HOME@IX OFFERS DIGITAL SALES OUTLET DASHBOARD
Home@ix Dashboard for Volume House builders.
The Home@ix App can be white labelled as an additional Digital Sales outlet on existing larger sites with Multiple outlets or on Smaller sales outlet sites. It offers the opportunity to satisfy Conditionality in s.106 and CIL provisions for, Down-sizers, sheltered/assisted/Care-home, Key worker and Live-work buyers or renters for Housing association and PRS (Fleet Buyers) and for off BIM sales to targeted local demand home owner-groups specific to a particular location. Digital Sales outlets do not have the attendant absorption rate or Work in progress (WIP) cost calculation requirements and are complementary to and additional to existing sales and marketing and Sales per outlet projections.
As a House builder Our current focus is on the Downsizer and retirement end of the market and we are
actively pursuing smaller schemes for 5 to 35 homes in England and Wales. Phasing has become a large factor especially with respect to absorption rates and we have been exploring deferred land payment deal structures with other Land owners. #Home@tix #DigitalSales #Housebuilders #RealEstate #PropertyDevelopment
What is strategic land? Option and promotion agreements.
●Conditional contract: This is a contract of sale of land where the sale is conditional on the buyer first obtaining, at its own cost, planning permission. ●Land assembly: Where a developer brings together smaller areas of land, buying the land or using landowners agreements or options, which are then merged together to create a viable larger scheme. ●Option agreement: The developer has the option within an agreed time period to purchase the land from the landowner, the option permits or requires the developer to secure planning permission to generate the enhanced purchase price. ●Promotion agreement: The promoter agrees to promote the site and obtain either an allocation or planning permission. The landowner then sells the land, paying the promoter a fee.
Bellway Sales rate per outlet 0.58 Since February..
In Line with Crest Nicolson SPOW (open market) 0.54 hy 2023 0.72 hy 2022
The importance of sales outlets in a market without Help to Buy. (Dec 22-
March 2023) Executive Summary The housing market has experienced a significant shift in demand and sales rates as a result of the end of Help to Buy and the Covid-19 pandemic and Bank of England Interest rate rises. The number of sales per outlet per week has decreased, and the number of sites gaining planning consent has fallen by 31% over the last five years. This has made it difficult for house builders to open more outlets and deliver the Government's target of 300,000 new homes per year. This trend, will not reverse until local planning authorities and House builders work together to increase the number of sites gaining planning consent, “allowing house builders to open more outlets and provide a diverse range of products, locations, and price points”. The National Planning Policy Framework (NPPF) needs to support this by delivering consents for the right number and range of sites, including smaller sites that support SME house builders and new entrants into the industry. By doing so, the housing market can improve choice for buyers and contribute to an overall increase in new homes delivery. Sales Rates The housing market in England is heavily reliant on sales of new homes to owner occupiers, which take place in sales outlets on new homes development sites. The number of sales per outlet per week had increased from 2012 to 2019 supporting increased housing delivery despite a relatively static number of outlets. However, recent mortgage market turmoil and falling demand in the housing market, coinciding with the withdrawal of Help to Buy, has had a dramatic effect on sales rates, which fell to an average of 0.45 at the end of 2022, a level not seen since the Global Financial Crisis. Analysis from Savills suggests that sales rates per outlet are likely to remain at between 0.5 and 0.6 over coming years, with the lower end of this range persisting until housing market conditions stabilise. “The higher end of the range is likely to be reliant on the success of replacement schemes for Help to Buy, particularly Deposit Unlock. Without Help to Buy or a replacement scheme, we expect sales rates to be lower than the pre-GFC period in line with wider housing market activity levels”. Major housebuilder sales rates and delivery The sales rates and delivery of major housebuilders are crucial metrics in the housebuilding industry. Sales rate is defined as the average number of homes sold by a developer across each outlet on a weekly basis. Data reported by Savills; “shows that the average sales rate per outlet among major housebuilders was around 0.62 to 0.68 between 2003 and 2007, before falling sharply during the Global Financial Crisis to hit a low of 0.40 in 2008. Since then, the average sales rate has gradually increased, reaching a stable level of approximately 0.73 between 2015 and 2019.”
