A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Economic News
Spending Review pushed back a year and definition of the economic cycle extended
Chancellor Gordon Brown announced that the next Comprehensive Spending Review (CSR) will be pushed back from 2006 to 2007, meaning government departments should keep to their current budgets for an extra year. The Treasury also changed the definition of the economic cycle from seven years to nine, meaning that the current cycle now began in 1997 not 1999, although this does not have to be formally announced until the pre-Budget report in November. These changes are expected to give the government more room for fiscal manoeuvre and reduce the requirement for tax increases in next year’s budget. (http://www.hm-treasury.gov.uk, Financial Times)
Minutes of July MPC meeting reveal growing support for rate cut
The minutes of the 6/7 July Bank of England Monetary Policy Committee Meeting (MPC) revealed that four of the nine members of the Committee (including Kate Barker) had voted for a 25 basis point reduction in the repo rate (while two had voted for a cut in June), with the other five favouring no change. The minutes noted that: “Overall the risks that inflation would be below target in the medium term appeared to have risen. Early action would reduce the risk that greater changes in the policy rate would be needed at some point in the future.” (http://www.bankofengland.co.uk)
Political Events
Government announces shake up of planning system
The government announced a series of proposals aimed at making the planning system more responsive to market demand in the latest consultation document Planning for Housing Provision. (http://www.odpm.gov.uk)
HBF Comment: To ensure delivery of more housing supply, Local Planning Authorities (LPAs) need to identify and allocate land that is both suitable in terms of its location and genuinely available for development. Planning policy needs to strike the right balance between proper planning and the demands of the market. There are three suggested element as to how this should be achieved:
1)Making provision of land for housing through partnership working between LPAs and stakeholders (including housebuilders) to align distribution with housing market areas.
2) Planning for a 15-year time horizon through allocating the most sustainable and developable land in the short to medium term and identifying broad areas for development in the longer term.
3) Provide for a rolling 5-year supply of developable land.
The ODPM also published a consultation on new Green Belt Direction (http://www.odpm.gov.uk)
New Circular on planning obligations
The ODPM also published a new Circular on planning obligations - Circular 05/2005 - aimed at speeding up the system, to support the delivery of development, including new housing. (http://www.odpm.gov.uk)
HBF Comment: This Circular, published on Monday 18th July, replaces Circular 1/97 regarding planning obligations. It does not, however, implement Sections 46 and 47 of the Planning and Compulsory Purchase Act 2004 which give the power to make regulations to replace Section 106 of the Town and Country Planning Act 1990 as substituted by the Planning and Compensation Act 1991.
In effect, the new Circular seeks to provide clearer guidance to everyone involved in making agreements under S106 in order that the process becomes faster and less of a delay in the issuing of planning permissions.
Part B building regulations consultation
The ODPM also published a another consultation, Proposals for Amending Part B (Fire Safety) of the Building Regulations, in light of recent experiences of fires, developments in construction, research findings and comprehensive stakeholder engagement. The proposals, which also cover the use of door-closing devices and changes to the guidance on domestic loft conversions, would affect future building work in England and Wales, (typically the erection, extension or material alteration of a building) and how fire safety is designed in. (http://www.odpm.gov.uk)
Opposition parties criticise government plans
The two main opposition political parties were critical of the government’s housing plans. Shadow local government secretary Caroline Spelman said John Prescott had allowed green belt protection to "become worthless": "Conservatives want more green belts around our towns and villages to prevent over-development. Yet the Labour government is moving in the opposite direction, leaving a concrete scar across the face of rural England. The green belt has served England well for the last half century - but I now fear it faces a sustained assault from John Prescott's army of bulldozers and concrete mixers."
Liberal Democrat local government spokesman Sarah Teather warned that new rules could mean a loss of local control over house planning: "The government must not dismantle local accountability in order to build more homes. Still paramount is the release of public sector land in order to meet the government's target of building more homes." (http://www.epolitix.com)
Chair of ODPM select committee announced
Dr Phyllis Starkey MP (Lab, Milton Keynes South West) has been appointed Chair of the ODPM Housing, Planning, Local Government and the Regions Select Committee.
