A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
HBF News and Activity
HBF makes PGS submission…
After exhaustive consultation with members, HBF has come out against the government’s proposed Planning-gain Supplement in its response submitted to HM Treasury. While the proposal was considered to have some benefits, it was concluded that it would be unworkable due to a number of major reservations; valuation difficulties- particularly on brownfield sites, the danger of “mission creep” from a scaled back S106, that the issue of Affordable Housing is not addressed in the PGS, problems with infrastructure delivery and the potential for a future Chancellor to raise the initially “modest” rate at which the PGS is set.
…and a PPS3 submission…
HBF’s submission to the Office of the Deputy Prime Minister (ODPM) on the draft Planning Policy Statement 3 (PPS) was also submitted this week. HBF welcomed many aspects of the draft PPS3, which represent a move toward making the planning system more responsive and many of which acknowledged HBF’s previous recommendations, including ending the one-size fits-all parking policy of PPG3 and greater flexibility on densities. However two major concerns were highlighted; the threat that local authorities will seek to prescribe size and type of open-market dwellings on all sites and the provision of affordable housing, including the proposed removal of low cost market housing from the definition of intermediate housing.
… and Code for Sustainable Homes submission
HBF acknowledged the need to work towards further improvement in environmental performance and the sustainability of new as well as existing homes in its submission to the ODPM on the proposed Code for Sustainable Buildings. Alongside some positive elements, HBF believes the proposals raise a set of wider issues about how the future policy and regulatory environment should be structured. HBF suggest that a group of all the relevant stakeholders, including developers, is set up to consider how an effective future framework that encompasses policy, incentives and relevant regulation can be established.
PGS Round Up
A number of bodies have come out against the government’s proposed PGS recently. The Confederation of British Industry, Institute of Directors and Royal Institution of Chartered Surveyors were all critical on the proposals, with valuation of land noted as a major problem and all three organisations believing that the PGS would not improve housing supply.
The Town and Country Planning Association gave qualified support for the PGS, with Director Gideon Amos commenting: “To be effective any new development tax must raise significantly more money than the current system, without causing landowners to withhold land or jeopardising necessary development.” (TCPA Press Release)
Economic News
High street sales remain subdued threatening retail jobs
Retail sales remained below last year’s levels in February, according to the Confederation of British Industry’s (CBI) Distributive Trades Survey (DTS). A balance of –18% or retailers surveyed reported that volumes were lower than in February 2005, a slight deterioration from January. The DTS also revealed that a balance of –26% reported a fall in employment. However, retailers expect a modest improvement.
John Longworth, Executive Director of Asda and Chairman of the CBI's DTS Panel, commented: "With rapidly rising household bills for energy, water and council tax, it's no wonder that consumers remain cautious about spending money except on basics such as food. Competition in the high street remains tough as stores continue to tempt shoppers with discounts and other promotional offers. At the same time, retailers' margins are being squeezed by sharp rises in the cost of energy utilities, rent and rates, environmental taxes and the minimum wage. But confidence about the overall retail outlook has recovered since November's low and some retailers now expect a slight improvement in sales over the coming month." (February DTS Press Release)
Political News
SEERA criticises draft PPS3
The South East England Regional Assembly (SEERA) criticised the draft PPS3, claiming the proposals could create delays in delivering new homes. SEERA Chairman Keith Mitchell said: “PPS3 is seriously flawed in presuming that building more homes can determine the housing market and make housing more affordable. Last year, responding to the Government’s consultation on planning for housing provision, we had wide agreement – across parties as well as from the business, social and environment sector - that this is not the right approach. We are very disappointed that Government failed to heed our advice for PPS3. The South East needs to deliver growth and seeks to do that through appropriate planning processes and by gaining support from local people for essential development. We believe PPS3 reduces the prospects for delivering necessary housing growth and is likely to increase growing public concern with the operation of the planning system. It could even create problems with infrastructure provision.” (SEERA Press Release)
Corporate News
Strong results for Persimmon
Persimmon announced that pre-tax profits for 2005 rose by 5.9% from 2004 to £495.4m on turnover of £2.29bn. Persimmon sold 12,636 homes, slightly more than the 12,360 in 2004. Total sales for 2006 to date, which includes “an initial contribution from Westbury” (Persimmon’s takeover of Westbury was completed on 17 January), are over 7,000 units. The expanded group is expected to build around 16,700 homes per year.
Persimmon re-iterated the announcement made last year that Group Chairman Duncan Davidson is to retire and his role will be taken over by current Chief Executive John White. Mike Farley will become the new Chief Executive and the change over will occur at the AGM on April 20.
