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Persimmon PLC
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Welcome to the Persimmon Trading Update Analyst Conference Call. [Operator Instructions] Just to remind you, this call is being recorded.I'll now hand the floor to our host, David Jenkinson, CEO; and Mike Killoran, FD. Gentlemen, please begin.
Good morning, everyone. Thanks for calling in. What we're going to do, we've got me here and Mike sitting beside us as well, we're going to follow the normal procedure. I'll give a quick opening statement, picking out some of the key areas I want to bring your attention to from the statement and then we move on to, as normal, the questions and answers. So quickly, the first 4 areas I'd like to draw your attention to from the statement is, firstly, on my appointment, I stated my key focus was an improvement in our customer relationships. I am pleased to say I'm happy with the progress we have made in the first 7 months of the HBF reporting period, and this will continue to be my #1 priority. Secondly, I've also stated I wanted to restock our shelves by increasing the amount of WIP we have on the ground to enable us to provide more reliable moving-in dates and allow sufficient time for our teams to follow our quality control process. Once again, I'm pleased with the progress we are making on this area, which is reflected in the 19% increase of equivalent build units we have on the ground. The third point I'd like to bring your attention to is that the legal completions are slightly down on half 1 '19, but this is a byproduct of our drive to improve customer care and satisfaction rather than a change in market conditions. However, we are on a strong position for half 2 '19 with a good forward sales position, strong margins, excellent outlet network and with hard half 2 build programs in a much better shape. And finally, I would just like to say how proud I am personally of the work Persimmon is doing in getting first-time buyers on the housing ladder with 52% of our private completions being to first-time buyers. So I'll open now to questions and answers and any questions anybody may have.
[Operator Instructions] Our first question comes from the line of Gregor Kuglitsch of UBS.
A couple of questions or maybe 3, actually. So the first one is just to come back on the volume point. I just want to explore that a little bit. I think in April, you were kind of indicating flat. I think in the end, you were down kind of 5.6%. Appreciate that's a bit difficult to predict on timing. The comments in your opening remarks suggested a better outlook for the second half. So maybe you can just give us a bit of a feel where you see things trending on that into the second half. Do you expect to be kind of at least flat?The second point is, do you have an indication where your, I'm sure you try to track this, where your HBF rating would come out if you did the survey today. So in terms of percentages, would you be comfortable in saying that you're in a sort of 4-star builder run rate?And then final question is, you've indicated margins are flat for the first half. Any direction from here? Do you expect it to kind of pare back a little bit as some of the costs come through that you're incurring or not so much?
Okay. Well I'll deal with the second question first, and then Mike can pick up on the volume point. I may be able to help you out on the ladder bit as well. And on the third one, Mike will pick that up as well.Well, as you know, we ended the last HBF reporting period, which finished in end of September, at 79%. We're now 4 -- now 7 months into the period of the next reporting period. And I'm really pleased with the results we've seen, and we've seen a movement in forward from where we were last year. And in particular -- yes, in the last 4 months, we've seen a considerable take-up in our results. But I wouldn't want to go on record quite yet until we're further into the reporting period of the 12 months for the HBF rating. But what I can say is that we're confident of where we are at the moment and we're comfortable with what we're seeing...
