Housebuilder Bovis allocates £3.5m in extra funding to cover remedial work
● Firm says it has made good progress addressing ‘high level of customer issues’
Bovis Homes is to set aside a further £3.5 million to deal with customer complaints over the quality of its homes.
The house builder has already set aside £7m to cover remedial work and compensation for affected customers after the firm was dogged by complaints over homes that were sold unfinished and had electrical and plumbing faults.
In a trading update yesterday, Bovis said the extra provision is to ensure it is “fully resourced” to complete work quickly. The firm said: “We have made good progress addressing a high level of customer issues in the first half.
“Following the CEO’S review of the business, the group has taken a further £3.5m of provision in the first half, taking the total one-off costs related to these legacy issues to £10.5m.
“This further provision will ensure we are fully resourced to complete the works identified as swiftly as possible whilst at the same time delivering the appropriate high level of service to our new customers.” In February, Bovis announced a raft of improvement measures, including having more staff to deal with complaints, the creation of a dedicated homebuyers’ panel and an improved quality assurance process.
The firm also said it would slow the rate at which it builds homes in 2017 as part of a “reset” and now expects to deliver completion volumes for the full year at around 10 per cent to 15 per cent below the 2016 level.
In its update, the group said it delivered 1,512 completions compared to 1,601 in the same period in 2016 as demand “continues to be robust”.
Bovis noted first half profitability has been impacted by increased build costs and an increased level of investment to address legacy issues. The average selling price of its homes rose 9 per cent to £277,000, driven by “changes in mix and a modest increase in average underlying prices”.
Chief executive Greg Fitzgerald said: “The trading performance in the first half of our financial year is in-line with management expectations.
“We continue to identify and implement operational improvements and I am very confident we can deliver a successful turnaround, returning Bovis Homes to being a leading UK housebuilder.”
Hargreaves Lansdown analyst George Salmon said: “Repairing the damage done to the group’s reputation might well take some time, but with industry veteran Greg Fitzgerald installed as CEO, the group has at least got an experienced campaigner to lead the rebuilding project.”