A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
HBF News and Activity
Third HBF Barker Conference
The third annual HBF conference tracking developments from Kate Barker’s Review of Housing Supply gave the industry a chance for dialogue with Government officials and an opportunity to showcase the progress made by the industry in the two years since the publication of the Review.
The keynote address was given by Minister of Communities and Local Government David Miliband, who pointed out that public support is needed to achieve the necessary “step-change” in the supply of new housing. The Minister cited the example of a WIMBY (Welcome In My Back Yard) campaign in Holland, which aims for “a recognition that new development should be the ally of progress not its enemy”. He pointed out that the government “also accept Kate Barker’s view that local authorities should be incentivised to deliver higher housing numbers”. (Full Text of Minister's Keynote Address)
James Paton from HM Treasury outlined official thinking on the proposed Planning-gain Supplement and highlighted the forthcoming cross-cutting review of the infrastructure needed to support housing and population growth, in preparation for the Comprehensive Spending Review 2007.
Kate Barker gave an update on matters from the perspective of the Review and the so-called “Barker II” review, which is to look into the planning system in more detail. She commented that she was extremely pleased that 28 of the 36 recommendations made in the Review had been acted upon.
Dr Ashley Lane, head of Westbury Partnerships, Persimmon Homes, announced publication of the executive summary of a report by the cross industry steering group looking at measures to remove the barriers to wider adoption of modern methods of construction (MMC) in response to Barker Recommendation 33. (Executive Summary of MMC Report)
Sir Peter Hall, Professor of Planning and Regeneration at the Bartlett School of Architecture and Planning at UCL, gave a lively and authoratative speech on what he saw as the strategic issues relating to growth in the South of England and housing provision more generally. Sir Peter suggested that the continual push towards higher densities and use of brownfield land was not necessarily the best way forward.
Full transcripts of the speeches made and copies of presentations will be available on the HB Media website early next week. (HB Media Website)
HBF Announces Results of Pioneering Customer Satisfaction Survey
The HBF, in conjunction with NHBC, published the results of its first industry wide survey of customer satisfaction. The survey revealed that three-quarters of homes buyers are satisfied with the quality of their new homes. The survey gives a star rating to 22 of the industry’s largest builders for overall quality of the customer’s home and whether customers would recommend their builder to a friend as well as industry results for a variety of questions. (HBF Press Release, Customer Satisfaction Results)
HBF Announces Plan to Drive Up Skills
HBF also launched its strategy to promote required skills across the industry. Key measures include:
Assisting in the development of the new Specialised Diploma for Construction and the Built Environment to be introduced in 2008
Developing comprehensive skills provision for the industry via the Sector Skills Agreement for Construction
Forging a working relationship with The Academy for Sustainable Communities.
As part of the strategy, HBF will work to extend Major Home Builders Group initiatives to other members. (Press Release, HBF Skills Strategy)
HBF Secures Continued Project Support for the Qualifying the Workforce Initiative
HBF has reached agreement with Peter Roberts, who is shortly leaving his current position as Construction Skills Certification Scheme (CSCS) Product Manager, to provide project support for the Major Home Builders Group Qualifying the Workforce Initiative over the next two years. Peter will take on this role from Austin Hargreaves in April. Peter's agreement to take on this role will provide HBF and its members with unrivalled experience, connections and understanding of the issues involved in working towards a carded and qualified workforce and should materially assist progress.
Thames Basin Heaths Special Protection Areas - HBF Meet English Nature
HBF and members met English Nature (EN) in Thatcham on 20 February to discuss the current problems relating to the Special Protection Areas (SPAs) in Surrey, Berkshire and Hampshire. HBF pushed for early means of unlocking the planning moratoria introduced by local authorities in these areas pending the agreement of a delivery plan to mitigate the potential impact of new development on the habitats of protected ground nesting birds in the SPAs. EN maintained that any mitigation plan must involve the provision of additional or enhanced public access green space to divert potential pressure on the SPAs. The South East England Regional Assembly has been asked to lead an urgent review of land availability in all the district authorities affected, due to report by the end of May, while EN are assisting the drafting of a Supplementary Planning Document template that might be adopted to accompany public access site provision funded by developer contributions.
HBF and members remain concerned that this process may still take a long time to unlock the current problem and may also create opportunities for obstruction on the part of local authorities who do not favour development. We will therefore be pursuing further political lobbying and seek further media coverage to sustain pressure for urgent resolution of the situation.
Economic News
MPC mindful of pick up in the housing market
The minutes of the Bank of England’s Monetary Policy Committee meeting on 8/9 showed no change in the recent voting pattern with eight members voting for no change and Stephen Nickell favouring a 25 basis point cut. However the minutes did include an interesting comment from the Committee on the potential consequences of lower interest rates: “There was some concern that a reduction in interest rates at this stage would provide further support to the housing market and consumption at a time when GDP growth was already strengthening, and that would increase the probability of inflation rising above the target in the medium term.” (Minutes of February MPC Meeting)
Political News
Conservatives attack Miliband’s backing of PGS
The Conservatives attacked Communities and Local Government Minister David Miliband’s support of the proposed Planning-gain Supplement in his speech to the Barker conference. Shadow Secretary for the ODPM, Caroline Spelman said: “We recognise that infrastructure has to go hand in hand with new development- in fact it is lack of infrastructure provision that has been one of the many criticisms levelled at John Prescott's Sustainable Communities Plan. However, the problem with a new land development tax is that it will undermine regeneration and inevitably it will be passed on in the form of house price increases. There is also no guarantee it will be used to provide infrastructure. Instead it could well be used to fill the black hole in Gordon Brown's finances."
