September 2009 Archives

So finally some good news for Arsenal over at Highbury Square, the redevelopment of their former pitch. After months of rumours about failed completions, rights issues, and empty properties, it's good to get some firm figures out of the North London club.

In their annual results, published today, we learn that they have sold 208 units over the last year, meaning a total of 445 are now sold of the 655 private flats. This isn't a bad result for them - but you have to feel sorry for the club. A prime opportunity to build some swish flats on highly valued land quickly became the bane of their life. They completed far later than planned, the property market crashed and they couldn't sell them - and then financing quickly became a problem because they couldn't pay off the whopping construction loan.

But, things seem to be looking up. The homes are, after all, in a superb location, and if you are a Gunners fan, then they are a little piece of football history. In the boom years they would have been flying off the shelves. Nonetheless, in the last year, they made the club £88m in revenue - money they desperately need so they can get out there and buy some new players to fill an Adebayor-shaped hole on the pitch...

The Homes and Communities Agency laid out its two year corporate plan this morning to a room full of press, the first time they have been able to draw up their own plans rather than inheriting a mismatch from CLG, the Housing Corporation and English Partnerships. There is a lot of money being pumped into their plans, a lot of good news for the industry, and Sir Bob Kerslake's prediction that "there is unlikely to be any regeneration scheme which we are not in some way connected to" is probably a fair one. A promised 117,000 new homes by March 2011 is also good news, as are the budgets for infrastructure schemes and the Decent Homes programme, raising the standard of neglected council homes.

But this is, in essence, it. There is no more money for the HCA, everything is allocated, and if all the targets are met, then well and good. A much needed boost for the industry, certainly. But that's it.

The HCA, sometimes described as the "ambulance saving the wounded industry" cannot pick up any more casualties. It can't afford to. That's if, of course, it even makes it through the two-year drive. The Conservatives have been overtly cool on the idea of quangos, and Grant Shapps, who will probably be the housing minister this time next year, has already attacked the HCA , and he isn't even in the job yet. Sir Bob has responded by drawing up similar battle lines. When asked about Shapps today, he said it was "right and proper for us to be challenged".

So with two of the most key people in the future of housing already on uncomfortable footing with each other, the HCA had better hope it can meet the targets it has set itself. Sir Bob Kerslake will, certainly - he has a rather large bonus riding on it.

Tony Pidgley was very down on the market at the Newport Resi conference this year. The newly crowned chairman of Berkeley stood in front of an audience of industry professionals, and warned that it would be "at least two years before we see any good signs of recovery". He anticipates further price falls, warned that purchasers were "sitting on their hands" and condemned the hosuebuilding industry for losing track of common sense - "Every crime we could committ, we did committ", was how he put it.

All this has been said before, and was said by others at the conference. But this is Tony Pidgley. He has correctly called the market before, and is now expected to look into his crystal ball every time and map out where the market will be and when. When I spoke with an anlayst about the conference this morning, all he wanted to know was what Pidgley had said.

Although the Berkeley boss might well be rightly held in this revered position, there were discontented mumblings in Newport this year. When he told the conference it could be a "four, five or six year dip", agents felt he was unneccessarily gloomy, other developers recited reasons for cautious optimism, and even economists were more bullish.

But, he has been right before. It remains to be seen whether he is right again. 

Sir Bob announced a four point plan for the progression of the private rented sector as expected this morning - and one of the four points included the tie up between the kick start and PRSI schemes. Talking to delegates at the conference today this seems to have gone down quite well (to be honest, I think they were nervous his talk today would involve much worse news) , and they have been reassured that the possibility of a rental guarantee has not been ruled out. Putting land in also seems to be featuring more heavily than previously thought.

Liz Peace, from the BPF, has been careful not to criticise SIr Bob too much, saying he has done the "best with what he has got", but has accused the government of being "tight fisted" and not giving the level of support first anticipated. But, this is the latest in a series of announcements by the government quango where you get the feeling their hands have been severely tied by the Treasury, and where the industry will just have to wait for more details to emerge about the specifics.