And I think, Gregor, the key thing there is that obviously, a lot of the measures that we are introducing is still early days, as we say in the statement. As Dave said, we're seeing good improvement in the results from those initiatives, but it is still early days. So that's quite encouraging. But we need to see how things go, obviously. Just on the volume side, yes, I mean I think the outlook -- the market for us appears to be pretty similar to what we've been seeing through the first half. And it's remarkably resilient really in terms of the challenges, obviously, that the country faces. We've got to consider the increasing uncertainty with respect to the process of removing the country from the EU, et cetera.So the market in the regions, across the regions, has been remarkably resilient. And our private sales rate, I guess, is an indicator of that and that it's been a pretty consistent reference the prior year, which was, we all know, quite a strong comparative period for us. And we've been seeing a pretty consistent performance against that. Visitor numbers are good. Cancellation rates remain pretty low. We're not seeing a pickup in down wells or anything like that.So yes, I mean, obviously, it's well rehearsed that products are higher price points, particularly perhaps in the Southeast and in and around London, it's a bit tougher conditions. But across the regions where the majority of our business is, the product that we're offering, the homes that we're offering to our customers is proving to remain attractive, hence, good visitor levels and good interest.So when -- what does that mean for the volume outlook? Well, as Dave said, we've got a very healthy forward sales position. We've got around about 4,400 PD units forward sold at the end of June, so that's a good starting point. We will suffer a few cancellations out of there in the normal course. But rule of thumb, if you were to say, well, we'd carry forward maybe 4,000 out of that number for delivery through the second half.And then it's all about the sales rate through summer and autumn. Traditionally, as you know, it's always a bit slower in autumn and spring. And as you've seen in the statement, we've done 0.74 of the private sale to cycle week in the first half if you were to say an assumption of maybe 20% lower, which would be the traditional sort of pattern. That would give you sales rate of around 0.59. And then how many weeks, 15, 16 weeks perhaps to sell in a simple way, thinking about it simply, would give you a figure of maybe a little bit more than 3,000 expected to sell PD through the second half that we could take as legal completions.So when you add those 2 numbers together, maybe 7,000 -- a total of 7,000, but then you've got the issue of building the right ones. Obviously we're, as Dave said, very pleased with the progress on construction. So we are obviously [ pleased ] about the HA units. Another, I don't know, 1,500, 1,600 units on HA. And you can make your own conclusions from that. We've got solid support for the second half, but we want to be measured in terms of delivering the balance of outcomes that Dave's touched on already.
I think the thing is on -- I think we believe -- if you look at the different moving parts that's going to be used to results for the second half, we believe we're in a good position. We'll have a good outlet network with a similar sort of number. We have a really strong forward sales position to which to build on. We've got good stock on the ground and the right product, 19% more than what we had this time last year. We believe the margin, it will be pretty strong again. And we also believe the sales rate and the price for the sales unit will be pretty similar to this year. It won't be hard for you to come up with your own calculation in terms of volume, Gregor, for the second half.
But I think it's going to be -- we're going to be measured of our deliveries we have in the first half. I think that pattern will be consistent. So we're not chasing volume. We want to deliver the quality of outcomes.
The margin?
And on the margin point?
Yes. I mean the margins, yes, we are investing in the business. I think the -- we're indicating, as we have before, that the full year outturn of last year will be a reasonable guide for the first half of this year. In the second half, I think we'd expect that to come back a little bit but not significantly. There's a bit more, obviously, investment going into the business, as we've said. So yes, we'd expect our margins to be still pretty healthy by the time we get to the full year position. So yes, I mean, obviously, we talked before the quality of the land bank is the key support to that delivery.
Our next question comes from the line of John Fraser-Andrews at HSBC.
Two for me, please. One, following up on what you've just outlined there, Mike, on the completions. The missing piece of the jigsaw for the full year completions is what the social-private split was in the first half?
Yes. I mean the private was just shy of 6,000 units, I believe, of completions. And the HA sales were around about 1,600. Yes, that's sort of 7 -- 7, 6-ish number.
Sure. And then on outlets, can you talk -- sort of appreciate you're holding back and you've got higher inventory level, but outlets actually dropped quite rapidly from the 1st of May where they averaged for the 4 months, 350; and then the 6 months, 345. So I mean was -- and also your completions clearly were somewhat lower than you've guided at that time. So can you just explain exactly what did happen on the outlets side? Appreciate the sales point, sales rate is resilient.
Yes. I mean you saw -- I mean we're talking averages here, John, so it's not an absolutely precise science. We -- you'd have to monitor it hour by hour, day by day, through the period. So what we've seen through the first half, around about 350 average, as you say, running through to sort of mid-April or the back end of April, and then slightly lower levels from there through to the end of the year. As you can appreciate, spring selling season isn't flat. We -- those have a different pattern. Within there, it builds through into April and May, so -- and June. So obviously, if you've got a few lower -- a few less sites later on in that period, it can -- on a weighted basis, it can influence the numbers according to that higher level of activity later on in the period because it's just how the market appears to work.So I think we end the year just slightly lower than the 345 mark. But on average, 345 for the whole year -- for the first half. But I think moving through into the second half, we'd be confident of around the 345 mark at this point. We've got good visibility on new outlets coming through. We said we plan to open around 85 new sites through the second half. So we've got good visibility. As Dave said, we've got very strong invested WIP position, which delivers a good platform to work from through the second half.
Is the sole driver the build quality? Or has there been any planning issues or any market issues that also explained the fall?
