Chris Heminway, Exec-Chair at Time To ACT, explains why now is the right time for the Group to IPO. Watch the video here.
I hate to play diplomat, but both sides are right and wrong. And it's often hard to sort out who is blame for what.
For example, Nigel Lawson imposed a tax on pension fund surpluses; and then Gordon Brown drove a stake through the heart of defined benefits pension schemes and (arguably) their investment in the stock market by abolishing dividend tax relief for pension funds.
Labour left a staggering deficit, which lead to Osbourne's era of austerity, which I'd argue was horribly overdone.
The Conservatives have been in a self-defeating death spiral since Cameron made the numpty decision to call a referendum without planning for what would happen if he lost. And then, in my view, all of the parties did the country a huge disservice by focusing all of their energies on trying to reverse the decision then to get a good deal and plan for exit.
Labour, in particular, held the ridiculous view that the Government should declare its negotiating red lines in public. My flabber was utterly gasted.
And then we have Labour's self-sabbotaging swing to the far left.
I am very far from a Labour voter, but my view is that it's time for a change as the Conservative's disunity serves no-one but their tiny egos.
But I'd have to hold my nose at the ballot box for the number of U turns that Starmer has made - and continues to make. He makes Liz Truss look like a "steady as she goes" type of leader.
Ho hum ;)
Londoner - I agree with you on every point except the outturn. Both parties will support buying over renting.
Londoner
First time buyer subsidies aren’t the right thing to do. AND/BUT none of the political parties will do anything to assuage the “home ownership dream”. Labour’s emergent policy revolves around revisiting the new towns idea.
The RIGHT thing to do would be to build many more homes for rent and move to the German approach where people don’t expect to buy until their parents die and they inherit.
But that’s political suicide.
It’s a bit like inheritance tax. Few pay it, but even people who have no chance of ever paying it are against it. It’s an aspiration thing.
Thatcher sowed the idea of home ownership very deeply in the British psych. Labour aren’t stupid enough to say to the electorate that they should give up on the hope of home ownership.
First time buyer subsidies will prevail.
Afternoon Crossley. All good thanks mate.
The numbers are plucked from the air. But/and, I was responding to the “…at an eye-watering COST of £40million…”, which is grossly inaccurate.
The remediation isn’t costing anywhere close to £40m, which is the total selling price of the land. The build costs is, at most, only 20-30% of the selling price.
The 36 homes being demolished have been completed up to roof level. The other units weren’t up to roof level. None of the units had been finished internally, although the 36 homes had solar panels, which have been removed and are being reused.
£5m is a reasonable guess. £8-10m worst case.
Interestingly, if it was significant then it would have been mentioned in the full results report. I can find no mention.
The only point I’m trying to make is that one shouldn’t take badly written news reporting as “the truth”.
It’s important to unpick this…
“Bulldozers have begun the mammoth task of demolishing 88 properties on a huge new housing development on the edge of the Cambridge today after developers discovered fatal defects - just after it had been built.
…
36 homes currently at the roof stage of construction are scheduled for demolition and in addition to this, remediation will be undertaken on a further 47 plots, each at different stages of partial construction”
So, that’s 36 homes being demolished, not 88.
36 + 47 does not equal 88.
Demolishing 36 homes is far from a “mammoth” task. Unless you’re doing it by hand.
“…an eye-watering cost of £40million”
Suggests an average cost of £454k per home. That might be the selling price, but it’s far from the build cost, which will be probably closer to £80-100k per property.
In truth, if you had to underpin 47 homes then you’d be able to do that for less than £30k a property.
So, actual cost to BDEV is closer to £3.6m for the demolition and rebuild (36 x £100k) plus around £1.4m for the remediation.
Happy to have helped ash
If you transfer shares to your wife then you have two choices as to tax treatment, you can:
- make the transfer at market value, at which point you have a CGT liability - and further gains for your wife start from the transfer price
- transfer as a gift - in which case your wife's buy price for CGT purposes is your original purchase price.
You can opt to transfer some one way and some the other to minimise CGT.
This only relates to shares transferred without being sold (in specie) - if you sell and re-buy in her name then you have released any gain for CGT purposes.
IF your investment platform allows you to do in specie GIA transfers to a family member (some do, but please don't ask which) then you can do that and she can bed and ISA them in. You can also ask your investment platform to transfer out the shares to share certificates; do the transfer on paper; and then transfer into an ISA.
