John Tonkiss, the chief executive of retirement housebuilder McCarthy & Stone, might soon find his weeks consisting of bingo, Chinese takeaway nights and chair yoga. That’s if his wife gets her way.
Tonkiss, 52, grins and says Lisa talks about downsizing into one of the flats his firm is building in Staffordshire.
But the Brummie Aston Villa fan doesn’t fancy becoming a customer just yet of McCarthy, which specialises in land buying, developing, selling and managing homes, mostly for folks in their late seventies, though buyers start from 55.
The father-of-three is convinced, though, that there are plenty of others like his wife who want to move from larger properties.
He has run FTSE 250-listed McCarthy since September 2018. The company got into the pensioners’ niche in 1977 after carpenters-turned-housebuilders John McCarthy and Bill Stone responded to a government call for firms to look at retirement accommodation.
Since then Britain’s ageing population has grown as cleaner lifestyles and better healthcare has seen pensioners living far longer.
Many want to move out of large houses when their kids have flown the nest, to go into smaller apartments with medically trained staff and cleaners on hand. McCarthy’s homes sit on sites where there are luxuries available at an extra cost. Who wouldn’t want a wash and blow dry, wine club and restaurant all under one roof?
But while this all looks good on a macro level, McCarthy has had a painful few years with a string of poor results. It has been battered by Brexit jitters denting buyer confidence and a weak secondary housing market making it harder for would-be customers to sell their homes and downsize. Amid the slowdown there were office closures and redundancies. Results last month showed a 25% fall in annual profits.
The shares are 158p, below the 180p the group floated at in 2015.
Some investors appear to have lost patience. Biggest shareholder Anchorage Capital recently offloaded a big chunk of shares.
Canaccord Genuity analyst Aynsley Lammin says that, while signs of health are returning to the housing market, “investors will remain sceptical until there is more evidence that sales rates, margins and returns are improving in a sustainable way”.
Tonkiss, a still athletic former triathlete with dark blond hair and cobalt-blue eyes, acknowledges all this: “I know I’ve got a lot to prove, but we have great plans in place.”
These include a major push into the rentals market this year, which he hopes will open his business up to a wholenew slice of the market. He has appointed Rothschild to find a partner to invest in up to £300 million of new rental homes and has “lots of interest”.
He’s also introducing shared ownership schemes to make his sites more affordable and broaden choice.
He enthuses about how the firm is “on the cusp” of appointing two manufacturers to help it create its first everfactory-made homes. More modern construction is something he claims is quick, sustainable and cheaper than traditional housebuilding. This, he says, should feed through into lower prices for customers.
Tonkiss’s first job was as a paper boy, and his path from there to the senior ranks of the property industry was far from conventional.
He started his career at Birmingham’s Lucas Industries factory, where he got an apprenticeship making car components. He went on to get a degree while at Lucas and his bosses twice asked the electronics and software engineer about relocating to the US, where he could have grown his career on a much bigger scale. But he turned it down twice and decided to leave: “We’d just had our second child… I am incredibly focused on family.”
He moved to student housing giant Unite in 2001 as manager of its new modular housebuilding division.
In a precursor of his pre-fabs plan for McCarthy, he was tasked with setting up a factory where rooms could be built at a manufacturing site before being transported on a lorry to be assembled on site. The aim was to deliver more homes faster and cheaper.
Tonkiss’s eyes gleam when he says more than 20,000 flats were made this way: “It was exhilarating.”
Mark Allan, incoming chief executive of property giant Landsec, recalls working with Tonkiss at Unite. Allan says: “John seems to survive on little sleep. He does everything at a million miles an hour.”
After a decade at Unite, Tonkiss fancied a change and took a management programme at Harvard Business School before running a tech business specialising in security systems, including facial recognition.
The tap on the shoulder to join McCarthy & Stone as business transformation director came in 2014, to help it grow before a float.
At that point McCarthy & Stone had had an eventful history. The company listed on the Stock Exchange in 1984 but was taken private in 2006 by an HBOS consortium, including the billionaire Reuben brothers.
But the financial crisis wiped them and others out. A debt-for-equity swap followed and the firm went into the hands of private equity before it floated again in 2015.
Then came turbulent times. Tonkiss says: “It went from a pretty buoyant housing market to a pretty stagnant one in 2016 after the referendum.”
Then, the Government started looking at a game-changing ban on ground rents. These levies on leaseholders by freehold property owners have been accused of being too high across the housing industry.
McCarthy lobbied hard against a ban, saying it relies on ground rents to help pay for the construction of the communal areas it provides. It argued that, without the income, purchase prices would rise. The Government relented in 2019, exempting retirement builders from the proposed ban.
McCarthy has also come under fire from families who say reselling their relatives’ properties bought before the financial crisis has been difficult with falling values and the ground rent putting off buyers.
Tonkiss set up an in-house resales agency to help sellers get higher prices.
On Tonkiss’s wish-list for the looming Budget would be a removal of stamp duty on over-65s looking to downsize.
“This could encourage up to 2.6 million older people to move, freeing up much-needed housing stock for families and first-time buyers as well as generating more tax revenue for the Treasury,” he says. “Everyone would be a winner.”
With no guarantees of the new Chancellor giving him a helping hand, Tonkiss will have to work hard on his own to boost McCarthy & Stone.
No bingo nights in sight for him.