Study into Value for Money of Delivering Affordable Housing through Section 106
The ODPM commissioned the University of Cambridge and University of Sheffield to undertake a study on the value for money of delivering affordable housing through the planning system through section 106 agreements. The study confirms the importance of using planning obligations in the delivery of affordable housing. As developers and local authorities are becoming more familiar with using planning obligations, the system is improving and delivering more affordable housing. The main drawbacks are perceived to be the delays in negotiation and the costs. (http://www.odpm.gov.uk)
Commission on affordable rural housing launched
Former Channel 4 political editor, Elinor Goodman has been announced as the Chair of the government’s new commission into provision of affordable housing in rural areas. The Secretary of State, Margaret Beckett MP said: ‘The availability of affordable housing is the key issue for people living and working in rural areas, which is why the Government made a commitment in its rural manifesto to seek out practical and innovative solutions, based on robust evidence. Without pre-judging this work, it is already clear that while the causes and experience of a lack of affordable housing are very similar in urban and rural areas, the solutions for rural communities have to be tailored to take account of, for example, the environmental qualities of the countryside, and the higher unit costs of development.' (http://www.defra.gov.uk)
Planning Delivery Grant 2006/2007announced
The ODPM has announced the Planning Delivery Grant allocations for 2006/07 at £135 million. This represents a reduction of £35 million from the current year. (http://www.odpm.gov.uk)
Launch of consultation on a bill for Better Regulation
The government has anounced a Bill to “speed up the Government’s Better Regulation agenda by enabling the government to implement measures to remove unnecessary burdens on business more quickly and efficiently.” John Hutton, who is responsible for leading the Better Regulation agenda across government, said: ‘Today I am setting out proposals for new legislation that will enable government to deliver regulatory reform measures more quickly and efficiently. Businesses have welcomed our radical plans to first measure the administrative burden of regulation, then set clear targets to reduce it; this proposed bill for Better Regulation will give us the tools to fully deliver the government’s programme.' (http://www.cabinetoffice.gov.uk)
Minister commends Housing Design Awards participants
George Wimpey were one of a number of housebuilders honoured this week with ODPM Housing Design Awards. ODPM Minister, Baroness Andrews said: ‘I am delighted at the high standard of entries to this year's awards, the best ever, and I congratulate all the winners, who represent the best of housing design, on their achievements. Good design is at the heart of sustainable, liveable, communities and the awards have and influence far beyond the winners.’ (http://www.designforhomes.org)
Housing market
RICS report falling prices but some pick up in buyer interest
The Royal Institution of Chartered Surveyors June housing market survey saw a very modest decrease in the balance of surveyors reporting falling house prices. A net balance of –42% of those surveyed reported that prices had fallen in the three months to June compared to the previous three months, a modest improvement from –46% in the three months to May.
The level of new buyer enquiries rose modestly in June, the first rise since January (where there was only a marginal increase) and bucking a trend of falling enquiries in all the other months’ surveys since April 2004. A net balance of +8% of those surveyed reported an increase in enquiries, after a reading of –10% in May’s survey. There was a further rise in the volume of property coming onto the market, with a net balance of +18% reporting a rise in instructions. However, the pace of the rise was the lowest since January. (http://www.rics.org.uk)
Rightmove report a fall in asking prices
Rightmove reported that asking prices fell by 1.0% from 11 June to 9 July, leaving prices just 0.2% higher than a year ago, a drop in the annual rate of increase from 2.4% the preceding month. Rightmove comment: “The likelihood is that prices will be more negotiable throughout the quieter summer holiday season, before stable prices traditionally firm with the onset of autumn.” (http://www.rightmove.co.uk)
Other News
New Ministers to air views at HB05 conference
The new ministers for housing and for industry will both address housebuilders and suppliers at conferences during September’s major industry event, Housebuilding 2005. Housing minister Yvette Cooper is to address the third annual Housing Market Intelligence (HMI)conference on September 7 which will be the first opportunity for the industry to hear her detailed views on housing and her newly announced plans for planning reform.
And on September 8, industry and regions minister Alun Michael will speak at the inaugural Sustainability in Housebuilding (SiH) conference, a new initiative which will build the business case for sustainability in this sector. The line-up at HMI again promises to give delegates a comprehensive macro overview of the industry and its challenges through speakers such as the minister, Savills research director Richard Donnell and Andrew Wilson, head of residential development at Tesco.
This year, the afternoon of the conference will be given over to The Great Regulation Debate(ITS), hosted by John Sergeant. The debate panel will include Jeff Channing, director, Thames Gateway & Sustainable Communities at ODPM, Imtiaz Farookhi, chief executive at NHBC and Dave Baker, chief executive at RDL Ltd. Similarly the line-up at SiH will give a remarkable overview of the topic, with speakers including the minister, Joseph Rowntree Foundation director Lord Best, Anne Hemming at ODPM and Nick Townsend of Wilson Bowden.
To book your place at both or either conference, or one of the many other conferences including MMC, Part L or Skills, go to www.housebuilding2005.com or contact Helen Board on 020 7960 1634.
Milton Keynes Partnership (MKP) releases planning consent for 1,400 homes
The Milton Keynes Partnership (MKP) released planning consent for 1,400 homes at Broughton Gate on the east of Milton Keynes. The consent, given to Gallagher Estates, is a UK first with the developer agreeing to "trailblaze" an infrastructure tariff - a new form of section 106 agreement that will help fund the infrastructure needed for growth. MKP will facilitate the timely construction of local and strategic infrastructure and then collect payments from the developers. The Partnership hopes to roll out the process across the whole of the Urban Development Area (UDA) and will be seeking similar contributions from developers of over 15,000 new homes. (http://www.englishpartnerships.co.uk)
Hospital site to deliver more than 1,000 homes
English Partnerships announced the first former hospital site to be marketed since taking over a portfolio of 67 redundant NHS properties three months ago. It marks the start of an intensive disposals programme that will help boost housing numbers nationally. The former Park Prewett hospital site in Basingstoke will deliver over 1,000 new homes in plans put forward by the national regeneration agency. (http://www.englishpartnerships.co.uk)
Paul Samter
Senior Analyst - Economic and Policy Affairs
Home Builders Federation
For daily news updates for the housebuilding industry from Housebuilder magazine go to www.house-builder.co.uk
Remember to register to attend Housebuilding 2005, the industry event which includes nine conferences, a free to enter exhibition and a comprehensive free briefings programme. Go to www.housebuilding2005.com