The question is whether the time spent is worth the money saved :)
Eccles - I did what you’re suggesting by parking £30k not immediately needed into a GIA and buying LGEN shares rather than parking it in a savings account.
Then SVB happened.
I am now back in the position I’d envisaged, but it’s taken patience.
The moral is that it’s an uncertain world - so don’t dip in and out of the market if you might need the money :)
This on Morningstar - https://stocks.apple.com/AmrZaoLM_SwivEfGTMncQWg (apologies, this is an Apple News link as I can't find it on the Morningstar site, so can't do a direct link)
"No-moat Barratt Developments' shares remain appealing, offering attractive upside of around 22% relative to our unchanged fair value estimate of GBX 700. We think recent U.K. interest-rate dynamics and the late 2023 improvement in sales activity recently disclosed by its homebuilder peers no-moat Persimmon and no-moat Taylor Wimpey bode well for Barratt Development’s earnings outlook throughout the remainder of fiscal 2024 and onward. With U.K. housing market conditions retracing their cyclical nadir in 2023, we continue to expect Barratt’s earnings to bottom cyclically in fiscal 2024. We forecast Barratt to deliver 13,215 homes and a pretax profit of GBP 325 million in fiscal 2024, with earnings to progressively improve thereafter.
Investor sentiment for Barratt and its U.K. homebuilder peers has improved dramatically in recent months, responding positively to the marked drop in U.K. interest rates in mid-December 2023. Indeed, Barratt shares currently trade some 38% above their recent low in late October 2023. Nonetheless, Barratt and its peers trade on still depressed price/book multiples—relative to their historic norms—that do not adequately factor in our upbeat long-term expectations. We expect demand for new housing in the U.K. to remain robust over the coming decade with Barratt Developments ideally positioned to benefit. Specifically, we forecast an approximate 250,000 new homes will be constructed annually over the coming decade in Great Britain to meet the incremental demand for housing as its population ages. Our housing demand forecast compares favorably with the prior housing cycle, sitting about 9% higher than the average of about 230,000 new homes that were constructed annually in the U.K. over the 2013-22 period."
"In comes blogs, eyeing up £1bn in the bank, offers 50p over share price to agree the buyout… paid for by our cash in the bank. We would sell!"
Which is why it's not generally good for companies to have excess cash in the bank.
“I didn't think the TW. TU was good.
The figures from the TU shows how the housing market/HBs remains weak and uncertain.”
sst1 was spot on. I don’t think PSN’s TU was any better.
Up more likely than down, but being mindful that the market has already priced in a lot of expectation - so there’s a risk that a really bad trading update would take 20+% back off prices.
Personally, I wouldn’t add to my position at these prices if I needed the money in 18-24 months. It was a much easier call at the price I bought BDEV for.
Stt1 - your statement on Home REIT needs moderating by highlighting that they are VERY distressed sellers of homes - having lost what they believed to be secure large scale tenants. The following headline sums it up - https://www.insidehousing.co.uk/news/fifth-charity-client-of-under-fire-homelessness-investment-fund-goes-bust-83097
You can’t equate a distressed sale with the state of the housing market for house builders. There is no comparison.
The market for house builders is tough - there’s no denying that. There are plenty of smaller house builders going out of business. But the established names have all been through this before - and the benefit of most of the house builders not having a high turnover of staff is that most of them have been through this before.
They do ned to conserve cash -and that is what TW are doing. Most of the spend above their c£40m running costs was to pay existing land creditors. PSN is being more aggressive in continuing to buy land - presumably on the expectation of buying it more cheaply because the other HBs have retrenched.
I don’t know where you get the supporting evidence for there being “a huge debt crisis”.
The reality is that COVID exasperated a wealth gap between those with money and those without. My neighbours have around £7k extra to spend a year as they no longer have to buy season tickets and can spend the day working athleisurewear. Items the people with money that buy new builds and there is still quite a lot of money around.
My view is that the issue for house builders is that the general housing market isn’t moving very well. People with homes are tending to hold off moving. And moving has become really fraught. I’ve just bought and sold places for my parents and my trusty solicitor, who I’ve known for 15+ years, tells me that near 60% of chains collapse at some point due to mortgage issues - compared to 10% in normal times.
