Housebuilding boss: days that cost £500m
Housebuilder on a drama that shook firm to its foundations
AS BRITAIN woke to the Brexit result, shares in the country’s housebuilders crashed. Among those contemplating the slumping prices was John Tutte, chief executive of Redrow.
Tutte had taken June 24 off because it was his 60th birthday and was looking forward to a pleasant day wandering around London art galleries and having lunch with his wife Yvonne.
‘Our share price – it must have been a computer glitch or something – opened at £1 having closed the previous day at £4.26.’
It eventually settled around 35 per cent down and didn’t recover for several months. It wiped half a billion pounds off the value of the company as well as a hefty chunk off the value of the former civil engineer’s own stake in the business – worth almost £1.3million the day before.
A relaxing day in the capital became ‘nerve-racking’ as Tutte constantly checked the markets. ‘It was a bit of a different world. I couldn’t grasp what was happening, how can it be this bad? Are they right in the City about the housing market collapsing?
‘We were thinking perhaps somebody knows something we don’t. Thankfully they didn’t.’
In the event, Tutte knew quicker than everyone else that the Brexit vote was not the immediate blow to the UK economy many were expecting. ‘By Monday morning I’d spoken to divisional heads who said there were people queuing up. We thought perhaps this isn’t what everybody thinks it is.’
Shares in Redrow are now higher than before the Brexit vote, though the same cannot be said for many other housing groups.
But Tutte is used to standing out. Rivals such as Berkeley Homes have warned housebuilding could halve post-Brexit as foreign workers quit the UK. Tutte disagrees, arguing that EU building workers are only part of the story. ‘Nobody really knows the numbers,’ he says.
‘We have a big site in Colindale in North London which I visited recently. There was quite a large element of the workforce there from Australia and Africa, which is not a Brexit issue.’
But even those who are from the EU may not be affected, as they have been here so long they have residency and maybe even a British Passport. Current UK law allows anyone resident legally in the UK for the past five years to apply for a passport.
‘They’ve lived here for many years. Are they classified as foreign labour?’
But while Tutte thinks much of the problem is exaggerated, he agrees for some there will be issues, notably those workers who have come over for short work stints of a few months.
‘That’s the vulnerable element, and they make an important contribution. So there will have to be a sensible visa system,’ he says.
Whether such a system will be introduced remains unknown and last week’s Brexit White Paper left open the status of EU citizens in the UK. It is turning out to be quite a month for White Papers and the building trade, as this week the Government will release its review of house-building in the UK.
Britain has been failing to build enough homes for decades. Figures out last week suggested 152,000 homes were registered as complete in 2016, well short of the 240,000 homes a year that economists estimate are necessary.
The review, led by Sajid Javid, is likely to recommend a streamlining of planning rules and greater powers for councils to build homes. Tutte, whose company is the fifth biggest housebuilder in the UK and builds 4,000 homes a year, suggests the Government should take an axe to current planning laws. ‘We shouldn’t have to test a site on so many occasions, it’s far harder than it needs to be.’
At the moment housebuilders have to get consent to build on a site, a separate consent to see if it complies with councils’ local plans, put in an outline planning application and also a ‘reserved matters’ application for detailed issues. Tutte says there should be one application to councillors and planning officials should handle the rest. There needs to be strategic thinking about where homes are needed and how they can be achieved, he argues.
He says rather pointedly: ‘If you left transport to local authorities you wouldn’t have any.’
Critics of the housebuilders say that, far from councils blocking development, it is the industry sitting on huge land banks waiting for prices to rise that is the real problem. But Tutte insists this is nonsense. ‘We don’t have sites where we won’t build on them because house prices might shoot up. We have no financial incentive to do that. Our build rates are dictated by the strength of the local market and the resources we have in terms of skills and materials.’
Big housebuilders have increased the speed at which they build in recent years, he says. The reason building levels remain so low is because the small and medium-sized housebuilders have disappeared. ‘Small and medium-sized builders have been in decline for 25 years. If we had the same number as in 2010, we would be building 11,000 more homes. If we had the same number as in 2007, we would be building 25,000 more homes a year. Major housebuilders have increased their output.’
Tutte says this Government has played a part in putting the smaller builders out of business, by clamping down on the ability to build small extensions on existing properties or so-called ‘garden-grabbing’. Such work was, Tutte says, the bread and butter of small housebuilders.
A civil engineer originally, Tutte joined the housebuilding industry following government cutbacks in the late 1970s and early 1980s. An avid gardener and painter, he lives in Northamptonshire with Yvonne, his wife of 38 years. They have two grown-up sons, now 32 and 30.
