You are viewing 1 of your 1 free articles
Sector’s biggest builders close sites as construction grinds to a halt
Housing association developments across the country are being put on hold as the sector’s biggest builders in England and Scotland shut down their sites because of the coronavirus crisis.
In a stock market update, L&Q – which completed 2,862 homes in 2018/19 – said that it is closing all its construction sites and that it will review the position in three weeks. L&Q is unusual in the sector in that it has an in-house development operation. Many other social landlords are reliant on contractors.
Wheatley Group, the biggest developer in the Scottish sector, having delivered 896 homes in 2018/19, will also close all its sites in line with advice from the Scottish government.
Government advice in England is that construction sites can remain open, but many volume house builders in the private sector have been closing down their operations regardless.
A number of large housing associations – including Clarion, Sovereign and Wheatley Group – told Inside Housing that some or all of their sites are in the process of closing following last night’s announcement of greater lockdown measures to prevent the spread of coronavirus.
READ MORE
In its statement, written in full at the end of this article, L&Q said that it found social distancing on construction sites “extremely difficult” and that its workers “are heavy users of the public transport network”.
“In the interest of customer and employee safety, we have today taken the difficult decision to close down all of our construction sites. This decision will be reviewed in three weeks, and in the meantime we’ll be making all our sites safe and secure as quickly as possible,” the 95,000-home association said.
The organisation told investors it had “planned for an inevitable material impact on trading performance and cash flows”.
It added: “We continue to have a well capitalised balance sheet and a strong liquidity position.”
Tom Titherington, executive director of development and commercial at Sovereign, said: “The ultimate decision whether to close a site rests with our development partners or our contractors. We’re seeing a mixed picture across sites at the moment, but our expectation is that these will close over the next few days.”
He added: “In the light of the current social and emerging financial crisis due to the COVID-19 virus, we have paused all of our new development activity while we take stock of both the situation and the potential impact on our business plan. We will remain active, but will be reappraising the form and nature of projects.”
A representative from Platform Housing Group, which built 1,600 homes last year, said that roughly 50% of the developers it works with are currently taking the decision to close their sites.
Meanwhile, a representative from Network Homes said that the association is aware of contractors closing down some of the sites it is working on. They added that the landlord is in regular dialogue with the government, the Greater London Authority and the G15 group of large London housing associations about the issue.
Richard Cook, development director at 125,000-home Clarion, said: “Most of our sites were open on 24 March, in line with the advice from the secretary of state.
“However, we use external contractors to build our homes and a number of our partners are now taking the decision to close sites, which we support. We expect the majority of our sites to be closed by the end of the week and will of course move more quickly if the advice from government changes.”
It comes amid confusion about whether building sites should remain open following prime minister Boris Johnson’s address to the nation last night, during which he said that individuals should only leave the house to go to work if absolutely necessary.
Following the announcement, housing secretary Robert Jenrick tweeted that builders working on site could continue to do so if they follow social distancing measures. However other politicians, including London mayor Sadiq Khan and Scottish first minister Nicola Sturgeon, have called for sites to close.
Wheatley Group, the largest social landlord in Scotland, has confirmed to Inside Housing that its contractors are closing down sites today and tomorrow in line with the Scottish government’s advice.
Meanwhile, several of the country’s largest private house builders – including Taylor Wimpey, Barratt Homes and Galliard Homes – have all announced that they are closing down sites.
Cladding removal work being carried out by Galliard at New Capital Quay in Greenwich has also been paused.
On the morning of the 25 March housebuilders Bellway and Persimmon, alongside retirement home developer McCarthy & Stone, announced they were ordering the shutdown of their construction sites.
L&Q’s stock market update in full
Picture: Sonny Dhamu
“The health and safety and well-being of our customers, employees and subcontractors are L&Q’s top priority. With the national response to the outbreak changing daily, we are doing all we can to support them during this unprecedented crisis; to help prevent the spread of the virus and to ensure that they stay safe and are following the latest government and public health guidance.
“We have found that social distancing on construction sites is extremely difficult to achieve. Added to this in London, our construction workers are heavy users of the public transport network. L&Q wants to be part of the effort to maintain the safety of our transport network for critical key workers, and we also want to be part of the national campaign to halt the spread of the virus. Therefore, in the interest of customer and employee safety, we have today taken the difficult decision to close down all of our construction sites. This decision will be reviewed in three weeks, and in the meantime we’ll be making all our sites safe and secure as quickly as possible.
“We do not underestimate the impact on people’s jobs and incomes, and this decision has been taken after very careful consideration. We will do everything we can to support people through this period.
“We are also urgently discussing the implications of this decision with the government, mayor of London and other key stakeholders. While this unprecedented situation calls for tough short-term adjustments, our longer-term commitment to working with partners and building the homes people need remains undiminished.
“L&Q continues to work hard to make sure we are well prepared to deal with the latest developments. We have established a crisis response team and developed a pandemic plan to help us deal with the health and business threats caused by coronavirus. The aim of this plan is to keep residents, colleagues and stakeholders informed, reassured and safe.
“While prioritising safety and following the latest official government advice, we want to ensure that our response is proportionate and minimises disruption. We are constantly reviewing how service delivery will be adapted if our staffing levels or resident health are severely impacted and are putting measures in place to ensure that emergency, business-critical and health and safety-related functions are maintained.
“We are also doing everything in our power to support our people and the most vulnerable during these difficult times. Actions to date include:
- Established a home-working approach for our customer contact centre to ensure that customers can always get a response from us.
- Enacted tried and tested direct maintenance plans. This involves prioritising requests so that emergency demand remains well-serviced.
- Introduced screening for repairs, and personal protective equipment for our operatives to reduce the risk of coronavirus spreading during repairs visits.
- Developed procedures to ensure that emergency repairs can be carried out, even if there is an infected person in the property.
- Maintained caretaking and estate services to ensure health and safety compliance on our estates.
- Completed coronavirus risk assessments at all of our care and support schemes, and introduced increased infection control measures including additional cleaning and hand-washing requirements.
- We will not take legal action for arrears at this time, but we are reminding people that they should continue to pay their rent as normal because it helps to fund essential frontline services.
- We have instructed our specialist income teams to support customers who may be struggling to pay their rent by putting personal payment plans in place if needed, and providing enhanced support for those affected by coronavirus. We are also putting in place arrangements to help people access the emergency support that has been put in place by the government.
- Established robust finance procedures to ensure that contractors and suppliers continue to receive payment for goods and services.
“Whilst it is too early to speculate about the full extent of the ongoing crisis on L&Q’s future financial performance, we have planned for an inevitable material impact on trading performance and cash flows. We continue to have a well capitalised balance sheet and a strong liquidity position.
“In order to conserve cash and increase our flexibility, we are taking measures to tightly manage our working capital and capital expenditure and have taken the decision to stop all discretionary spend and delay capital expenditure plans. However, we are likely to face weeks or months of uncertainty, including periods of inactivity and disruption to income streams and therefore our ability to generate cash.
“Furthermore, whilst every effort is being made, ongoing disruption could have the ability to impact our financial reporting timetable, including the publication of quarterly trading statements and the publication of our audited financial statements for the year ending 31 March 2020.”
Sign up for our development and finance newsletter
Already have an account? Click here to manage your newsletters
More on coronavirus
To see all our coronavirus coverage to date – including the latest news, advice to providers, comment and analysis – use the link below.