However, sales rates fell during the first Covid lockdown before rising to an average of nearly 0.87
during 2021 and 2022. Although some major housebuilders have reported results for the beginning of 2023, they remain lower than the previous two years. It is important to note that while the publication of sales rates has become common practice, it is not compulsory, which means reported figures may be biased towards housebuilders with better results. Crest Nicholson at 0.35 for the eleven weeks since November 1st 2022, Vistry Group a rate of 0.46 in Q4 2022 (compared to 0.84 in H1 2022) and Barratt at 0.44 across H2 2022 (down from 0.79 in H2 2021). Redrow reported 0.51 for the first five weeks of the year and Persimmon reported 0.52 for the first eight weeks (up from 0.3 in Q4 2022 but down from 0.96 for the same period of 2022).
Land Supply and Outlets
The number of outlets for housing has reached its lowest level in at least 20 years, with a continuing downward trend as the number of sites gaining planning consent has fallen every year since 2017. While the number of plots gaining consent declined less, over the last three years, with a 31% decrease in consented sites compared to a 15% decrease in consented plots plainly, Sites gaining consents are Larger. The lack of new sites, particularly smaller ones, gaining planning consent is a symptom of SME housebuilder decline and continuing barriers to entry for new entrants into the housebuilding industry. Measures That can increase land supply and outlets to meet the growing demand for housing should be welcomed.
Impact on delivery and What needs to change.
Delivery. The sales rate has fallen to levels not seen since the Global Financial Crisis, resulting in a decrease in new home completions. Even if the number of outlets remained constant, a sales rate of 0.5 would reduce the number of new homes sales from 145,000 to 90,000. This would make it impossible for the government to reach its target of delivering 300,000 new homes per year. To address this issue, local planning authorities need to recognise the changed market conditions and include more sites in housing trajectories to maintain and increase delivery. The National Planning Policy Framework needs to support this by delivering consents for the right number and range of sites, catering to a diverse range of developer types, including SME house builders. Although government policy has attempted to increase the number of SME house builders, the availability of smaller sites has only worsened in recent years. However, there is an opportunity for the planning system to deliver more smaller sites and lift a significant barrier to growth for SME house builders. Overall, changes are needed to support the housing market and appeal to a wider range of buyers through product, location, and price point.
Please call Roger Lewis for details of our Digital Sales Outlet Dashboard
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https://www.youtube.com/watch?v=ke4X_34Aank
Legal And General withdraws Umbrella from its Modular Business whose non existent Sales presence led to low expectation of a Sales Approach "Making it Rain"[videopress OZUH74hP]In more optimistic times this was the general Narrative of Legal and General Modular Homes as told by its CEO.https://www.youtube.com/watch?v=7pGKN7XSdMkHousing Today interviews Rosie Toogood, CEO 07 April 2021Legal & General Modular, a subsidiary of insurance firm Legal & General, has set its sights on revolutionizing the housing industry through the use of modular homes. Led by former Rolls-Royce executive Rosie Toogood, the company aims to provide affordable and sustainable housing solutions to housing associations, councils, and build-to-rent developers. Toogood has set the target of building 3,000 homes a year by 2024, with the company already on track to achieve this goal. Legal & General Modular's current pipeline includes a 750-home project over the next 18 months, with an additional 2,000 homes in discussion for 2022. The company's modular homes are in high demand due to their quality, sustainability, and fast delivery times. Legal & General Modular is poised to make significant revenues in 2021 and beyond as it continues to grow its presence in the market. The Announcement last week that The operation was to close is explained by an analysis of the 2021 full year accounts and 3 Subscription payments for Shares amounting to £49,500,000 presumably to cover the deficit in funding as funded in each of the previous accounting years reported. 31/3/2023 Cash for additional 3 £1 shares £49,500,000
Losses accumulated at 31 Dec 2021 £181,863,551 Total Cash for Shares/covering Losses. £231,363,551 £12m of sales in 2021 Bank Loans £9,000,000 Lease Liabilities £25,000,000 Staff Liabilities. 