By Sebastian O’Kelly, LKP trustee
The retirement house builder McCarthy and Stone says that it is struggling, the newspapers are reporting.
Profits are down more than 50 per cent for the first half of this year. And it is worried about the long-term implications of the government’s undertaking to reform ground rents, setting them as low as zero.
The Telegraph says that over the last six months McCarthy and Stone has become more cautious about buying new sites, securing 22 land exchanges and 21 planning consents, down from 30 land exchanges and 34 planning consents in the corresponding period 12 months earlier.
The Times says that McCarthy and Stone feels that it is “caught in the cross fire” over the battle for leasehold reform.
In fact, it has been at the heart of the call for it: LKP is born out of the work of the Campaign Against Retirement Leasehold Exploitation, where the editorial continues as www.BetterRetirementHousing.com.
The full article is on www.BetterRetirementHousing.com here:
McCarthy and Stone: we want you to succeed, but you don’t need ground rents – Better Retirement Housing
By Sebastian O’Kelly Trustee, Leasehold Knowledge Partnership The retirement house builder McCarthy and Stone says that it is struggling, the newspapers are reporting. Profits are down more than 50 per cent for the first half of this year. And it is worried about the long-term implications of the government’s undertaking to reform ground rents, setting …
Dear Mr Fenton: I don’t regret my purchase at Rosewood Court, but ‘leasehold is a rip-off’ – Better Retirement Housing
All re-sales at Rosewood Court should falls in value from new, with several down £50-£60,000. The highest fall is flat 21 showing a fall from February 2004 to May 2017 of £81,500 Clive Fenton, CEO, McCarthy & Stone Dear Mr Fenton, My late wife and I purchased a McCarthy & Stone retirement flat at Rosewood …
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Our ground rents are fair, says McCarthy and Stone (even though they go up to £600 and are for no service whatsoever)
I cannot understand why M&S should be struggling.
They sell their new properties at a Premium rate, (values often drop after occupation).
Ground Rents can be £500 plus per annum.
Their Part Exchange deals must be fairly profitable as they don’t appear attractive to purchasers.
I do admit that recent M&S complexes are of a high standard and generally situated in attractive areas. This of course attracts the wealthy elderly in that neighbourhood.
I would suggest that they lower their sights and cater for average elderly as there is a demand for retirement accomodation amongst that class.
Build a bit cheaper and lower or remove the Ground Rent.
According to the About Peverel website it is possible that a tie up between the in house McCarthy & Stone management companies and Firstport is being mooted? This follows the appointment of Paul Lestor as a director of McCarthy & Stone.
Mr Lestor is a director of the struggling Knight Square Group (parent of Firstport)
Rumours are circulating in the city that suggest Electra wish to divest themselves of their interest in Knight Square..
Should such a tie up happen, it will be full circle for both companies.
Surely M&S would not risk their reputation with a tie up with FP, after all that happened 20 years ago with Peverel.
But then nothing surprises me in Leasehold.
Logic would dictate not? That said Knight Square has a negative worth of £-35,000,000 and are said to be on the edge.
If McCarthy &Stone are set to lose some of their asset value due to forthcoming legislative changes they need to develop a strategy to increase income from other sources? Expanding their property management division must be a consideration. Why else would Paul Lestor (of all people) be appointed a director of McCarthy & Stone?
I too readily acknowledge that the newer McCarthy & Stone sites are well managed. Less fortunate are those that live at a development bequeathed to the vagaries of Firstport management.
I am concerned as the steps McCarthy & Stone might take in the future to mitigate their reduced earnings? They do appear to have borrowed a great deal of money to fund their recent expansion? Clearly those debts need to be serviced.
Will McCarthy&Stone backers put pressure on the company to sell leaseholds on house manager’s flats? Will pressure be put on the management company to produce more revenue for McCarthy & Stone?
The route of all the Peverel/Firstport tribulations does appear to be due in large part down to their financial woes? Could it happen again?
No doubt McCarthy Stone build high quality apartments tailored to the needs of the elderly wanting a communal living – at a price.
HOWEVER, they’ve comprised their reputation in a number of ways.
Firstly, by flogging off the freeholds to offshore investor freeholders. As the Grenfell type cladding story shows, these freeholders do nothing apart create an income stream for no service whatsoever. They create an additional cost on the leaseholder.
Secondly, drastic price falls on a high proportion of historic sales. The MS development in Folkestone, Laurel Court, has lost over £750,000 on re-sales alone since 2007. Seemingly, MS PR attempts do not cut the mustard, blaming everyone but themselves. They cite properties that do make a gain as an “investment win” and the losses as “premium on being first in” and like any product loses initial purchase value! You cannot have it both ways.
Recently, at Laurel Court, Folkestone, Firstport came up with the idea of replacing all the communal lighting for LEDS. (Read a nice free property upgrade for the landlord in reality.) Somehow, they persuaded the residents to accept it in a meeting, although the residents I spoke to said Firstport suggested it should be done. The communal lighting bill there is around £14k. The upgrade to replace the bulbs…. er £13k. To put in bulbs? Modern LED bulbs work off the same bayonet or ES screw fixings, as the bulb contains all the electronics, so a like for like replacement. I asked Firstport the estimated savings in energy costs so I could work out how long it would takes to recoup the cost. I am still awaiting a response.
MS think they can PR their way out of all these damning questions and situations they have left their customers in. But now we have LKP, a lobby of MPs and a voice to bring this organisation to account.
“On an annual basis, with electrical consumption and purchase costs considered, an LED light bulb is 12% cheaper to operate than an energy efficient fluorescent bulb, and 74% cheaper than an incandescent bulb”.
( copied from greenenergy website )
How many flats at Laurel Court , Folkstone to share the £14K lighting bills ? If the running cost is £3 per bulb , seems like it has about 3, 000 bulbs . That does not seem right.