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Major builder reveals discount sale of 200 homes to associations amid ‘uncertainty’
Crest Nicholson has sold off more than 200 homes to housing associations through a series of bulk deals aimed at securing sales amid housing market uncertainty.
The company confirmed it had sold around 200 shared ownership properties to registered providers at reduced rates in the past year, with the majority being difficult-to-sell homes in and around London.
Speaking following the publication of its half-year results Stephen Stone, executive chair at Crest Nicholson, said the company had taken steps to sustain sales numbers through bulk sales deals.
Earlier this month, Inside Housing reported that a number of housing associations had been buying up cut-price homes from house builders outside of Section 106 deals.
The two sites where Crest Nicholson sold the highest number of properties was at its Dylon Works development in south-east London, and its Totteridge Place development in Whetstone, Barnet.
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London housing association Metropolitan Thames Valley confirmed to Inside Housing that it had bought 69 units at the 223-home Dylon Works last March.
Crest Nicholson offloaded 34 new build properties to ReSI Housing, the for-profit registered provider which is chaired by David Orr, former chief executive of the National Housing Federation, in October.
Metropolitan Thames Valley’s shared ownership arm, So Resi, was recruited to manage the properties as part of the deal.
Yesterday, Crest Nicholson’s full year results saw pre-tax profit drop by 15% for the year ended 31 October. The company blamed Brexit uncertainty and a sluggish London market for the falling profit and slowdown in sales.
It came as giant London housing association L&Q warned staff its surplus for 2018/19 would be half of the £342m it had based its plan on due to a “market downturn” and increased costs.
Chris Tinker, chair of major projects and strategic partnerships at Crest Nicholson, said securing pre-sale deals with housing associations had now become a key part of its future strategy, and the company wanted to take advantage of the additional money being pumped into affordable housing.
The government through Homes England has now invested nearly £1.7bn into its strategic partnership scheme, with 21 housing association partners expected to deliver an additional 39,000 homes by 2022.
As part of the funding arrangements, strategic partners able to use funding to secure affordable properties from developers outside of Section 106 agreements.
Mr Tinker said the house builder would be targeting Homes England’s strategic partners to partner with, to secure part of the money being spent by strategic partners to deliver 23,500 intermediate homes by 2023 under the strategic partnership plan.
Explaining the numbers behind these deals, Mr Tinker said: “The lower the average open market price the closer they get to the open market value, if you had a site that was selling at roughly £300,000 I think you would have offers over 90%, and the house builder would be saving probably 5% on sales marketing and interest costs.”
Earlier this month, house builder Bovis Homes said it had increased the number of private sale homes it had sold to housing associations and expected this to increase further in 2019. Taylor Wimpey also said it had agreed a bulk deal with a registered provider in December last year.
Commenting on the Crest Nicholson deal, a spokesperson for Metropolitan Thames Valley said: “Metropolitan Thames Valley has a current build programme of 2,000 homes with a focus on affordable housing, and we’re in the market for good quality sites at the right price. We’re happy to talk to house builders with sites to sell in our areas of operation and that meet our investment criteria.”
