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Partnership patron: we speak to Bovis Homes’ Partnerships Housing Division chief
As a flurry of private house builders move to set up new arms to partner with social landlords, Jack Simpson speaks to Bovis Homes’ Keith Carnegie about why these partnerships are so attractive. Photography by Bovis Homes
Bovis Homes’ Keith Carnegie discusses the value of partnerships #ukhousingKeith Carnegie, chief executive of Bovis Homes’ Partnership Housing Division, discusses why joining together can be attractive #ukhousingAbove: Keith Carnegie, chief executive of Bovis Homes’ newly established Partnership Housing Division
Housing associations and house builders are strange bedfellows. While both have the same core aims of providing homes, these are often delivered through different routes and for different motivations.
Traditionally, the Section 106 process sees the two come together fleetingly, then go back to work in their affordable and private silos.
But both sides are changing, and this is pushing the two ever closer to each other. Inside Housing meets one of the drivers of that change: Keith Carnegie, chief executive of Bovis Homes’ newly established Partnership Housing Division.
The company is one of a number of builders reshaping slightly to move alongside the housing association sector. But what will that change look like? “I have long argued that the sector should stop looking at itself as affordable and private. We would be stronger, more powerful in voice and delivering for customers [when] working together,” Mr Carnegie says.
He is speaking just weeks after the house builder posted its half-year results. The company achieved record profits, but more significant for the social housing sector was the news that it would be launching its Partnership Housing Division.
The new arm, which will be led by 20-year Bovis stalwart Mr Carnegie, has been set up to target housing associations for joint ventures to deliver homes across Bovis’ sites.
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With a strategic land bank that includes plots for more than 10,000 homes, the opportunity for associations is clear to see.
“We will not go out to tender; we will use our land assets to enter into [joint ventures] with RPs [which stands for registered providers, the technical name for housing associations] and deliver homes,” he explains.
The new arm will officially launch this year and will remain within Bovis over the next two years, before becoming a separate business in 2021. The idea is not new for Bovis, explains Mr Carnegie – who spent a year-and-a-half as chair of 800-home Soho Housing.
Bovis previously had a partnerships division to work with the sector, which Mr Carnegie led, but this “withered on the vine” as the 2008 recession hit, he says.
However, the latest iteration comes at a time when house builders are increasing their focus on the affordable sector. Bellway last month launched its London Partnerships division, specifically aimed at social landlords in the capital. In January, Crest Nicholson said it would target associations on Homes England’s strategic partnership programme.
“Since Greg came in, it has been about recovering. Now it is about how we move forward and we see the partnerships business as an area of growth”
After years of underfunding, money is being pumped back into the sector, making partnerships with associations more attractive.
In explaining the drivers for Bovis’ partnership arm, Greg Fitzgerald, the company’s chief executive, said such partnerships provide a less cyclical revenue stream for house builders – important as concerns about the wider market continue to rise.
Above: The first new homes at Riverside and Bovis’ scheme in Stanton Cross, Wellingborough
It could also be argued that with the Help to Buy set to change after 2021, private house builders are readying themselves for when that tap is turned off. Mr Carnegie is quick to dismiss this in the case of Bovis, and says the timing of it has more to do with its own business. Just two years ago, slow build-out rates across Bovis meant that the company was hit with a shock profit warning.
In 2017 former chief executive David Ritchie was replaced by Mr Fitzgerald, who has helped to turn the company’s fortunes around.
“Since Greg came in, it has been about recovering. Now it is about how we move forward and we see the partnerships business as an area of growth,” Mr Carnegie says.
He admits that Mr Fitzgerald’s experience at Galliford Try, where he was chief executive from 2005 to 2015, has also played a part.
Galliford Try’s partnerships business currently works with nearly 70 housing associations, and last year achieved profits of £14.5m on a turnover of £284.9m. He says Galliford Try “stole a march” on how to do it.
Mr Carnegie says that while his division doesn’t have any homes or revenue targets yet, he believes it will be able to make “a sizeable contribution in a short space of time”.
Some deals are already beginning to materialise. In September, Bovis agreed a joint venture deal with Clarion to deliver 1,500 homes on a site in Sherford, Plymouth.
Above: A Bovis construction worker
And last week the house builder completed a £103m joint venture deal with Riverside to deliver 3,600 homes near Northampton.
These deals promise to be the first of many, and Bovis is in talks with several associations over four sites that include a potential 4,000 plots. These include a 1,775-home site in North Whiteley, an 830-home site in Taunton, a 1,500-home site in Exeter and a 1,000-home site near Northampton. These are all from Bovis’ land bank, but Mr Carnegie says it could look at delivering on housing associations’ land in the future.
The next few months will not only be about getting joint venture deals over the line – Bovis is also looking at how it can sell more private homes to the affordable sector. In January, Mr Fitzgerald said it had increased the number of private homes being sold to associations and expected further deals in 2019.
“At risk of annoying these for-profits, I am a bit cautious. If something looks too good to be true, it often is, and I think we need to be doing our due diligence in respect of these sorts of deals”
Mr Carnegie believes that this should be welcomed. He says the sector needs to overcome its “binary approach” of looking at the sector as either housing associations or private builders, and look more creatively at how the output is absorbed.
Does this extend to for-profit associations, too? Mr Carnegie says that while there is an increase in for-profit providers looking for deals, Bovis is not targeting them. “At risk of annoying these for-profits, I am a bit cautious. If something looks too good to be true, it often is, and I think we need to be doing our due diligence in respect of these sorts of deals.”
But whether through sales or partnerships, affordable housing is clearly becoming a bigger focus for Bovis than it has been in recent years.
And with uncertainty and significant change expected for private house builders over the next few years, don’t be surprised if several more follow suit.
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