390 at end of 2021 £20,000,000 pa Contrasted with the April article on the Companies website there would seem to be a contradiction between the Narrative and the Actualite While Legal & General Modular is not a speculative housebuilder selling directly to individuals, it is part of a larger group of housebuilding businesses within the insurance firm. Toogood expected ( Some might say took for granted) that "internal" customers should be a significant part of their delivery pipeline. The company's current projects include an 185-home development for Bristol council, with 50% of the homes being affordable. Toogood aims to build 3,000 homes a year by 2024 and has already taken on an additional 50 employees this year, with plans to hire 300 more by the end of 2021. The company's pipeline for the next 18 months includes over 750 homes, with further projects in discussiontotaling another 2,000 homes. Toogood attributes the strong demand for modular homes to their quality standard, sustainability credentials, and ease of delivery. The Employee appraisal site Glassdoor gives a less spun appraisal of what had been going wrong. Legal and General Modular Homes has been facing some challenges, which are reflected in the reviews of its employees. One of the main issues seems to have been the lack of a clear future strategy, which has resulted in a dearth of sales pipeline and necessitated production breaks. This led to periodic layoffs and low morale among employees. Additionally, the CEO's micro-management style has not been well-received by the executive team, with multiple resignations over the past few years. On the positive side,L & G Modular Homes offered a good pension scheme and training opportunities for its employees. However, there are reported concerns about the low base pay and lack of bonus or overtime schemes. Furthermore, the management has been criticized for not valuing its employees and not giving them enough opportunities to progress within the company. To address these issues, L & G Modular Homes should have focused more on demand planning and building a solid sales pipeline to secure jobs and grow the business. It could also have listened more to the expertise of and widened the fields of expertise in its leadership team and given them more autonomy. Additionally, the company needed to prioritize its customer led projects and make decisions faster. By taking these steps, L&G Modular Homes could have become a great place to work and got closer to achieving its goals. Katerra The most similar Failure lately was the collapse of Kattera The US based Modular Behemoth, in June 2021. https://www.youtube.com/watch?v=UYHPesaX398Katerra, a construction technology company that started in 2015, collapsed due to a series of business failures compounded by the macroeconomic effects of the COVID-19 pandemic. The company's financial position deteriorated rapidly, and it was unable to secure additional capital and business. One of the reasons for Katerra's downfall was its connection to Greensill Capital, a supply chain finance giant that filed for insolvency in March 2021. Both Katerra and Greensill were heavily backed by SoftBank. This cashburning unicorn failure is not unique; other companies like Enron and WeWork have also experienced similar fates. However, even with other examples to learn from there is still an appetite in " Roving Caveliers of Finacialisation Land" to solve problems that no longer exist, such as Range Anxiety for Electric Cars, as seen with the failed pilot program Better Place. The lesson here is clear: businesses must have a sustainable financial model and be mindful of their connections to other companies. The housing market has been plagued by two fundamental misdiagnoses of the problem. Firstly, the collapse in home ownership is mainly due to the withdrawal of mortgage finance from first-time buyers (FTBs). Secondly, there is a crisis of affordability and credit allocation, with people borrowing eight times their income to get on the housing ladder while hundreds of thousands of pensioners' homes have at least three spare bedrooms. The availability of credit is a key factor in the gyrations we call the property cycle. In January of 2020, SoftBank first bailed out Katerra, then still a fully integrated manufacturing system with an order book of $2 billion. However, the sheer breadth and ambition of the company's approach was always hugely ambitious, and ultimately it was brought down by the Hubris of another Softbank Unicorn, Greensill Capital. The writer noted at the time "A winning solution could be an order book-led approach by occupier demand coupled with assembly off the supply chain that already incorporates a lot of automation". In the world of House Building, the customer as occupier is king. The key to success in the housing market lies in dis-inter-mediation - cutting out the middlemen and advisors who have institutionalized and complicated the process.This is no more apparent than in the "Affordable Homes Crisis " Talking Shop. The UK MMC market is riddled withingroup biases and silo-based thinking, which leads to a lack of customer engagement. Home@ix seeks to change this by incorporating the customer's voice into the origination and briefing stage of the place-making design and site acquisition/viability process. The offsite manufacturing industry needs to think like a brand, creating a story and personality that consumers recognize. Manufacturers can create a product and brand that developers can market successfully, ultimately determining the overall success of a project. It's time for the industry to pull together and push together to take a larger market share. Home@ix offers a direct-to-customer approach, giving customers the choice of design and finance options. It's time to put the customer first and disrupt the broken industry. https://www.youtube.com/watch?v=sc5ZlXV-1fwThere was always something of putting the Cart before the Horse with the L&G approach. In addition to the obvious market and industry challenges, the Management approach could IMO have been better.
