A weekly news summary this week by John Slaughter, the HBF's director of external affairs, covering all aspects of the housebuilding industry. Available to members only.
Time to get HIP
The Housing Bill received Royal Assent on 19 November following lengthy Lords and Commons debates on its provisions, particularly the introduction of compulsory Home Information Packs (HIPs). On 16 November the Lords finally capitulated to the government's determination to make the packs compulsory. HIPs - to be introduced from 2007 - will be required to contain information on terms of sale, standard searches, warranties and, for all but the initial sale of a new home, a home condition report roughly equivalent to a purchaser’s survey. The government will hold a pilot scheme and assess this with stakeholders during 2006. It will also set up a stakeholder working group, involving NHBC, to look into the possibility of having the resale of homes still covered by a suitable warranty excluded from the requirement for a home condition report.
HBF note: The HBF has worked closely with NHBC on this issue and will continue to do so.
The Act also introduces a provision that permits private developers to apply to the Housing Corporation for social housing grant. "At a time when housing provision and affordability are key concerns this will encourage much needed private investment into the wider housing market," said Bellway spokesman Julian Kenyon. "The proposal will reinforce developers' ability to promote multi-tenure solutions in partnership with RSL's and local authorities."
Mind the gap
A group of social, commercial and planning organisations has signed a pledge to work towards maximising the opportunities provided by the Barker report to reduce the gap between homebuyers and those priced out of the market. The agreement was signed at the Thames Gateway Forum this week by members including Wilson Bowden, Shelter, RTPI, CBI, CABE and George Wimpey.
The group's manifesto, which was backed by John Prescott at the launch, is based on the proposal that housing supply should be more responsive to need and demand, and it aims to ensure that the issue is a national priority and that the Barker agenda is implemented "in a way that is consistent with social, environmental and economic imperatives."
Shelter director Adam Sampson said, "The crisis is crying out for a voice that can make the powerful social, economic and environmental case in favour of the homes this country so desperately needs."
…but Prescott is still pressing on costs
In his speech to the Thames Gateway Forum on 24 November, the deputy prime minister referred back to his call for the £60,000 home at the Labour Party conference. “There was a lot of talk afterwards about how it was not possible. Well I’m going to prove people wrong. We are going to do it… We are going to do it by pushing up efficiency and using new technology. And we are going to deliver better quality, reliability and sustainability. We know it can be done. Some of our partners have experience of building offices where they have done exactly the same thing. But it takes imagination and commitment.”
Soaring costs 'will curb housebuilding in South'
Falling house prices and spiralling construction costs will see housebuilders blown off target to build hundreds of thousands of extra new homes in the South-East according to new research. The findings from researchers Experian show a 16 percent rate of inflation this year in housebuilders' labour and material costs with an expected 11.6 percent rise on top of that next year and around seven percent in 2006. Experian predicts new builds nationally will rise to only 187,000 this year, 95 percent short of long-term targets for 120,000 extra private dwellings recommended in the Barker Report. Total new builds in 2005 will actually fall back to around 180,000, Experian predicts.
Experian associate director James Harding said: "The rising costs of construction are making the Barker Report's ambitions unrealistic. The slowing property market, especially in London and the South- East, combined with spiralling labour inflation and higher land costs, is effecting a tourniquet on builders' margins." The survey also shows high cost inflation for public housing, up seven percent this year and averaging 3.3 percent each year for the next four.
CPRE and Friends of the Earth knock Barker
CPRE and Friends of the Earth issued a joint statement claiming Kate Barker’s recommendations and the government’s Communities Plan will not solve the country’s (affordable) housing problem but will do real and lasting environmental damage. “House builders are misleading people into thinking that simply building more housing will automatically help people who are homeless or need affordable housing”, said FOE director, Tony Juniper.
HBF note: CPRE and FOE are responding to a statement that nobody has made.
Building skills capacity
The Major Home Builders Group (MHBG) and ConstructionSkills have teamed up to launch a three-pronged drive to tackle industry skills requirements. The series of initiatives involves increasing the number of training places through the MHBG's subcontractor supply chain, and the MHBG joining the Qualified Workforce Initiative and working with ConstructionSkills to promote the Construction Skills Certification Scheme (CSCS), with the objective of having a fully card-carrying workforce by 2007. The third initiative involves the two organisations jointly developing a new flexible scheme of qualifications and training for house building site managers.
