Property & Construction Daily

The Property & Construction Daily provides a sector-specific comment from leading analyst Alastair Stewart. His daily perspective provides a round-up of market statements, news, economics and views from the property and construction sectors.

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August 29, 2023

BLV | Economics – Architects turn more gloomy | News – No signs of anti-competitiveness in housebuilding, CMA

Company news

Belvoir Group (BLV, 215p, £80m mkt cap)

Franchised lettings-focused property agency group. Acquisition. MAB (South West), a financial services business acquired for a cash consideration of £1.0m. This follows the earlier acquisition of BMA Bristol in June 2023 for £1.1m in cash. BMA and MAB SW both trade as the Mortgage Advice Bureau and are appointed representative firms of Mortgage Advice Bureau, the wholly owned subsidiary of AIM-listed Mortgage Advice Bureau (Holdings) plc, one of the UK’s leading networks for mortgage intermediaries. The acquired companies provide mortgage and related financial services to clients through a combined network of 41 self-employed advisers, with MAB providing training, support, compliance, website and national marketing via the wider MAB brand. In the year to 30 September 2022 MAB SW had revenue of £1.5m, pre-tax profits of £0.1m and net assets of £0.2m. In the year to 31 December 2022 BMA had revenue of £1.8m, pre-tax profits of £0.3m and net assets of £0.1m. The acquisitions are expected to be immediately earnings accretive adding around £0.6m pa to group PBT. They bring Belvoir’s financial services network up to 321 advisers, which the Board believes “will enhance growth through accelerating the nationwide coverage of advisers who can support growth of the mortgage and remortgage business within its property franchise offices”.

Economic data

Architectural workload. Expectations of future workload among architects fell in July for the first time in six months according to the latest RIBA Future Trends survey. The Workload Index fell from +1 in June to -10 (16% of practices expect an increase minus 26% forecasting a decline). All four sectors measured declined: Private Housing, -13 from -8 in June; Commercial, -7 from +3; Public Sector, -15 from -6; Community, -13 from -9. London is the least pessimistic region with an Index of 0, from -3 in June. The South of England saw the largest fall in confidence, with a July Index figure of -28, compared with -4 in June.

Future Workload Index

In other news …

The ongoing study into housebuilding by Competition and Markets Authority has published a preliminary update that appears to clear the industry of the main concern among some pundits, competition between builders: “The market study has found that, at the national level, the housebuilding market does not appear to be particularly concentrated, with a number of large housebuilders competing alongside smaller, regional firms”. The CMA, however, is now considering the number of competitors in particular areas and the extent to which small and medium sized housebuilders are able to compete in these local markets. On land banking, the largest builders “hold large swathes of land, and that these land banks have grown in recent years, leading to concerns from some stakeholders this may be limiting competition or slowing build-out rates in some areas”. However, the study also recognised “complex planning rules and uncertainty of decision making were hindering the delivery of new homes – particularly for smaller housebuilders that have less resources to help manage the planning process”. In a parallel ongoing study into the rented sector, “while many landlords and letting agents are providing a good service, initial engagement by the CMA heard many complaints raised by stakeholders suggesting that a significant minority are not complying with consumer protection law. The CMA will update its guidance for lettings professionals. If any letting agency or landlord is found to be in breach of the law, then the CMA does not rule out launching enforcement action”. Viewpoint (on housebuilding): As expected, Levelling up Secretary Michael Gove’s imposition on the CMA of the umpteenth survey into the same topic in recent years continues to be an expensive exercise into the blooming obvious. The authority’s preliminary findings appear strongly to refute his statement in March 2022 that volume housebuilders as operating as “essentially” a “cartel”. Rather, it blames the planning process for restricting access to land, rather than avaricious national housebuilders.

Prices are as at the previous day’s close. Where quoted, net debt is pre-IFRS16 (excluding leases) unless otherwise stated.

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