Mr White noted an improvement in market conditions: “In the eight weeks since the beginning of this year we have detected an increase in purchasers’ confidence and the ability and desire to buy a new home. Visitor levels have been good and new reservations have been encouraging. Whilst it is too early in the New Year to predict the market, it is nevertheless a good start to the year.“ (Persimmon's 2005 Results)
Strong US performance for Taylor Woodrow
Taylor Woodrow announced that group pre-tax profits rose by 2% to £411m in 2005 from the previous year. The UK division saw operating profits of £233.4m, compared to £301.1 in 2004, in completing 8,178 homes (9,053 in 2004), while the landbank was expanded 7.8% to 34,985 plots. The US division saw a 56.4% rise in operating profits to £199.6m, in completing 3,932 homes, compared to 3,635 in 2004.
The company are optimistic on the outlook for the UK market: “The UK housing market remains very attractive in the medium term continuing to be fundamentally underpinned by supply-demand imbalance, relatively low interest rates and generally benign economic conditions.” (Taylor Woodrow Preliminary Results)
Wilson Bowden report results for 2005
Wilson Bowden announced that group pre-tax profits fell 14.3% in 2005 to £216.4m on turnover of £1,230.8m. The company completed 5,207 homes last year, compared to 5,588 in 2004 and increased its landbank from 21,963 plots to 31,138 plots.
A new product range “i-LIFE by David Wilson Homes” was announced, which is a range of seven new designs “aimed at accessing the market place for new homes between £65,000 and £140,000”.
Chairman David Wilson noted a “marked improvement” in visitor interest, reservations, prices and cancellation rates in the Southern part of the country. (Wilson Bowden plc: Annual report 2005)
Housing Market
Prices edge down in February according to Nationwide…
House prices fell by a seasonally adjusted 0.2% in February following a 1.5% rise in January, to leave prices 3.7% higher than a year ago, according to Nationwide. Nationwide describe the trend in prices as still strong over the last 12 months “making an interest rate cut unlikely”, but still note some weakness.
Senior Economist Greg Fuzesi commented: “The strengthening of the housing market over the last 6 months does not detract from underlying weaknesses. Affordability among first-time buyers remains stretched and continued uncertainty over the economy’s strength makes strong rises in house prices over the coming months unlikely. While high current levels of mortgage approvals still suggest the existence of some demand pressure in the market, February’s 0.2% fall in house prices is a reminder that fundamental drivers remain weak.” (Nationwide's February House Price Index)
… while Hometrack report a rise
Website Hometrack reported that house prices rose by 0.4% in February, leading to a cumulative rise of 0.6% rise over the past three months, although prices remain 0.5% lower than at the same time a year ago. Most of the pick up in prices reported by Hometrack was seen in the south of the country and the shortage of homes for sale was cited as the main reason underpinning the rise.
Director of research Richard Donnell is confident on the outlook for the market, commenting: “We expect values to keep rising, but the scale of growth over the later parts of the year is set to be far more modest than what we are currently seeing in a supply constrained market.” (Hometrack's February Housing Survey)
Mortgage approvals remain high
The number of mortgage approvals remained unchanged in January, according to the Bank of England. A total of 122,000 loans were approved for house purchase (seasonally adjusted) in January, an identical number to December, which was the highest figure seen since May 2004, almost 50% higher than the same month a year earlier. After approval levels fell away sharply over the latter part of 2004, there has been a steady pick up and approvals are currently running at higher levels than has been seen at any time other that the surge from 2002 to mid 2004. (Bank of England Statistical Press Release)
Other News
Think tank calls for presumption of right to develop
The centrally-directed plan-led system should be abolished and there should be a presumption of a right to develop, according to a report “Better Homes, Greener Cities”, written by Alan W. Evans and Oliver Marc Hartwich from the Policy Exchange think tank, the third and final instalment in a series looking into planning and housing supply. The report advocates a complete re-think of the way the planning system works and slates the high density development currently imposed when “British people would prefer to live in detached homes with gardens in green suburbs”.
The report advocates a wide range of changes to the current system and “a greater recognition of the economic benefits of development as a material factor in the planning process.” In line with recommendations in the second report in the series, the report argues for local authorities to fund more of their revenue through local income tax and local retention of all Council Tax and business rate revenues, which would help local communities gain from development. A “Social Cost Tariff” is recommended to replace all existing development charges (such as Section 106 agreements), “to allow communities to share in the benefits of development”.
The report also argues that “local authorities would be set minimum building targets by central government and would lose revenue if they fail to build up to the minimum. All revenues from development above the minimum level would be retained locally.” (Better Homes, Greener Cities Full Report)
Decline in urban green space halted
The fall in the quality of urban green spaces has been halted in most areas, a report entitled “Enhancing Urban Green Space” by the National Audit Office found. The report found that both those who manage green urban space and local residents reported an improvement since 2000. However, the report also noted that in 16% of urban authorities there had been a decline and there was still more that could be done, saying “there remains a need to continue to promote urban green space, and to identify and apply good practice to secure a more widespread and sustainable improvement”. (NAO Report)
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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