No, not at all. It's been about quality before volume and ensuring that we meet on what we said we were going to do. To be clear, I made it my #1 priority to ensure that houses are right, and that's what we decided to go along. Maybe got lose a little bit of volume in the short term and make sure that houses are right. That's a place unprepared to be on standby.
Okay. And last one from me then is just on the selling price, which was a little bit firmer on private. Is there any market inflation in there or is that mix? And are there any sort of regional variations on price that you could highlight?
Yes. I mean just on the sort of inflationary effect, I mean, again, it's very, very hard to be exactly precise on this. But at the 1 point -- sort of 1.7% increase on the PD, average selling price thereabouts, we'd say inflation is probably is 1.25 with 50 bps of mix effect, but it's hard to be exact on that. But that's the feel. We are nudging price -- able to nudge prices forward still. I mean there, regionally, what...
I think to the North, excluding the Southeast and bigger units, the price points are incredibly resilient. We're still seeing some decent price growth when we lease new sites and that pattern hasn't really changed in the last 12 months. To be honest, when we buy the land and we get the right mix and the right product and we present the property, we're seeing good price growth. As sites mature, the larger 4-beds become a little bit more difficult and the market is certainly a little bit stickier in the Southeast.
And our next question comes from the line of Clyde Lewis at Peel Hunt.
A couple, if I may. One, could you just sort of say a little bit about sort of land buying and what you're seeing on sort of pricing of land and how hungry you are to sort of, obviously, sort of add in the market? Obviously, you've got your strategic pull-through but just sort of what you're seeing, I suppose, in sort of more open-market land buying.Second one I had was on Help to Buy. Are you seeing a drop-off at all in terms of usage with the sort of improvement in sort of higher LTV mortgages and the drop in rates that we've seen there?And I suppose the third one was in terms of sort of the increase in stock that you've indicated in the first half, is that it now? Or do you think there's a little bit more to come in the second half of the year?
Well, I'll deal with that. The first one, the easy one, which is Help to Buy, no, we've seen no drop-off. There's still really strong demand for first-time buyers of houses out there. And Help to Buy works really well in facilitating that, and it's something I'm very proud of because it enables so many people to get on the housing ladder. So yes, we're not seeing any drop-off.Land buying, as you know, we're in a very, very strong position. The land bank is extremely long, and the strength of the land bank underpins the strength of the business. And what that does, that gives us options to buy land at the right terms at the right time at the right place. We haven't spent quite as much money on land at the moment, but that's a timing issue rather than by design. We have some fantastic strategic land coming through in the next 12 months, and a bit of our focus has been on that. And what our spend will be in the second half will depend how much that comes along. But to summarize on that, it's more of a timing issue why there's drop in the spend rather than by design.And the third point, increase in stock. I still think we got a bit more work to do on that. We still haven't got the perfect shape in all our sites where we can offer a product at every different stage when a customer comes along, and that's something I'm very keen to see change. I would like to see probably about another 10% growth on a 19% increase this time. If we can get another 10% increase of stock on the ground, I think that would put us on a much better position for moving the customer care even further than where the improvements we've seen to date.
Our next question comes from the line of Will Jones at Redburn.
Just again 3, I think, from me, if I could. The first is just like coming back to the issue on outlets and maybe some early thoughts, if possible at all, on how they may progress in 2020. I guess just winding it back to this 15 to 20 you held back, did some of those start to come back into the business, I guess, in terms of their opening next year? Or is that where they do come back in then, let's say, the [ off-body ] equivalent hold back on new sites again next year? So I'm just trying to get a feel for should we be thinking about circa 350 or a bit less holdings maybe for the next 18 months or can they grow slightly?The second was just to double check on build cost. I don't think it's in the statement, but you had talked around that's the 4% mark or so for your expectation in 2019. Presumably, that is still the case given your margin commentary, but just to double check.And then the last one maybe is just to update us on the retention program that's about to get launched for new reservations, just really where you are logistically on that. Is it ready to roll and, where relevant, what might be the accounting impacts of that in terms of the booking of those new sales?