Corporate News
Peter Johnson to retire as George Wimpey Chief Executive
George Wimpey announced that Peter Johnson is to retire from his role as Group Chief Executive on 30 June, with current Chief Executive of the UK business Peter Redfern to succeed him. The company commented: “Five years ago Peter Johnson joined George Wimpey to bring about a transformation in the Company’s organisational structure, strategy and financial performance, a process which is largely complete. Having completed internal succession in both the UK and US, and overseen the Company during a period when total shareholder returns have been significantly in excess of the housebuilding sector, Peter now believes it is the right time both for the business and for him to step down and to enable a new Chief Executive to lead the business forward.”
George Wimpey also announced preliminary results for the calendar year of 2005. Group operating profit before tax was £366.5m, a 16% fall from 2004. The UK division (George Wimpey) saw operating profits fall by 32% to £278m on turnover of £2157.6m in completing 12,100 homes (of which 1422 were affordable homes), 1% fewer than in 2004. The US division (Morrison Homes) saw profits rise by 64% to $308.3m (£169.4m) on turnover of $1538.8m (£845.5m) and completed 4921 homes, 11% more than in 2004. (George Wimpey Results Press Release)
Galliford Try upbeat on market conditions
Galliford Try reported that its housebuilding division achieved a profit of £13.9m on turnover of £98m, in releasing interim results for the six months to 31 December. The company completed 484 units over the period. Chairman David Calverley noted an improvement in the market and is confident looking ahead: “In housebuilding we are encouraged by the level of sales since the New Year and by the increasing confidence returning to the market.” (Galliford Try Interim Results)
Housing Market
Rightmove report price rises across the country
Property website Rightmove reported that national house prices rose by 2.7% in the five weeks to 12 February, the biggest monthly increase in almost two years and taking the annual rate of house price inflation to 4.0%. The survey also reported that all regions saw an increase in prices for the first time in 20 months. The average time it takes for a property to sell dropped to 81 days, from 94 the previous month.
Commercial Director Miles Shipside commented: “For the first time in 11 months, all property types saw prices rising. The largest increases are at the lower end of the market as the recovery is driven by growing demand for terraces and flats. Agents report increasing numbers of first time buyers, partly assisted by parental help with deposits as well as more flexible lending criteria. More activity from buy to let investors, and downsizing divorcees are also adding to the activity in this sector.” (February Rightmove House Price Index)
Housing stock has trebled in value over last 10 years
The value of the UK’s private housing stock has trebled from £1.1 trillion in 1995 to £3.4 trillion in 2005, according to research from Halifax. The southern regions of England account for 55% of this wealth, with 44% of the total population. However, the North-South gap has narrowed slightly as the South had accounted for 60% of housing wealth in 2000. Halifax also pointed out that household balance sheets are in good shape, with the outstanding mortgage debt at around 28% of the value of the stock.
Group Economist Tim Crawford commented: “This increase in the value of the housing stock highlights that household balance sheets are in good shape. Housing assets are worth three and a half times the value of housing debt and assets have increased by more than debt levels in each of the past ten years.” (HBOS Research Press Release)
Other News
Introduction of new building regulations sped up
The Government has cut the amount of time for the industry to comply with new climate change regulations. The transitional arrangement of a maximum of three years has been cut to twelve months to “speed up take up of the regulations to maximise their impact on climate change”. The ODPM announced that: “All new buildings without full building plans approved by 6 April must comply with the new Part L regulations from 6 April 2006, which increase the energy efficiency of new buildings by 20 per cent from April, and by 40 per cent since 2002.”
(ODPM Press Release)
HBF Comment: The Government's announcement is not what we had expected and appears to reflect a high level decision that climate change objectives precluded the case we had argued for flexibility on transitional arrangements. We are talking urgently to ODPM about the concerns the announcement raises for house builders, including the fact that SAP software is not available and Approved Documents are still in draft form so that it is not yet possible in any case to make an application under the new regulations. We will update members on HBF activity and with more information about the detailed position as soon as we can.
Government enters next phase of introduction of Housing Act 2004
As part of the Government’s drive to bring long-term empty homes back into use, the Government announced that reform measures in Parts 2 to 4 and 7 of the Housing Act 2004 will come into force in April this year. The new powers will include the licensing of houses in multiple occupation (HMOs), minimum management standards for all HMOs and additional powers for councils to secure occupation of privately owned homes left empty for more than six months without good reason. (ODPM Press Release)
Consultation/Key Publication Dates
PPS3 Consultation 5 December - 27 February
Planning-gain Supplement (PGS) Consultation 5 December - 27 February
Select Committee inquiry into PGS 27 February
Code for Sustainable Homes Consultation 5 December - 6 March
Implementation 1 October
Home Information Packs (HIPs) Consultation Closed 31 December
HIPs Dry Run Ongoing
HIPs Introduction 1 June 2007
Barker Review of Land Use Planning 25 January - 28 March
Energy Review Consultation 25 January - 14 April
Lyons Enquiry into Local Government Consultation Closes 13 March
Part L Implementation date 6 April
The Welsh Assembly Government's Strategic 28 February 2006
Framework for Economic Development Consultation
HBF/HBM/NHMB Events
New Homes Week 20 - 26 March
For all full list of HBF events please visit the HB Media website click here
Paul Samter
Senior Analyst - Economic and Policy Affairs
Home Builders Federation
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