Is Legal and General Modular Homes, Just another part of the Affordable Housing Crisis Lip Service Talking Shop?The Logic of dividend policy and maximum export of financial surpluses might though give a better understanding of what is going on with housing in the UK in the context of the Global Financialisation and its own peculiar yet dominant logic system. As Saskia Sassen put it , there is " A Savage Sorting of Winners and Losers: & Contemporary Versions of Primitive Accumulation," seem to be at work with the "accumulators" being "Off Shore" in nature. The Narrative "account therefore offers a partial picture at best, as it neglects the impact of capital flows into, and outflows from, the sector. Far more dramatic changes were taking place here than this ‘institutional recovery’ paradigm suggests",Tom Archer & Ian Cole examine these themes in this paper from The financialisation of housing production: exploring capital flows and value extraction among major housebuilders in the UK The paper explores the financialization of housing production in the UK, focusing on the capital flows and value extraction practices of major housebuilders. The authors argue that financialization has led to a shift in the priorities of housebuilders, from building more homes and growing income and profit through expanding volumes, to maximizing profits for shareholders, often at the expense of production volume. They analyze the financial statements of major housebuilders and find that they engage in practices such as share buybacks, dividend payments, and land speculation to extract value from the housing market often for offshore shareholder interests. The authors conclude that these practices contribute to the unaffordability of housing in the UK and call for policy interventions to address the negative effects of financialization on housing production.
The financialization of rented homes: continuity and change in housing financializationRental housing financialization has implications for housing shortages, prices, and volatility. In the short term, the impact on the market for sold homes is likely to be minimal as most rental financialization is oriented towards larger housing blocks. However, over longer time horizons, it is reasonable to expect that housing shortages may fuel more demand for rental property. Conversely, rapid growth in the availability of quality rented homes may have a depressing effect on prices for purchased homes. Rental housing financialization should have a major impact on the distribution of rental housing availability, especially in dynamic local economies targeted by REITs and REOCs. These funds prefer to provide for asset-poor but education-rich urban professionals, especially in their younger years. Asset-rich elites also benefit from the integration of a new class of assets into mainstream financial markets while limiting any downside that might come with increasing the supply of single-family properties. For renters who lack both human and physical capital, there is far less cause for optimism. They are too precarious as workers to be appealing as tenants to REITs and REOCs. Worse, the expansion of higher-quality urban housing often results in the removal of existing property serving these poorer communities. Without major efforts to orient listed real estate towards social ends, there is more than a little cause to assess these financial structures as further exacerbating the divide between insiders and outsiders to the knowledge- and asset-driven globalized urban economy. Within that larger pure banking structure, the sorts of Bonds Home@ix is proposing and which Berkley homes floated last year could be underwritten by the new federated land banks of England, Scotland, Wales, and Ulster. a sort of rentenmark solution. Bonds and who benefits from the coupon are two key questions which are rarely asked and which this article seeks to address. The Distinction between Free Markets and Free Trade are crucial to understanding the point. https://notthegrubstreetjournal.com/2023/04/09/free-trade-vs-free-market-careys-american-system-vs-ricardo-malthusian-system-monopoly-vs-free-market-competition/ https://theecologist.org/2008/aug/02/radical-carbon-tax-reform https://drive.google.com/file/d/1wZiBNnJ81t9D-LwFJwjyb4QU5R9BUDRd/view?usp=sharing https://www.gov.uk/government/collections/housing-white-paper https://publications.parliament.uk/pa/cm201011/cmselect/cmtreasy/memo/taxpolicy/m32.htm The Home@ix approach is for one segment of the Market the reluctant 10%, Rungs 1-25 and rungs 35-50 of the housing market could quite seamlessly and for great benefit to society be worked into the brief of a regional English landpound, Scottish Land Pound, Welsh