I am excited this morning for two reasons. First, because I've finally managed to get the wireless internet working at the Celtic Manor, where the Resi 09 conference is on its last day. But secondly, and more importantly, a big annoucement is expected this morning from Sir Bob Kerslake, from the HCA.

The HCA has come in for quite a lot of implicit (and, off the record, explicit) criticism this conference. It has been months since the PRSI scheme was first announced, and still little has happened - frustration is evident among the delgates here. Yesterday, the HCA held a board meeting in London, and more than one source is expecting Sir Bob's address this morning to include details of either the Kickstart Funding round two, the progression of the PRSI - or both.

Would a tie up between the two be on the cards? We have heard repeatedly that housebuilders want to build, but don't have any money. The institutions want to invest in resi, but don't have the incentives from the government. It has been rumoured that some kind of merging of the two schemes could be an idea thrashed out by the HCA yesterday. But, we have also been led to believe that the Treasury is reluctanct to put more money forward for the Agency, and as Anthony Hilton put it yesterday: "What use is the HCA without any money?"

The Resi 09 conference in Newport kicks off proper this morning, although there were as ever a few keen delegates spotted at the bar yesterday evening. Last year's attendees will remember that the theme was "Riding the Rollercoaster", and there was a distinct air of nervousness. This year, a more subdued conference - with attendance expected to be down by at least 200 - is called "Rebuilding the Market". There are noticeably fewer parties this year, but who will be surprised by that - there were several lavish parties hosted last year which raised eyebrows in resi circles for splashing out at difficult times. And, of course, there are a few high profile names which will be noticeably absent this year.

But is it too soon even to talk about rebuilding? Even if we have reached the trough, it seems likely we will "bump along at the bottom", as it were, for some months to come. A note out from Investec this week warned that certain housebuilders, namely Barratt, might be "irreparably damaged" by this downturn, and even though it pitted Berkeley and Bellway top of the housebuilder list, the analyst still was gloomy about their immediate future. One seasoned property investor told me this evening that he thinks the resi market this time next year will in an even worse state than it is now. With government cuts approaching, more rights issues among listed housebuilders expected and future land write-downs a certainty, perhaps a more fitting title for this year's conference would be "Surviving the Market".

- Just one further note: conference gossip on the first evening revolved around Nick Shattock's last minute exit from the conference. Quintain's Shattock was set to be speaking tomorrow morning at a panel titled "Financing the future", and his hasty pulling out has left the organisers with some hasty re-arranging to do, and started the rumour mill grinding about possible rights issues...

It is crazy that the regeneration of the Ferrier Estate in Kidbrooke, South London, only just kicked off yesterday. This development has been being planned for more than ten years - a quick search through past news stories traces a rollercoaster ride of failed funding, revised plans, new developers, and finally funding to get construction started from the HCA.

The launch, which was held yesterday, did not please everyone though. A smattering of protestors outside accused the developers of "ethnic cleansing", referring, I think, to the fact that 2,000 residents are being or have been moved to make way for the new development. Read the other side of the coin here as some dissatisfied residents argue their side, and make your own mnd up. 

"Good news", my flatmate said to me in the pub yesterday evening. "Apparently, the recession's over." Although this is perhaps a little optimistic, judging by our experience of the London rental market, perhaps the gloomy times really are over for agents. Myself and two friends are currently hunting for a property to rent in Hackney, and we have three weeks left to find it before we are out on the streets. The rental market has been swamped, we understand, there should be no problem finding somewhere - in fact, we'll be fighting them off! Estate agents will be paying us to rent through them

Ah, those naïve days. Our search has taken on an increasing sense of desperation as houses disappear as if by magic. The two flat viewings I had booked for yesterday evening were cancelled - they've already been rented. Another booked for this morning - gone, even though it only popped up on primelocation yesterday. Agencies I've been into have shaken their head gloomily when asking for three or four bedroomed houses (a few have bravely tried to convince me that in fact I'm after a two-bed in Lewisham - I've got a nice one here for you love, its just what you're after). And don't even mentioned the agent who offered to put me on the "hot" list. A more reputable agent I called yesterday told me, with regret, that it has been weeks since a three-bed has come onto their books.