Perhaps unsurprisingly, he thinks government support in the form of help to buy should continue.
‘Some sort of permanent replacement would be quite sensible, limited only to first-time buyers. Historically I don’t think first-time buyers have been able generally to buy without some kind of government support. The Government doesn’t make enough of the benefits of home ownership.’
He argues people who have been unable to buy their homes may struggle to pay rents in 30 years’ time, given the lack of saving for pensions.
He is disdainful of economists who argue that Britain should get over its obsession with home ownership.
‘Do I know many people who regret buying their own home? I don’t.’
He qualifies that immediately. ‘People who bought in 2008 might regret it a little. But it hasn’t made any difference to their life.’
And despite the shock of that Brexit share slump, it has not made much of a difference to Tutte’s personal financial life. His stake in the company is now worth £1.4 million.
It was a different world. Could it be this bad? Are they right about a housing market collapse?
Housing needs a strategy. But if you left transport to councillors... you wouldn’t have any
THE floods that struck the country last winter cost £1.3billion and caused untold misery. They were the latest in a series of weather incidents to wreck the properties and lives of thousands of households.
But their devastating impact could be averted by the development of the ‘floodproof’ house of the future. Here, The Mail on Sunday takes a look inside – and gives tips on how to adapt a home to withstand a disaster.
THE shiny black door with the number 10 immediately suggests Downing Street, home to Prime Minister Theresa May. But this door opens on to ‘Resilient House’, a modest terraced property on a business park in Hertfordshire, developed to show how easy it is to protect a home from a flood.
Beneath the plasterboard on the inner walls are bubble wrap-style membranes designed to draw water out through channels. A sump in the floor can swiftly pump away water.
In the kitchen, specially designed units in Finnish eco materials can be quickly decontaminated and reused rather than thrown away.
At the front and back, door seals can lock out the worst of an inundation.
The Building Research Establishment has funded the modification of this house, along with several partners including insurer Axa. The cost? Around £60,000, but this should more than pay for itself in the event of a flood.
Builders have installed in the home a range of permanent defences, whether from rising ground water, a river breaching its banks or a burst mains.
The proof of the pudding will be in the flooding. Only when the defences have been put to the test in the next few weeks will the team overseeing the project learn how well their efforts have fared, including the speed at which it dries out and becomes inhabitable again.
A standard house can take months to dry out and the cost of fixing damage is on average £50,000 – time and cost scales this project hopes to shrink.
David Williams, technical director at Axa, says: ‘Currently it is a rarity for a homeowner in a flood risk area to opt for the materials we are using inside Resilient House.
‘The reasons include thinking they will never be flooded; or for those who have been flooded believing it is a one-off event. There is also the worry that their home will stand out as being different.’
Cost is also a deterrent, with some defences pricier to install than others. Williams adds: ‘Resilient House shows you can have a home that looks normal and comfortable.
‘If we can encourage more homeowners to include such modifications, it will help bring down installation costs.’
Some effective steps post-flood damage cost little, such as raising electric sockets to a higher level or attaching a television to a wall.
GOVERNMENT grants of £5,000 were handed out to many flood victims in Cumbria. To encourage them to take future flood risk more seriously, the grants could only be used on antiflood measures.
The insurer Aviva helped its customers apply for these grants and now half ofthe 400 policyholders flooded in Cumbria last winter have some form of resilient repair, such as airbrick covers and raised electrical sockets. The Department for Environment Food and Rural Affairs published an action plan last autumn to encourage wider take- up of floodproofing measures.
Its research found many people resist because they believe it is up to ‘the authorities’ to manage flood risk.
A survey of brokers also found that insurers do not necessarily make lives easy for those at risk of flood, with a third failing to offer lower premiums to reward homeowners who install anti-flood devices.
Some insurers are also unwilling to allow victims to add such improvements during a flood repair, even if it cost no more or the policyholder agreed to meet the cost. It is hoped the launch of a property flood resilience database later this year may persuade insurers to reduce premiums for homeowners who have taken preventive measures.
This database will hold information on properties that have been improved to set standards under a new Building Research Establishment certification scheme.
Stephen Garvin, a director at the Establishment, says: ‘This data will be ‘fed’ to insurers in conjunction with other flood risk data.
‘It will allow them to balance the flood risk of a particular area against the prevention measures taken at an individual property.’
This may, it is hoped, result in reduced insurance premiums.