Landpound and Ulster Landpound. Etc, so forth and so on. https://www.youtube.com/watch?v=VaEQX-rN_0Y https://twitter.com/richard_donnell/status/1655129170756661248 https://twitter.com/richard_donnell/status/1655137148079677440 https://twitter.com/George_Nixon97/status/1655109483994001412 https://twitter.com/George_Nixon97/status/1655149045222977545 https://twitter.com/RealEstateLand3/status/1655176398758195201 https://twitter.com/RealEstateLand3/status/1655177446520500225 https://twitter.com/DurhamWASP/status/1653892326413008897 https://twitter.com/CunneenKeith/status/1651728338317082624 https://notthegrubstreetjournal.com/2023/01/02/from-homes-for-heroes-to-exponential-zeroes-neglected-actors-in-the-housing-crisis-narrativeabsorptionrate-lasttimebuyerscash-buyers-fiscalpolicy-miras-and-stampduty-an/ https://notthegrubstreetjournal.com/2022/10/01/homeatix-moduloft-the-affordable-housing-manufacturers-defining-the-terms-of-and-boundary-conditions-of-our-domain/ https://notthegrubstreetjournal.com/2022/06/09/benefits-to-bricks-a-homeix-response-to-pm-and-michael-gove-proposing-the-english-scottish-welsh-ulster-land-pound/ https://notthegrubstreetjournal.com/2016/01/06/the-iron-law-of-oligarchy/
Tenure
www.ons.gov.uk/peoplepopulationandcommunity/housing/bulletins/housingenglandandwales/census2021 Tenure is whether a household rents or owns the accommodation that it occupies. Households that rent their accommodation were asked what type of landlord owns or manages it. The census data on tenure in England and Wales show:
The data on accommodation ownership and renting can be broken down further to show that:
UK housing value breaks £8 trillion barrier31 JANUARY 2022 Growth by tenure Government support for home ownership via the stamp duty holiday and record funding from Bank of Mum and Dad combined saw the total value of mortgaged owner occupied homes pass £2.9 trillion for the first time ever, increasing by £297 billion in 2021 alone. Despite this, the value of housing owned by unmortgaged owner occupiers continued to be the fastest growing housing tenure in 2021, up 12.0% on the year to reach a total of 3.3 trillion. Increased institutional investment in the private rented sector saw the tenure grow by £86 billion in 2021 – more the double the increase seen the year before. Over the past decade, this sector has increased +77.6%, or £605 billion. < Back to newsMortgage Lenders and Administrators Statistics: 2022 Q4 Key findings
If as some commentators Claim Values Fall by 35% in real terms The Value of all Mortgaged Property would fall to 1.875 Trillion and the Loan to value ratio on Bank Balance sheets would rise to 88.9% This would have very severe consequences on the rating of Mortgage Debt held by banks as secured collateral for Tier 1 Basel 3 Solvency purposes. Regarding Falling Prices at the End of 2021 “unmortgaged owner occupiers continued to be the fastest growing housing tenure in 2021, up 12.0% on the year to reach a total of 3.3 trillion”. 53.2% of the UKs Residential Housing Stock in private ownership is not Mortgaged this figure suggests why Prices for Property are much stickier going down than going Up.
https://tradingeconomics.com/united-kingdom/banks-balance-sheet https://www.wolframalpha.com/input?i=4403720000000 £4,403,720,000,000 Four Trillion Four Hundred and Three Billion Seven Hundred and twenty Three Million https://tradingeconomics.com/united-kingdom/money-supply-m3 https://www.wolframalpha.com/input?i=1675.8+%2F4403.8++as+percentage Outstanding Mortgages are 38.05% of Bank Balance Sheets https://www.wolframalpha.com/input?i=1675800000000%2F3584011000000+as+percentage Outstanding Mortgages are 46.76% of Stirling M3 Total Value of UK Housing Stock. 12 MARCH 2021 https://www.savills.co.uk/insight-and-opinion/savills-news/311889-0/uk-housing-value-hits-record-%C2%A3 7.56-trillion-high
Mortgaged ownership rises again Government support for homeownership and funding from the Bank of Mum and Dad have combined to support mortgage owner occupation, while longer mortgage terms mean households remain mortgaged for longer. For the first time ever, the value of mortgaged owner occupied homes passed the £2.5 trillion mark, rising by £170 billion to £2.62 trillion in 2020. Despite this rise, the value of owner occupied homes with no mortgage was higher still at £2.88 trillion, with the total value of homes owned outright rising by 5.8% in the year. 20% of this value was concentrated in the South East. A further 17% was in London.
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AuthorRoger Lewis, CEO of Home@ix writes this Blog, and the opinions expressed are his alone. Archives
July 2023
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