I'll deal with questions 2 and 3, then Mike will deal with question 1. The first question on build cost, nothing has really changed from where we are before. Labor cost seems to have steadied. Material costs have increased a little bit. We've spent a bit more money on customer care, and we'll be able to offset that by some cost savings specifically with owned externals type of area, what we said before, and a bit from our own manufacturing. So the [ gates ] we've given previously still stands.In terms of the retention, yes, it's fair to say it's been a little bit more difficult than what we envisaged. But we've been working really, really hard with our stakeholders to try and make sure the scheme works not just for us but for all our stakeholders. And if you know it, we've actually changed that to ensure that the retention covers not just items at key release but also items 1 week later. And that was one of the feedbacks that was coming back from specifically the customer-facing type groups.We've got all the documentation in place now. Once we're done with all the draft, then we'll hand that to the solicitor and probably 99% there. We've got some lenders in a good place on this where they're just about able to support it. And we've got others we're still in discussion with. So we should be in a position to roll this out, so anyone who makes a reservation in July will take the benefit of the retention.
And on the outlets point, Will, I think Dave has already said that we have the ambition to carry more stock moving forward. That will obviously affect the sales release profile of the sites that come through when we get a decent ticket to start. So I think that it's difficult to be precise in terms of that unwind of those sort of 20 sites or whatever. We would suspect that it will continue around that sort of level through the second half of this year, and it may even continue into the first half of 2020. But it does depend on the progress that we make against that ambition to have more availability on site that is a bit more progressive, as Dave has already touched on. So that's our sense of it at this point.
Our next question comes from the line of Arnaud Lehmann of Bank of America.
I have 3 questions, if I may. The first one is just a follow up on your comment on margins. I'm just trying to understand the moving parts because you mentioned the investment in the quality of the product and the cost inflation, offset by your cost-cutting initiatives. Could you elaborate a bit on the cost-cutting? Is it brickwork? Do you still have some land coming through that is supporting the margin? I'm trying to understand the upside and the outlook for this.Secondly, and I'm sorry to bore you with Brexit, but do you have contingency plans for a potential no-deal Brexit? In particular, are there any products that you're importing that you've started to source more locally? Do you feel ready for this event?And lastly, maybe one for Mike, you've reduced your land creditors I think in the first half. I mean, is it a timing effect? Or is it a proactive strategy to take those over?
Okay. Yes, Mike...
Yes. I mean I'll just jump in on that land creditors point first, if I may. And I'll -- perhaps, Dave, I'll deal with the margin point...
You'll deal with the margin one, and I'll deal with Brexit here.
Yes. On the land creditor profile, obviously, it's timing issues when the deals are done. Land creditors are generated on completing the contract for purchase of the land in simple terms where we agree with the landowner to defer part of the consideration. So it's just a deferral mechanism on the cash-out of the business. So it is primarily determined by when the deals drop, when those deals are completed, which is pretty unpredictable. As Dave said earlier on, the land market is still offering decent opportunities. We've got great opportunity within our strategic land bank to pull that forward and get them converted and get on and build the houses that the country needs, which we're very, very keen to do, obviously.So again, from a profile perspective, I would have thought land creditors may bob along around the same sort of level moving forward. But again, it depends on the deals and the timing of completion on those deals. So sorry for not being able to be too precise about that. I mean we put it in the statement because directionally, they moved in different directions compared with the first half of last year. Just to remind everybody, last year, we started about GBP 570 million, ended at June at around about GBP 610 million. So we extended the profile of land creditors in the first half of last year. Whereas in the first half of this year, we've shrunk the land creditor, if you will, by about GBP 60 million, going from GBP 550 million to around about 5 -- GBP 590 million. So directionally, we thought it was important just to point that out.
And I think it is a bit of timing issue. We have some large strategic sites, which are going to be coming through in the next 12 months. So I think you're probably going to see that increase in the short term, back up a bit.
But the maturity is pretty steady. We haven't got any refinancing risk there, particularly we've got a nice tail on the amortization. So we're quite happy with that.On the margins front -- and on the margin front, yes, we've got areas of cost mitigation. I don't think this is absolute reductions in cost. This is about mitigating cost inflation to limit to around the sort of 4 percentage mark. Yes, we're investing in the business in customer care initiative and, obviously, areas of specification that we've changed, taking on board feedback from customers along the way, as we normally do, and we'll continue to do that. And that's why we've said, well, the margin through the second half will probably come back a little bit compared with the first half. But for the full year, we'd expect the margins still to be very, very good, maybe a tad below what we delivered last year, but nothing significant. And I think the prognosis further out, obviously, we've got an inflationary market. We've got some great quality land. And as always, land recovery, we're in a very strong position. We published and will be publishing in August our average plot cost, et cetera. And I think that the work that we've been doing on external investment to reduce cost there, this isn't relating to build, but it's part of the build cost, but it's not related to the construction of the home. We've seen decent mitigation of those costs. We've got a lot of new sites coming on. That's part of what you'll see on the balance sheet in August.When we publish the balance sheet at June, you'll see an increase in work-in-progress, and that will be primarily because of the investment in external works, offsite infrastructure and the like, together with the increase in build units that Dave's already touched on in terms of the 19% increase in equivalent units of build that we're seeing. So those 2 key areas are leading to an increase in work-in-progress. And obviously, you've got to do your external investment to get on to site, open them up so you can get to the plot. So necessary investment, very keen to get on, some great sites coming through, which puts us in a nice position still in the second half and beyond.
