‘Cus­tomers tell me we have trans­formed their lives’

The boss of re­tire­ment homes de­vel­oper McCarthy & Stone is bullish about how it coped with the crisis, finds Rachel Mil­lard ‘We help ad­dress a lot of the is­sues around lone­li­ness, and we help friends and fam­ily know their moth­ers and fathers are be­ing loo

The Daily Telegraph - Business - - Business -

It wasn’t the 18th birth­day cel­e­bra­tion that ei­ther imag­ined. But when John Tonkiss took his daugh­ter to a drive-through McDon­ald’s for her big day in mid-June, it marked a sliver of nor­mal­ity af­ter the height of the crisis. “It’s strange how much you can look for­ward to some­thing like that,” says Tonkiss, flash­ing a Ron­ald McDon­ald­wor­thy grin over Zoom.

As chief ex­ec­u­tive of McCarthy & Stone, the UK’s lead­ing re­tire­ment hous­ing de­vel­oper, he has had both his busi­ness and its thou­sands of res­i­dents to worry about. Things could have gone a lot worse.

“We were strug­gling with PPE in the early part of Easter, but broke the back of that,” he says. Staff from parts of the busi­ness whose work had dropped off helped check on res­i­dents and de­liver med­i­cal sup­plies.

Over­all, the com­pany’s home­own­ers had lower rates of coro­n­avirus cases and deaths than in the gen­eral pop­u­la­tion, Tonkiss says, and far lower than in care homes. He is en­cour­aged by signs of de­mand as the com­pany restarts build­ing sites and view­ings, with cus­tomers on the or­der book want­ing to pro­ceed quickly.

“In some re­gards the pan­demic has am­pli­fied their de­sire to get on and get into one of our re­tire­ment com­mu­ni­ties,” he says. The crisis may end up be­ing of longer-term help to McCarthy in its mis­sion to make cus­tomers out of the UK’s age­ing pop­u­la­tion – a 43pc rise in over-65 year-olds to 17.4m by 2043 is pre­dicted by the Of­fice for Na­tional Sta­tis­tics.

The UK hasn’t em­braced re­tire­ment com­mu­ni­ties in quite the same way as some parts of the US and Aus­tralia, with re­tirees here more likely to stay in their own homes un­less need­ing the high lev­els of sup­port in a care home. Tonkiss, 52, is de­ter­mined to con­vince more of the Bri­tish pub­lic of the mer­its of a “third way”, as of­fered by his de­vel­op­ments, where homes sell for an av­er­age £308,000. The FTSE 250 com­pany has built 58,000 re­tire­ment prop­er­ties since the Seven­ties.

“In­de­pen­dent liv­ing with sup­port on hand is really quite unique and spe­cial,” he says.

“We help ad­dress a lot of the is­sues around lone­li­ness, we bring com­mu­ni­ties to­gether, and we help friends and fam­ily know their moth­ers and fathers are be­ing looked af­ter.”

An en­gi­neer by train­ing, he spent his early pro­fes­sional years in the Mid­lands’ au­to­mo­tive in­dus­try. His in­ter­est in home-build­ing grew when he joined stu­dent ac­com­mo­da­tion gi­ant Unite Group in the early 2000s.

He joined McCarthy in early 2014, and was pro­moted to chief ex­ec­u­tive in Septem­ber 2018. It has been a dif­fi­cult few years for the com­pany amid Brexit un­cer­tainty and a slow­down in the se­condary hous­ing mar­ket. Prof­its fell 25pc to £43.4m dur­ing 2019. Even be­fore coro­n­avirus, shares had slumped be­low 2015 float lev­els. They closed on Fri­day at 72.2p, valu­ing the com­pany at £388m.

Tonkiss is try­ing to di­ver­sify by of­fer­ing more care and man­age­ment ser­vices and al­low­ing cus­tomers to rent rather than buy – the lat­ter going “fan­tas­ti­cally well”, he says. As the pan­demic broke, McCarthy was in “11th-hour talks” with a “large in­sti­tu­tional in­vestor” over de­vel­op­ing a £300m in­vest­ment fund to de­velop rental prop­er­ties. A pen­sion-backed rental in­come stream is cat­nip for many in­vestors. “It’s an­other way of at­tract­ing pri­vate cap­i­tal to help build the homes we need,” he adds.

Tonkiss also has a job on his hands main­tain­ing trust in the in­dus­try which has faced crit­i­cism over ser­vice charges, ground rents, and low re­sale val­ues. McCarthy now man­ages its de­vel­op­ments built af­ter 2010 – cov­er­ing about 20,000 home­own­ers – giv­ing it greater con­trol over those mat­ters. It has also set up its own re­sales team, which is achiev­ing bet­ter re­sale prices, and has ex­tended leases. “Re­sales have been an is­sue for us; we have done a lot to tackle it,” says Tonkiss. He is un­mov­able on the need to charge ground rents (about £400£500 per year in his de­vel­op­ments) to fund the com­mu­nal ar­eas. Any­way, he in­sists, buy­ing a McCarthy home is about more than just the bot­tom line. “There is a dan­ger that some­times it gets nar­rowed down to ‘I bought it for this and sold it for that’. But you also get the peace of mind and sup­port. What price do you put on that, really? I very rarely meet cus­tomers that don’t say ‘this has trans­formed my life’.”

He is speak­ing as Black Lives Mat­ter protests are fill­ing Lon­don’s streets and prompt­ing ques­tions about eth­nic diver­sity in busi­ness. How is McCarthy’s record?

“Not good enough,” says Tonkiss, though he doesn’t have a fig­ure to hand. The com­pany is set­ting up a group to ad­dress the prob­lem. “I think there is a dan­ger that we take our own hearts to work with us – we think we are do­ing the right things, but you have to see the world through other peo­ple’s eyes.”

Tonkiss be­lieves the Gov­ern­ment has “done a ster­ling job” sup­port­ing busi­nesses dur­ing the crisis, but now needs to stim­u­late de­mand to get the econ­omy moving.

Cuts to stamp duty are high on his list of ways to do so.

“The dan­ger is we end up with 12 months of eco­nomic slow­down and a lot of re­dun­dan­cies.” He is clear-eyed about his own com­pany’s prospects on that front. “We are tak­ing stock. My gen­eral spirit will be to pro­tect as much of our em­ploy­ment base as we can – but there’s no point in any busi­ness leader hav­ing peo­ple on the pay­roll that we don’t have work for.”

As he gears up to steer the com­pany through the re­ces­sion, it’s worth re­mem­ber­ing that his in­ter­est in its strength goes be­yond his own job; it might be his landlord dur­ing his own re­tire­ment. His wife has al­ready “bagsied” a home on a forth­com­ing McCarthy de­vel­op­ment in Lich­field. “We haven’t put any money down,” he notes, “but she said, ‘I’d like to live there.’ ”

John Tonkiss, McCarthy & Stone chief, be­lieves that the re­tire­ment homes’ sec­tor is now show­ing signs of re­cov­ery

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