A weekly news summary by Pierre Williams, the HBF's head of media, covering all aspects of the housebuilding industry. Available to members only.
Government split over housing policy
A fundamental ideological split over housing policy has emerged within the government. Alan Milburn, Labour’s general election and policy co-ordinator, is championing the cause of home ownership and wants right-to-buy to be extended to one million housing association tenants currently excluded from the policy. But John Prescott, who is responsible for housing policy, wants to move in the opposite direction by curbing right-to-buy and is irritated by Milburn’s “invasion of his territory”. Milburn has been busy praising the Tory policy, arguing property ownership is the route to greater social mobility, personal opportunity and equality.
By contrast, Prescott says the 1.6 million house sales since 1980 amounted to a “£19 billion disinvestment in public housing”. The split emerged as government admitted this week that the number of households living in temporary housing has hit a new peak of 100,000. The Prime Minister’s office has tried to play down the dispute that is casting a shadow over Downing Street’s plan to put housing at the top of Blair’s third term agenda. (Times)
HBF note: The split has only now emerged, but the signs that it would eventually come out go way back – even if the media didn’t pick up on it. Perhaps this was best demonstrated during the Comprehensive Spending Review last year in which Gordon Brown called for the “expansion of the property-owning democracy”. Prescott followed immediately with a call for more social housing. The reality is that these are mutually-exclusive objectives and this split suggests the reality of this can no longer be hidden.
Homelessness figures dwarf official rates
Although the government has been forced to concede that official levels of homelessness have topped 100,000, the true figure is one of 500,000 people without a permanent roof over their heads say campaigners. Admitting that the priority was to “provide more housing”, John Prescott nevertheless insisted matters were improving as most of the homeless were living in unsuitable housing rather than on the streets. (All media)
SEERA suspends backing for 478,000 new homes
The South East Regional Assembly has suspended its backing for 478,000 new homes after accusing the government of failing to fund the infrastructure required to make development sustainable. The assembly, representing 54 councils across Norfolk, Suffolk, Essex, Herts, Bedfordshire and Cambridgeshire, withdrew its support – with backing from planners – after accusing the government of “grossly inadequate funding”.
Derrick Ashley, an executive member of Herts County Council, said: “For the government to suggest this is area that can take a large amount of new housing without substantial investment in infrastructure is living in cloud-cuckoo-land.” (Telegraph)
HBF note: Given that the Assembly has had many months to consider the infrastructure requirements and funding, this sudden turnaround suggests it is a political move designed to appeal to local voters before the general election.
Selling times double
Selling a house is now taking twice as long (18 weeks) as it did seven months ago, according to an estate agency website. The number of viewings per week has also fallen by more than half, from 2.5 per fortnight to just one. Some 47 percent of sellers have been forced to cut asking prices and, whilst offers were on average just one percent below asking prices six months ago, today they are more than five percent below the asking price. (Sunday Telegraph, Mail)
Yorkshire Dales introduces homes ban for outsiders
Yorkshire Dales National Park officials this week claim to have secured government approval to prevent “second-homers” buying new houses. The restricted occupancy policy means all new homes, including barn conversions, must be occupied by local people. None can be bought as second homes or holiday lets. Since the Dales last had a restrictive occupancy policy, which was overturned by the Conservatives in 1996, officials have complained that much of the property in some villages is empty apart from a few weekends each year.
The Park’s officials have also been successful in setting planning guidance stipulating that whatever new homes are approved must be small and cheap. The new rules are expected to be rubberstamped by Park’s planning authority next month. (Independent, Guardian)
Buy-to-let investors “committed”
The overwhelming majority – 86 percent – of buy-to-let investors claim they will hold on to their properties if prices fall, according to a survey by the CML. But their promise of commitment weakens when other scenarios are considered, with 49 percent prepared to sell if rents fail to cover mortgage costs and 46 percent seeing a further rise in interest rates as reason to quit the market. For now, 48 percent of landlords are planning no change to their property portfolios but an encouraging 38 percent are looking to buy more over the next 12 months. Just five percent are expecting to sell and eight percent are undecided. (FT)
Third of new homes for immigrants
Treasury figures suggest 14 million immigrants are expected to arrive in Britain over the next 30 years – about 250,000 a year. This figure, which is far greater than previous estimates, will lead to a major housing crisis, campaign groups have warned. London and the South East are expected to take the brunt with new household formation in the capital expected to rise from an expected 26,000 a year to 46,000. (Mail, Express)
Government crackdown on DIY bodgers
Beefed up buildings regulations are to be introduced in the New Year that might make DIY home maintenance uneconomical. All electrical work will have to be undertaken by registered tradesmen. Non-accredited workmen will have to pay around £250 for council surveyors to check the work meets government standards. The rules may be extended to cover plumbing, heating, ventilation and air-conditioning. Trade bodies have attacked the plans as unnecessary and say the extra costs of registration will be passed on to householders. Failure to comply may invalidate household insurance policies, the Association of British Insurers warned.