Neil Fitzsimmons, Group Managing Director, Redrow plc said, “The initiatives… represent a significant commitment to training and qualifications by the MHBG that recognise the challenge laid down to the industry under Recommendation 34 of the Barker Report.”
Snag misery shatters Scottish dream homes
New homes in Scotland are likely to have around 20 per cent more 'snagging' problems than comparable properties south of the Border, according to Inspector Home, a company, which examines houses for defects.
Experts believe the number of snagging complaints is higher in Scotland because of the consequent boom in new build properties and a lack of high -quality construction workers. Pressure to move key workers quickly on to new developments means homes are not being adequately finished off.
HBF note: The CML initiative is only now being rolled out in Scotland.
A royal caution
Prince Charles has warned that an obsession with fast-tracked building could lead to the re-creation of the failures of social house building seen in the 1960s and 1970s.
Speaking at a Prince's Foundation conference – ‘Local identity in a fast-track age’ – Prince Charles argued that modern methods of construction need to be balanced with traditional crafts and local economies. "Let us not ignore local employment, historic conservation and tourism," he warned.
But housing minister Keith Hill, was quick to jump to the defence of MMC in meeting Communities Plan targets. "We need the house building industry to work quickly to improve performance if it's going to deliver high quality homes. I don't see that MMC is incompatible with quality," he said.
Sustainable communities summit
John Prescott has announced that chancellor Gordon Brown, home secretary David Blunkett and secretary of state for education and skills, Charles Clarke will be speaking at the 2005 Sustainable Communities Summit.
The summit, which will be held in Manchester from 31 January to 2 February 2005 is expected to attract more than 2,000 delegates. The government intends it to be an opportunity for stakeholders in the Sustainable Communities Plan to come together to network and assess the progress of its housing targets.
HBF note: Arrangements for the summit programme have been largely trapped within the inner reaches of the ODPM and have been left very late. The HBF has learned that even significant public sector bodies are experiencing real difficulties in arranging Summit and related events. We are still exploring possibilities for the HBF involvement with a range of other bodies, but none of them has great confidence in the process.
House prices
The latest residential research briefing from property consultant FPDSavills has forecast house price growth to peak at two percent during 2005 – the lowest level of growth for nine years.
"The housing market is presently highly sensitive to changes in interest rates," said FPDSavills’s head of residential research Richard Donnell. "Higher rates and general negative sentiment resulted in a considerable amount of steam being taken out of the market over the summer and early autumn of 2004."
Donnell suggested that many potential homebuyers are currently "sitting on their hands" to see whether interest rates will rise again.
Meanwhile, Rightmove reported that prices fell by 1.7 percent in November, taking annual growth down from 13.4 percent to 11.6 percent, which they describe as providing “evidence of a significant downward correction in house prices, as the market recognises that prices had become too high and that affordability had been stretched too far.”
The Royal Institute of Chartered Surveyors’ (RICS) October survey showed further deterioration of market conditions. A net balance of 41 percent of surveyors reported falling prices, lower than the then nine year low of 29 percent in September.
The Hometrack October survey reported that average house prices fell by 0.6 percent , with falls spread across the country.
Countryside
Members of the Cherry family, who own 17.2 percent of Countryside Properties' shares, are planning a management buy-out. Headed by company chairman Alan, who is joined by sons Graham and Richard – the firm's chief exec and business director respectively, the trio has bid £218 million for the firm. They are being advised by Pricewaterhouse Coopers and Merrill Lynch.
Defence of the realm
English Partnerships has signed a joint working agreement with the Ministry of Defence, formalising the agencies' new approach to bringing forward surplus government sites for redevelopment.
The MoD and EP "framework" agreement outlines how the agencies will work together to maximise the development potential of surplus MoD sites. English Partnerships will be charged with recommending strategies for sites' disposal, and they will be entered onto an EP-managed register for 40 days, giving the public sector first opportunity to snap them up before they are released to the market.
Wilson Bowden
Wilson Bowden has pledged to "integrate environmental considerations into business decision making at all levels." David Wilson Homes has held its first "supply chain environmental forum" as part of the group's new policy, with the aim of promoting efficient working practices and improving environmental management. The firm has set nine environmental supply chain targets, including reducing carbon emissions and fuel consumption and reducing landfill waste.