It’s not an easy market. But it’s not apocalyptic. As the old saying goes, (with the exception of the Dutch and Maldives, they are making land any more and the HBs are sat on the largest part of the immediately viable stuff.
The question is whether we’re at the bottom of the cycle yet. (I think yes.) Do the house builders were invested in have the nous to manage through this without becoming overly distressed sellers. (Again, I think yes.) and do they have sufficient cash. (Almost certainly yes.)
The macro environment is improving and the election politics will help house builders.
One thing to remember about interest rate cuts is they take effect more quickly than interest rate rises. If the interest rate falls then you can make a choose to remortgage to a lower rate. You don’t do that when rates rise.
Dividends are going to shrink in the short term, but most of that is priced in.
“May I ask, how much of the sector have you investigated?”
Evening Crossley.
I had a good root through all the house builders when I bought into BDEV, which I did on the strength of the balance sheet and the fact that there was a whopping discount to NAV. Given the choice, I also think you’re better choosing a “premium” brand over a non- premium one - so I discounted Vistry at the time because of the Bovis brand. My view is that, if you’re premium, then you can more easily move down market if distressed than move up market. I also liked that BDEV had survived COVID without drawing on the furlow scheme - it shows corporate discipline.
I discounted PSN at the time because I didn’t think the dividend policy was sustainable - and the belief that the shares would take a hit when it was made more sustainable. TW was my second choice of investment.
My position in BDEV has now become too big - so I’ve split a chunk between PSN and TW. I think that PSN is the most undervalued of the two, but it’s higher risk than TW. Certainly, I prefer the shape of the TW trading update.
I’m expecting all three companies to make a 30-40% cut in dividends this year, which I’m happy with. I’d actually be concerned if there isn’t a big cut.
The motor finance decisions...
https://www.financial-ombudsman.org.uk/decision/DRN-4188284.pdf
and
https://www.financial-ombudsman.org.uk/decision/DRN-4326581.pdf
I do feel that Money Saving Expert are being more than disingenuous in how they are reporting this - https://www.moneysavingexpert.com/news/2024/01/car-finance-misselling-claims-complaints-paused-regulator-concer/
"I’ve done back of the envelope numbers and at the top end this could be PPI-type scale (that was £40 billion)...
...The pay out would be either the interest on loans (which is big), the commission (which is big), or the whole loan (which is huge). We're possibly talking thousands back for many."
If you look at the decisions, this isn't a case of mis-selling in the sense of repaying all premiums. It's a case of having treated some customers unfairly and having to repay the difference in the interest rate between what was paid and the best available rate at the time.
Not insignificant. But not a PPI scale thing.
"Unlike its peers, the FTSE 250 firm remained active in the land market despite the market uncertainty during 2023, securing 13,067 plots, up about 53% on the prior year."
The statement about inactivity isn't accurate. From PSN's trading statement...
"Land spend for the year was c.£430m (2022: £664m) of which c.£260m was the settlement of land creditors (2022: £207m). Our owned and under control land holdings stood at c.82,200 plots at 31 December 2023 (2022: 87,190 plots)..."
So, c£170m spent and a net 4,932 added.
And from TW's...
"Our strong land position enabled us to continue to be highly selective in our land buying during the year and as a result, 2023 approvals were significantly lower, at c.3k plots (2022: c.7k)."
Vistry is certainly using the fact that its partners forward fund development - and hence has a much more reliable cashflow - to secure land whilst prices are distressed. And/but TW are sat on 142k potential plots in addition to the c80k short term plots.
What IS impressive with Vistry is its forward sales position.
Saying all that - Vistry's new business model is interesting and something that I'd missed.
“Vote Labour Live Longer”
Vote Labour. You may not live longer. But it’ll certainly feel like it.
An interesting factoid here - CBG is 86% owned by institutions (https://simplywall.st/stocks/gb/banks/lse-cbg/close-brothers-group-shares/news/with-86-ownership-of-the-shares-close-brothers-group-plc-lon/amp) - so maybe an institutional exit?
With that level of concentration of ownership then any significant sale is going to have an outsized effect on the share price.
Thoughts?
This will be helping - https://www.theguardian.com/business/2024/jan/11/bank-of-england-may-cut-interest-rate-sooner-after-surprise-inflation-forecast
This is what happens when there’s no news…
SIDI - “…a nice 5.4% profit as I type on TODAY’S BUY”