Okay. That's very clear. And on the Brexit contingency plans?
Well, obviously, we'll have a bit of time. We've had so many false starts with Brexit that we have plenty of time to consult with all our supplies, and we'll have insurances from all of them that necessary steps are in place. We should use more alternative support. Obviously, we'll continue to review this with our supply chain to make sure what is going to happen, and I think we prepared the best we can. The risk area, where I see it, is probably in areas where we have a problem with certain materials at the moment. But obviously, we're dealing with that the best we can. But I don't see it being something which is going to prohibit our delivery in any way. I think what -- the materials will be available to meet the demand out there in the marketplace.
[Operator Instructions] The next question in the queue comes from Ami Galla at Citi.
Just 2 questions from me. First one was in Part Exchange. If you could give us some color as to what's the current utilization level and what sort of threshold are you comfortable with? And the second question is really on planning. How do you see the market today? You've touched upon that there are more strategic sites coming through. Do you think planning has become more easier or at least more -- the process is a bit more faster than usual?
I think the planning hasn't really changed in the last 2 to 3 years, to be fair. If you know what you're doing, you have the right planners, you have the right teams out in the ground which we have invested heavily in, in the past, we have a huge team of planners development business with an expertise, which we think is second to none, then you have the facilities to deal with it. Obviously, planning is a fluid thing and it moves. It's not stopping at any one thing, and we'll look to react and use the skills within the business to enable. We don't have the problems.So planning isn't really been a barrier the last 3 years of delivery other than areas of the green belt where it's very difficult to trump the presumption of favor, use the presumption of favor argument to trump the exceptional circumstances argument. But planning, I'm pretty comfortable where we are in the company, the skills that we've got and what we're working -- and the planning system we're working in at the moment.
I think on the Part Exchange point, Ami, we are keen to support the existing homeowners to buy newly built homes, obviously. And we've got a lot of capacity to do that with our Part Exchange and Home Change facilities. We're looking to support any customer that wants to take advantage of the convenience of those schemes. And we don't set a particular limit or a minimum number or we look at each case on its own merits. Obviously, we review the quality of the existing home the customer is looking to move on from. And if we can do -- agree an acceptable position with them, then we will support them with Part Exchange.I mean, in terms of the -- our sense of Part Exchange is we may see a little bit more being carried because we want to support more customers. And indeed, we've already pointed to the fact that the high price points, perhaps the market is a little bit slower. And what can be very helpful for customers is to use Part Exchange in a sensible way. So I think we would encourage and we do encourage all the teams to communicate the availability of that opportunity to customers.
I think the encouraging thing that we see in Part Exchange is it gives us some visibility in the second-hand market as those Part Exchange properties which we take in, we are turning over very quickly. We've got a very early aged stock, which tells us that the second-hand market, if it's priced properly for the right product, still produces very well.
And our next question comes from the line of Gavin Jago at Peel Hunt.
Just a couple around the customer care initiatives. I'm just wondering if you can just talk us through a little bit on the detail of kind of how the processes have changed, particularly around kind of inspection of properties before moving in and if they kind of like your view on whether you think a week is long enough to kind of find all snagging issues with a new-build house?And then the second one was just around the reliability of moving-in dates. Have you got any figures you could give us around how reliable, I guess, they were in maybe the first half of last year compared to what you've seen in the first half of this year?
