What to watch: Housebuilders face probe, Berkeley dividends, stocks wobble

·Finance and policy reporter
·3 min read
UK housebuilders face a probe. Photo: Reuters/Toby Melville
UK housebuilders face a probe. Photo: Reuters/Toby Melville

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and around the world:

UK housebuilders face probe over leaseholds

Britain’s major housebuilders have been threatened with legal action over potential mis-selling of new homes and “unfair” ground rent terms by a UK watchdog.

Persimmon (PSN.L) and Barratt Developments (BDEV.L) stocks slid as the Competition and Markets Authority (CMA) announced the pair and rivals Taylor Wimpey (TW.L) and Countryside (CSP.L) face a full probe.

High and rising ground rents on some new homes in Britain in recent years have sparked enormous controversy, with some doubling every 10 years. “This increase is built into contracts, meaning people can also struggle to sell their homes and find themselves trapped,” said the CMA on Friday.

The CMA said it was concerned over developers “failing to explain clearly” how ground rent would rise over time, leaving buyers “misled” over the cost of converting leasehold to freehold ownership and using “unnecessarily short deadlines” to pressure potential buyers.

The CMA has written to the four firms setting out its concerns, demanding more information and warning firms may have to make legal commitments to change their practices. It has also threatened court action.

Berkeley sticks to dividend plans

Housebuilder Berkeley meanwhile said it remained committed to giving £280m ($372m) a year to shareholders, with trading “resilient” since May despite the pandemic.

It said in a trading update it also still expects to make £500m of pre-tax profits in its full year, with construction levels “better than initially anticipated” and sales above expectations.

The need for modified working practices and increased supervision because of COVID-19 and social distancing continued to weigh on capacity, however. But it said efficiency levels were now at around 90% of pre-virus levels.

It comes as the latest PMI data indicated that Britain’s post-lockdown construction rebound has already begun to cool as economic uncertainty hits firms’ new orders.

A bellwether survey of construction chiefs showed a fourth month of expansion in August, but at a lower pace than the previous month when analysts had expected momentum to keep growing.

European stocks choppy after Wall Street tech rout

European stocks were choppy on Friday, after a tech sell-off in Wall Street sparked market jitters worldwide on Thursday.

Leading indices sank on the open in Europe, before rebounding as investors appeared to shrug off the fears behind Thursday’s sell-off. US stock futures were also mixed, though the tech-heavy Nasdaq (^IXIC) looked set for fresh declines.

The Europe-wide STOXX 600 (^STOXX) opened 0.5% lower after tumbling 1.4% the previous day, but was up 0.5% by mid-morning.

Britain’s FTSE (^FTSE), Germany’s DAX (^GDAXI) and France’s CAC 40 (^FCHI) sank further on the open after Thursday’s declines, but were all swiftly back into positive territory. Leading British and French stocks were up 0.7% at around 10am in London, while German stocks were up 0.3%.

The sell-off had spilled over into Asian markets overnight. China’s SSE Composite Index (^SSEC) fell 0.9%, Japan’s Nikkei (^N225) lost 1.1% and the Hong Kong Hang Seng (^HSI) lost 1.6%.

What to expect in the US

Wall Street futures had all been in the red overnight, but only the Nasdaq (NQ=F) looked set to fall by around 5am eastern time, with futures trading 0.2% lower. S&P 500 futures (ES=F) were up 0.4%, and Dow futures (YM=F) were up 0.5%.

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