and heading straight for the table with the wine on it. A few jokes about expenses later, they both patiently stood and let various journos barrage them with questions - without really giving anything away (they are politicians after all). Beckett was very polite and in control of the situation, with a few well spoken words about the importance of having a good working relationship between the government and media.

Wright was chipper as ever, chatting away about Hartlepool and his four kids. With a well-developed art of turning questions back on you, he kept repeating his wish to discuss the measures announced in the government response to the Rugg Review with our readers.

This is now the third time in a row Wright said to me that he is very keen to meet and talk with industry figures, or answer questions put to him by EG readers, and keep a continual dialogue running with the housing sectors. So, I thought it might be time to take him at his word, and open it up for suggestions.

Thoughts on a postcard please!

Bad news for St Modwen this week as Mayor of London Boris Johnson scuppered its long-running plans to redevelop land around Queen's Market in Upton Park as a towering residential block.

The developer was planning a 96m high tower, along with a 160-stall market, but Boris's office announced yesterday that despite the plans already having been revised, the tower was "inappropriate" and should be thrown out.
The £100m scheme has become an ongoing saga for St Mods, which today also announced a deeply discounted share sale in a bid to raise £100m and stay within its banking covenants. It got the go-ahead at Queen's Market from Newham council last month after five years of delays, rows with local traders, and revising plans.

Boris did not hold back when he described the tower as "neither attractive or in proportion or suited to any of the surrounding buildings, streets or the general urban realm of Newham".
It isn't the first time Boris has dived in over the head of a local authority to protect a local market - EG readers will remember Grainger's Wards Corner scheme in Seven Sisters, where a last-minute rejection by Boris lead to the plans being entirely redrawn. That scheme is still in the pipeline.
The Mayor has also made his dislike for tall towers in the wrong location known - in one of his first addresses as mayor in July of last year he told the development community that although he would support towers in clusters, "stand-alone tall buildings will face a pretty tough test".
Whatever your opinion of the Mayor, he has acted on his word. The tower is in the middle of an residential area of relatively low-rise buildings and despite bringing much-needed housing to the area, would have stood out like a sore thumb - that may be why most of the artist's impressions of the scheme don't seem to show quite how high the tower actually rises.
Sounds like its back to the drawing board for St Modwen.

The government has finally come out in favour of mandatory landlord regulation today, in its response to the Julie Rugg Review.

Rugg's report was widely welcomed by the industry last October - many of whom are keen to show that they don't belong to that demonised group of Rupert Rigsby-style Rising Damp landlords - but the government measures seem to have been received more cautiously.

Due, perhaps, to the lack of detail. Fair enough, the proposal is going for a 12-week consultation now - and at a press briefing this morning the enthusiastic housing minister Iain Wright stressed that he is very keen to hear from the industry about how they think it would work best. They don't want to go in with their ideas already formed.

Nonetheless, they must have some clue of what they are planning - but they weren't sharing.

Would it work on a points-based "driving license" system? Would landlords be named and shamed if they were struck off? The minister would not be drawn.

Would local authorities be given extra money and resources if they are left with the responsibility of implementing the licensing and redressing of landlords in their area? Or would the regulator come from the industry? Or government?

How much would a license fee cost? Would there be any conditions on which a landlord could be struck off for life? How quickly would disputes be resolved? How could they track down rogue landlords who choose not to be licensed?

These were all questions we were left without answers to. I think landlords will be left hoping that the National Landlords Association has been overly pessimistic in its review that the government measures announced today are "well-meaning, but flawed".

Housebuilder Barratt's new finance director has an unenviable task ahead of him.

David Thomas, former group finance director at retailer GAME - not too closely correlated to the property sector, perhaps - faces a net debt pile of £1.42bn.

This was largely taken on by the firm to fund buying Wilson Bowden at the top of the market, and although it reduced its debt by £315.7m last year, it remains an unhappy number to have hanging around your neck.

The beleaguered housebuilder reported a pre-tax loss of almost £600m in the last half of 2008, down from a healthy £194.6m profit in the same period of 2007. A third of staff were axed in these six months of carnage - sadly meaning around 1,900 people lost their jobs.

Thomas has a long history in finance though not with our sector - he was previously FD at the hotel group Millennium & Copthorne, and before that at House of Fraser and Forte.

August is the month he will step up to the helm, replacing Mark Pain, who announced he would stand down in January to take up the role of non-executive director at regional newspaper publisher Johnston Press.

 A story from the Times this week that private landlords were facing regulation (which surely came to a surprise to no-one in the industry) has opened an interesting debate about what else might be in the housing green paper, due to be announced soon.

Although the government will only say that the paper will be published "shortly" (see yesterday's EG story here ), speculation is rife that it will appear in the next week or so - in the window before the European elections at the start of June, but after last months' Budget.

The issue that regulation is approaching landlords is not a new theme - EGi has been writing about it since I joined as a young rookie reporter almost two years ago (and the issue become particularly hot after the Rugg Review last October ). And most landlords seem resigned that regulation is coming in some form or another - and are not adverse to it, so long as it is brought in properly.

How would it be phased in? How would the redress work? How would you distinguish between unreasonable landlords and difficult tenants? How quickly could problems be addressed - and would the tenant stay in the property for free while a complaint was clarified? These are all justified concerns from landlords, awaiting the devil of the detail.

It is thought one measure of redress could include a "points" system not unlike a driving license penalty, whereby a certain number of points lead to the license being revoked. This is not unpopular, though throws up issues of its own about how to grade complaints.

The industry is now just playing a waiting game for the paper to rear its controversial head.