Shares in a leading UK house builder, Bovis, fell sharply today after it said it would have to spend £7m ($8.7m) fixing defective homes sold to customers.
The £1bn-turnover company, which finished just under 4,000 homes last year, also reported a 3% fall in profit before tax, to £155m, despite an 11% hike in revenue in 2016.
Bovis’ shares opened about 10% lower on the results, which were announced today. They follow the departure of the firm’s chief executive David Ritchie on 9 January.
The company said it would cut back the number of houses it built by up to 15% in 2017 to "to ensure each home is delivered to the high standard of quality that we and our customers expect".
It called 2016 a "difficult year for the Group following a period of ambitious growth".
"Our customer service standards have been declining for some time and combined with the delays to production towards the year end, we have entered 2017 with a high level of customer service issues," said Bovis’s interim chief executive, Earl Sibley, Sky News reported.
Weaknesses in our production process and a high level of customer service issues [has led] to a one-off £7m customer care provision– Bovis
So widespread has customer anger over defective homes become that homeowners formed a Facebook group, the Bovis Homes Victims Group, to press for action.
They have also started a YouTube channel on which customers post videos of their defective homes.
In January some unhappy Bovis customers accused the company of offering cash incentives to move in to unfinished houses to hit sales targets.
Bovis acknowledged the problems in today’s results announcement, saying: "Weaknesses in our production process and a high level of customer service issues [has led] to a one-off £7m customer care provision".
It said its top priority for 2017 was an "end to end review" of its production process, and phasing of completions.
Image: "When buying a new home, you want to be sure you can trust your builder," Bovis Homes says on its website (Bovis Homes)