I think there's 3 parts to that. Obviously, the customer care inspections, we made a lot of improvements in lots of areas. We obviously increased our investment and the resources out on the sites. We've significantly increased our training. We started to digitize our customer care service. We're the first builder to offer out-of-hours calls that we can call a standard for our customers. And I think the point you're driving at is, what are we doing to ensure quality control procedures? In the business, we've got what's called the 7-point check process where 7 different people check a house before the customer comes across. And that is partly for the reason for the drop in the volume because we wanted to ensure that, that process would be adhered to. So before a customer moves in, a 7-key touch points have to be signed off and gone through. And we're confident, if that process is followed and we have enough time to follow that process, that will produce the quality of house that the customer expects at key release as part of our drive to get the house right the first time.The second point, on a week, I think a week is adequate time to identify the snagging issues if we get the houses right first time. We have invested very heavily in that area, both in terms of procedures, additional staff, and we've got an additional investment we're going to make in our own quality control procedure, which we'll give a bit more color on in August. So if we get the houses right first time, I think most of the issues, what we're talking about and the polishing of the house will be picked up by the customer.Initially, as you are probably aware, our scheme related to one at the point of key release, some of the feedback was coming back from our stakeholders and needed a bit longer than that. It needed time for the customer to move into the house, get a look in the house and get familiar with the issues that they would have picked up that they didn't get a chance to pick up. That was something we had to acknowledge and I think it made sense, and it's part of our drive to listen to our customers and try and give them the best service we can, and that's why we decided to have that decision. Is a week enough? We'd like to think it is. Obviously, we'll keep that under review. If we found out it wasn't, then that's something we can look at later on once we get the process up and running.Moving-in dates. The positive thing about the moving-in dates is it's got a bit of a gestation period. Most of the benefits that we're actually seeing when you look at the data is down to improvement in customer care service after care. Not really had the full benefit of the moving-in dates yet for our customers because if you actually think how this works, if we stop releasing certain plots in certain places until they got to roof in January, so if you think to take a plot from virgin to roof, it probably takes 3.5 to 4 months, some it takes you to April, then the customer has to reserve it. The average contract period is 12 months -- I mean, 12 weeks. So really, the first legal completions where we should really see the benefit of a deferred completion will be May and June. And the May and June completions aren't in the HBF rating yet, so that gives us some confidence that we should see some further improvement as we move forward.
And our next question comes from the line of [ Colleen Strong ] from Jefferies.
Hello?
[Operator Instructions] Okay, there seems to be no response from [ Colleen's ] line. [Operator Instructions] Okay. [ Colleen ] has come back, [Operator Instructions], on the line from Jefferies.
It's Glynis Johnson. I'm not quite sure what happened there. I didn't answer to the name of [ Colleen ]. So I'm going to ask the elephant in the room is, what has been the interaction with the government in the recent months? Have you got any feedback in terms of how they are feeling about your customer service? And how are they looking to monitor what comes out? Are you getting anything from an industry perspective in terms of what government may require for quality levels and how they might tie that into Help to Buy?
No. To be honest, obviously, we're in discussions all the time with the government and we have meetings -- regular meetings with them. There are no -- I think we see the improvement in quality and the difference that we can see. And obviously, they have visibility on the improvement in the HBF rating in the last 7 months. The important point is, in terms of the industry perspective, where the government looks at the taking, this is what is an industry ombudsman scheme. And they've announced that they're going to consult on that, which is part of the reason that we are looking to pioneer the retention scheme and get ahead of the game and make additional investments so we're ready for when that comes along. So no, I think we'll have discussions with the government, obviously, more around other issues, like Secord and zero carbon homes and delivery. And obviously, customer care is one of their issues, but I think the main focus where the government is going to look to deal with this is still the ombudsman scheme.
And the design of the extension around Help to Buy, Glynis, which I think is part of the question that you were asking, the government in housing are consulting with the industry, and that was about the design of that. We're in the same place as everybody else with respect to that. We're not sure as to the exact criteria that, that will be adopted in that regard. So -- but obviously, you can see that we are very focused on making sure the quality and service of what we aim to deliver to customers is increasing and improving. And we're very confident that we'll be able to satisfy whatever requirements are brought in the future with respect to Help to Buy or customer support service moving forward to ensure that we've got the business nicely positioned moving forward.
And our next question comes from the line of John Messenger at Redburn Europe.