HBF note: If fully implemented, these regulations would provide extra incentive to buy new.
Developers bearing gifts
With new sales slowing down, The Business has compiled a list of the incentives now being offered by developers to prospective purchasers:
- Comer Homes is offering a new Mercedes CLK or a 3.5 percent mortgage subsidised for two years plus a two percent Stamp Duty refund, a year’s service charge and £500 towards legal fees for buyers at any of its five north London developments where prices start at £235,000
- Rialto is offering investors a guaranteed 12 percent return at Victory Hill in Basingstoke. It is also offering commuters free travel for a year, five percent deposit paid and £500 a month towards the mortgage for the first two years on its two-bed flats which start at £210,000. Buyers of one-bed flats get five percent deposit paid plus £350 a month for two years
- Fairview is offering mortgage subsidies of up to £1,000 a month for a year at The Chase, a north London development of two-bed flats and four-bed houses
- Linden Homes is offering £20,000 off a house or £10,000 off flats at its Silk Quarter development near Reigate, Surrey
- Banner Homes has launched a 80:20 ownership scheme on London and South East developments. Buyers pay 80 percent now and the rest in three years time. Banner retains any capital growth on its three-year share; the buyers keep 80 percent and 100 percent of any rental income
- Galliard Homes is offering 6.29 percent net guaranteed income to investors at Romney House in central London where prices start at £349,950 for one-bed flats
- Barratt has a wide range of incentives. These include a 3.99 percent mortgage payment subsidy for three years, Stamp Duty and legal fees paid, home exchange, 5 percent deposit paid and £5,000 cash back. It also offers a sale and leaseback scheme on show homes, providing guaranteed rental for three years
- Laing Homes is offering fixed rate mortgage deals of 2.99 percent for two years on loans up to 90 percent of value to a maximum price of £1 million
Massive hike in planning fees proposed
In a statement on planning delivery grant, housing minister Keith Hill has proposed a huge hike in planning fees to help provide a “quality service”. A consultation exercise has been launched that proposes householder applications fees rise from £110 to £135 and maximum fees for major developments to soar from £11,000 to £50,000. Keith Hill said: “I want to give authorities the proper resources to provide the services the community needs. Once again, the proposed increases will be spread proportionately…”
On a more positive note, the minister has accepted industry’s calls for grant to be withheld from planning departments that reject applications without proper consideration. He said: “I will carry forward mechanisms for withholding grant where the rate of appeals upheld against the authority’s decision to refuse far exceeds the national average, to make sure that the grant rewards quality decision-making as well as timeliness”.
Pierre Williams for the HBF, said: “We welcome the move to hold the decision-making of planning departments to account. However, whilst we have previously accepted a rise in fees in exchange for a matching improvement in performance, it is difficult to see how the minister’s claims that the proposed increases are ‘proportionate’ when householders are being asked for a 20 percent increase but housebuilders 450 percent. Will we see a 450 percent improvement in performance? It seems unlikely.”
Appeals window extended
The time period for the submission of planning appeals has been extended from three to six months. Planning minister Keith Hill accepted the need to allow more time. He said: “The change from three to six months will give people more time to negotiate with councils if the original application is rejected, rather than simply putting in an appeal straight away. “ But the target time for councils to process large applications has also been extended from eight to 13 weeks.
MPs attack site safety record
Although Britain’s construction industry has a better health and safety record than its EU counterparts, MPs this week said the level of fatalities and injuries was still “unacceptable”. A commons’ inquiry called for tougher enforcement of safety rules and better building design. Construction accounts for one in three workplace fatalities with 70 deaths recorded in 2003-4. The MPs called on the Health & Safety Executive to step up unannounced site inspections as well as consider producing a “name and shame” register of the worst offending sites and construction companies. (FT)
Takeover talk boosts shares
Takeover speculation caused major housebuilders’ shares to rocket yesterday. Persimmon, which has a pot of cash ready for a suitable acquisition (see last week’s news summary), rose 59p to 700p; Barratt surged 54p to 608.5p and George Wimpey was up 34p to 421p. Westbury and Bellway were up 25.5p to 450p and 60.5p to 842.5p respectively. (Express)