 The daily morning search over my cereal through Rightmove, gumtree, findaproperty and any website with "property" in it is becoming increasingly hysterical. I am having nightmares about tenancy agreements, unfurnished flats and deposits. And I can't help but wonder who the psychic househunters are that find, source and rent properties before they have even been advertised. Am I missing some secret club, Mason-style, that finds all the best properties in London, even before the landlord knows he wants to put it on the market? The rest of us don't stand a chance.

It might be the end of the recession for estate agents in East London, but there it is the start of a coronary for these three hopefuls.

Steve Morgan's regret in posting Redrow's financial results today was palpable. The chairman, who has only been back in the role for six months, said it was "intensely disappointing" to have the post the "worst set of trading results in the company's history".

And they certainly make gloomy reading. A pretax loss of £140m, completions down by almost a half and debt of £214m. With this level of debt rumours of rights issue seem even more credible - Redrow, along with Barratt, are pipped to be preparing cash calls of £600m between them. While these rights issues aren't quite as serious as Taylor Wimpey's desperate scramble for funds earlier in the year, on analyst told me that they would have "no choice" but to hold a rights issue and drive down some of that debt.

Although Morgan said the company is "fully engaged" in new land opportunities, any talk of buying new land is likely to prove a little optimistic until debt levels can be reduced and the company can shore up its position.

I just spoke with Steve Morgan on the phone, and discussed this idea of "refocussing" the company. The straight-talking Wolves FC owner (I didn't mention my Birmingham City allegiance) said he is replanning sites where possible to replace high density flats with family housing, and basically put Redrow "back to the company it was when he left it."

His contempt for the shape his business was in after nine years away was very thinly veiled.

Big news for local councils today as the government and HCA finally announced the successful 47 who would get cash in the first round of funding to built their own homes for social rent.

The deal is not as great as it might first sound, unfortunately - the lucky local authorities have to match the funding from their own coffers, and in total the package will only build 2,000 new homes.

Nonetheless, this marks a clear change in policy, with a second round of funding to be announced in the autumn and it seems likely more is to come in the future. Gordon Brown has called for more council-built housing, and the Tories have made similar noises about "getting councils more involved" in housebuilding. Whoever the next government is, its time to shake of the nightmare memories of 1960s concrete council estates and urge for better this time round.

The issue of global warming is a hot topic (pardon the pun) but for one former employee at Grainger it has been been the subject of a landmark court ruling over unfair dismissal.

Tim Nicholson's success in establishing green causes as a "philosophical belief" under the Employment Equality Regulations spells trouble for the listed landlord. Nicholson has now been given permission to sue his former employers for unfair dismissal due to his environmental beliefs.
The former head of sustainability at Grainger has made a string of allegations against the company and executives, including their reluctance to make any carbon cutting commitments.
Whatever squabbles went on within the company, I can't help but question whether climate change, supported by a massive amount of scientific evidence, it suitable to be classed as a genuine "belief". Or is it me who's being cynical now?

Having rabbited on about my travels in SE Asia until my colleagues were sick of it, I have been spent my first day back calling round to catch up on the latest industry news. Summer, traditionally a quiet time for the housing market, seems to have been something of a cleansing for many. Chatting with agents today, some are reporting a modest picking up in sales anbd transactions, and quiet hope for the autumn. Nonetheless, it doesn't seem that developers are out fo the woods yet - Barratt is the latest to be linked with a rights issue of up to £500m, following earlier cash calls from Taylor Wimpey, Berkeley, Bovis and Bellway.

And we all know that relations between landlords and tenants can be fraught, but this is a truely shocking story of the landlord who engineered the murder of his tenant for potentially holding up a £2m property deal. It's worth reading the Standard's version of this story here, where the convicted man says that despite being an "adulterer, liar and addicted to prostitutes and pornography", and now a convicted murdered, he is "not a bad person".