Dave, Mike, it's a couple of questions, if I could. One is on the retention side of it, can I just understand -- obviously, some of your peers kind of have questioned whether it's right to go for this kind of mechanism that you're going to use. But more from the point of view of the lenders, is this -- what is their -- the issue for some lenders? Is it about the actual kind of putting this through their systems and the fact that there is this retention sitting with the solicitor? What is the pushback that you're getting? And is there a reason behind it that is more of an obstacle looking forward? Or do you think this is very much something you can get over?And the second one, which is obviously beyond Brexit, we've got the current kind of vying for who becomes the next Prime Minister with lots of promises. And obviously, one of those areas cover stamp duty. It's too early, I guess, but are you -- or do you have concerns as to what that might do, creating a bit of a hiatus in terms of people coming into sites? And this is more at the top end of your range, obviously, so you're much less exposed. But do you have concerns that there will be kind of people thinking, right, I'll hold back, I'm not going to think about moving, I'll wait until I've seen what the stamp duty scenario looks like beyond September/October time? Just a couple of -- whatever your thoughts around those 2, clearly...
Yes. I mean -- yes, John, I'll take the stamp duty uncertainty issue first. I think Dave will handle the retention side of it. Yes, I mean, obviously, we're in a period where there is a selection process going through. Stamp duty has been mentioned. I think the way that we are interpreting that, you're right in that it's at a higher price point, particularly on the market where perhaps, on reflection, it has contributed to the slower market to a degree. It's not really our specialist area, as you know. But we understand the concerns that others have expressed relating to that, and we can understand them having those views. So a little bit of help and relief on that would perhaps assist.Thinking about constituents in those perhaps higher capital value regions, it does create more uncertainty, as you say, for a short period of time perhaps. But we're not really seeing that sort of hesitancy or lack of urgency across our regional markets with the price points that we're offering products out. We are at the lower end. We emphasized that in the statement, as you can see, using the land registry data that the ONS use. So I mean I think we share your observations on that. I think it does make sense, but it's not something that -- I mean you could argue that the change, et cetera, maybe there's a consideration there that we need to be just a little bit more aware of. But apart from that, it's hard to predict it, really, in terms of market effect. Dave?
In terms of the retention, obviously, this is something we're pioneering. We're stepping into new grounds. And obviously, that can be challenging for different people that come on board and accept something which is new. I don't think it's one particular thing that worries the lenders because it depends which one you're actually talking to and which ones -- where they stand. I think it basically falls into 2 areas. The first one, I think, it could be an admin burden for them, which we don't believe to be the case when we put forward processes. That was proven that, that wasn't the case. And the second thing is sort of some of these risks around foreclosure, what happens to the money, but we believe that to be a negligible risk.I don't really want to start naming names and say what the real issue is on this because we're still in discussions with some of these lenders to try and find a way through them -- through with them. But we have got some lenders in a good place with this. It is something we're absolutely determined to introduce. And we -- it's for the customer and something we do believe will change behavior within our own company as well to make sure we get the house right first time and also give confidence to the customer that any outstanding issues will be resolved. In our opinion, it's hard to see any -- why they would have any real objections to it. And it's something that we're going to continue to push forward or bring forward.
Brilliant. And Dave, is it -- I mean as you think of the pool of lenders out there, have you got kind of -- is it half of them have accepted this and the other half still to go for or you just have a rough first half?
No, I think the way the mortgage market works is 2 or 3 main players who do the majority of it, then the rest are gated by U.K. finance. And we've got a main one major player, [ 89% ] there; another major player who's got 1 or 2 reservations; and then another major player who's got -- accepts the principle of it. We need to work -- make a little bit more comfortable 1 or 2 areas about what will happen in a foreclosure situation. But we're comfortable we'll be able to roll this out. We'll be able to confident -- that there will be a major lender who will support us. And I actually think this will change behavior for the whole industry in time. And I do know that other -- some of our peers have been in sync and the other sort of bank themselves a discussion of retention scheme.
And as that was our final question, I'll hand back to our speakers for the closing comments.
Great. Well, thanks, everyone, for ringing in. We've had some good questions there, which I hope gave you a bit more visibility on where the business is and gives you a bit more comfort on some of the queries you had.So just in summary, I'd just like to pick up on what we're looking at for half 2 '19. Customer care, we're really pleased with the improvements that we're making. We expect to see even further progress in that area as we start to get the benefit of more of our initiatives. We have a fantastic range of outlets in place with a fantastic land bank. The forward sales position is very strong. The margin has proved to be very resilient. Sales revenue per plot has been very robust. And most importantly, which pleases me in total, we've been able to get a 19% increase of WIP on the ground, which places us in a great place to not only increase volume moving forward but also to improve the quality of houses that we handle with other customers.Thank you.
Thanks very much.
This now concludes the conference. Thank you all very much for attending. You may now disconnect your lines.