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Column 14th March 2018

Grove Airfield will make £25m for just three executives

As you have probably heard or read on the national news, the government has started a consultation on changes to the National Planning Policy Framework (NPPF).

Both the Prime Minister and the Housing Minister Sajid Javid have made statements stressing the need for more housing to get house prices under control and saying that the changes will help this to happen.

“It will no longer allow Nimby councils that don’t really want to build the homes that their local community needs to fudge the numbers,” Javid said. “For the first time it will explicitly take into account the market prices. If you are in an area where the unaffordability ratio is much higher you will have to build even more. It will make clear to councils that this number is a minimum, not a maximum.”

Javid also said that does not mean building on the green belt, “but it does mean that outside of naturally protected land like woodland and green belt they [developers] can pretty much roam everywhere outside that”.

According to statistics from the Electoral Commission nearly half of all donations to political parties from companies in 2017 came from companies connected to the property industry.

Of course they will get this money back from the growth in business and increase in profits. Developers say that they are building as fast as they can, but what this means in practice is that they build as fast as they can while maintaining or increasing house prices and therefore profits.

Let’s look at one of the firms working locally, Persimmon plc are the developers of the Grove Airfield development, building under both of their brands (Persimmon Homes and Charles Church).

Their profits before tax last year increased by 25% to £966,000,000 on sales of 16,000 new homes. That’s a profit margin of 28% or over £60,000 on every property.

After a public outcry, Persimmon said it would cut the bonus paid to Chief Executive Jeff Fairburn – believed to be the largest bonus ever for a UK-listed company – to £75m. Finance Director Mike Killoran will receive £53m – a £24m reduction on what he had previously been awarded – and Managing Director Dave Jenkinson will see his bonus cut by £2m to £38m.

This means that every house sold by Persimmon and Charles Church last year contributed more than £10,000 to the bonus payments of these three directors.

With 2,500 new homes to be built on Grove Airfield that makes £25,000,000 extra bonus for these three. We wonder why house prices are so high?


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