Regional firm Chase Norton fell into administration after the Warwickshire-based contractor’s parent, Chase Midland, had its accounts frozen by its bankers, Royal Bank of Scotland. This followed falling sales at the group’s house building arm.
Meanwhile, North-east house builder Bellway, which last year had revenues of £1.4 billion, has stopped work on a 17-storey apartment block in Cardiff because of a drop-off in sales.
As many as 20 firms have already expressed interest in Chase Norton, which according to its latest report and accounts had a turnover of £41 million. Administrator PricewaterhouseCoopers hopes to decide on potential buyers by the beginning of next week.
French giant Bouygues and Worcestershire-based Thomas Vale are among the firms assessing the prospects for the stricken firm.
Lisa Cardus, director at industry credit checking agency Top Service, said Chase Midland had been struggling for some time. She said: “Even when it was winning new contracts we were receiving reports of slow payments to suppliers.”
Joint administrator Mark Hopkins said Chase Norton’s bank account was in the black but it had fallen because the group’s bank account with RBS had gone into the red because of its house building problems.
He added: “One key thing will be any claims Chase Norton may have against Chase Midland that come out of inter-company trading between the firms.
“We need to make sure the books are up to date and are in discussion with Chase Midland’s administrator [Ernst & Young] about this.”
Chase Norton has 123 employees. More than 100 have already been made redundant. Nearly 160 jobs went at Chase Midland.
Mr Hopkins said Chase Norton’s debts are “in the millions” and a final figure would be known by the end of the week.
Bellway said it had stopped work at the sixth floor of its scheme in Cardiff Bay because of falling sales.
Billie Oaten, sales director for the group’s Wales division, said: “Buyers are experiencing difficulties securing a mortgage and we will resume again as soon as sales pick up again.”
The firm’s problems are being mirrored by a number of other companies including Taylor Wimpey, which said it has mothballed around 10 sites, writing down £85 million in the process.
A Barratt spokesman admitted the business had slowed down works on a number of its sites in marginal locations.
Persimmon also confirmed it had put the brakes on at a number of projects while specialist retirement homes builder McCarthy & Stone said it had halted work on sites in Lincolnshire and Devon.
City Lofts schemes halted
The axe is hanging over a number of major projects after the collapse of developer City Lofts.
The apartment specialist called in the administrators last Friday after putting 250 of its properties into receivership.
Ernst & Young, which is acting as administrator for the business, said two of the firm’s current sites, Pochin’s Half Tide Dock scheme in Liverpool and Shepherd’s St Paul’s Tower scheme in Sheffield, would continue as they are being built by subsidiary companies that are still trading.
But sources said planned schemes including the £300 million Bay Pointe in Cardiff, the £13 million Guildhall Square scheme in Southampton and the £20 million Brassington Avenue in Sutton Coldfield were on hold.
Analysis: Action is needed to save the industry
By John Slaughter
If the industry has to downsize, it could take years to rebuild capacity and no-one else will deliver the scale of private and social housing we need.
Our suggestions for action have included a time limited stamp duty exemption, specific measures to help first-time buyers and further action to rebuild confidence and liquidity in the lending market.
Some small steps have been taken but much more needs to be done as the implications are clear.
These are challenging times for home builders. The industry had been increasing capacity to address years of undersupply and meet housing targets, only to be hit by the credit market problems.
We have been demanding Government action for months now as there are clear implications for the wider economy and the Government’s own housing targets.
John Slaughter is director of external affairs at the Home Builders Federation