Saturday, July 26, 2008

Last roll of the dice? For Barratt, HBOS and BTL?

Daily Telegraph

Struggling housebuilder Barratt has held preliminary talks with major UK banks, such as HBOS, about creating joint ventures to own and rent out new homes it is struggling to sell. The plan envisages a joint venture vehicle created between the housebuilder and a financial backer. The joint venture would then buy the houses at near cost price and rent them out to the private market. Uhm would be interesting to see how much a 400,000quid executive detached desirable much sought after home really cost to build. I suspect about 100,000 quid!

Posted by who stole my pension? @ 05:10 AM (1479 views)
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12 thoughts on “Last roll of the dice? For Barratt, HBOS and BTL?

  • Working out how much a house cost to build (and re-build) is easily done by using the ABI re-build insurance calculator on the Net. It then becomes obvious that house prices have been inflated by the value of the land underneath. Which is why cool people press for Land value Taxation, to try and get the land value down, in the process replacing other taxes on work,enterprise etc

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  • Mytimeisnigh says:

    How funny. The builders and bankers allowed the buy to let market, to inflate the market beyond recognition. The bubble has now gone pop and the builders will save their own skins, with help from the bankers, by obliterating buy to letters who inflated the market for them. What goes around, comes around.

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  • Doomed to failure I fear.

    I think we will find that just like the private sector, Barratts understanding of the value of their houses will be far too high

    versus any potential financial backer’s (about double I would expect).

    Still if it did happen, it would have a massive downward effect on rental prices in areas where there are large Barratt developments.

    As it happens, I live 1/4 mile fom a 700 executive home David Wilson (Barratts) estate, partially constucted.

    What price rental for a 4/5 bed house locally if they were all rented?

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  • You can see their profit margins by looking at the accounts. I don’t think they are that big, or they wouldn’t be in financial trouble. Most of the cost is in buying the land of course, and that is what is going down in value. The actual house itself, particularly things like the wiring and plumbing, are probably still going up in value.

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  • musn't grumble says:

    So why can’t they sell them to us at near-cost price …. blummin shysters. And anyway, the banks will soon be acquiring thousands of repossessed properties which they may have to rent out to the private market. As if they needed more.

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  • Psssst.. How much do you need? I’ve got a 1,000 colour photocopiers and the correct paper. No Probs!!!

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  • I suppose I should be putting my Gloating post on this thread.

    This is something I’ve been discussing for a while and IMO the only way Barrett etc. had to raise capital.

    The main thing being it will kep estates safe from being bough up by the government for social housing.

    One thing is for sure, Barrett board of Directors read HousePriceCrash Newsblog – and take note.

    Pity Gordon Brown hasn’t been reading.

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  • it_is_going_with_a_bang says:

    If they openly sold them at cost price everyone would haggle them to death from this point on.
    However, I fail to see where they make money even at that price.

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  • IGWAB
    I don’t think it’s about ‘making’ money at this stage – more survival.
    I’m sure they can create projections to make the numbers work to realise the capital.
    Whether or not the numbers actually work from Barratts point of view can be dealt with at a later date.

    Truth is though I’m sure they could realise enough capital to survive even if part of it is wrapped up in share options on the final portfolio that will be floated on the stock market.

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  • Bigbuilderbob says:

    £100K to build a £400k house? Never, im a builder and people dont seem to realise that it can take a lot of money to build a house, usually around £800/sq.m cost to the builder, why do some people think they are ALWAYS getting ripped off? There are some real blinkered views on this site.
    Granted, a price drop helps 1st time buyers, but a downright crash isn’t good,many jobs rely on houses getting sold

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  • Letsgetreadytotumble says:

    There’s gonna be a lot of houses for rent. The stuff on Rightmove for my area stays on for weeks and months and there’s loads of it. Hardly flying off the shelves.

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  • Tenyearstogetmymoneyback says:

    I actually think this is a great idea. It could make REITs operate in the way I expected them to.

    It really knarks me that while it is easy to make an investment in a shop or a power station (which I have)
    the only way to invest less than £150K in property is to take out a Lie to Bet mortgage and take on an amount
    of gearing which would make any stock market investor cringe.

    :- Duncan

    p.s. Bigbuilderbob @ 10

    How much do you think they really cost, given the economies of scale these firms make ?
    Just 12 years ago Crest were selling two bedrrom houses in Hampshire for £52000. How
    much would one of those cost to build then (I presume less than that) and now.

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