A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
HBF News
HBF comment on great belt land speculation
HBF Director of External Affairs John Slaughter appeared on BBC Radio 4’s Money Box programme, commenting on reports that land speculation companies are selling small plots of green belt land, often to small investors, with the promise of large returns if the land gets planning permission. Mr Slaughter pointed out that it is unlikely that major builders have overlooked such sites if they are developable and said: “It would not be attractive to our members to have to negotiate with 50 individual owners of sites in order to bring a development together. Generally, I do not think there would be any interest at all from a developer in acquiring land on that basis." (BBC News Story)
Economic News
Next move in interest rates could be up
The Bank of England hinted that the next move in interest rates could be an increase, but there is no imminent sign of a change, in its latest Inflation Report. The Report forecast that CPI inflation will move a little above the 2% target for most of the next year but then fall back to target beyond this. Most of the near term increase is attributed to rising energy prices and higher import prices, the effects of which are then expected to subside. The economy is expected to grow at close to its long run average throughout the next three years.
These forecasts are based on the Bank’s official interest rate as implied by market yields, which is for a 25 basis point increase in the repo rate in the first half of 2007.
The risks to the “central scenario” for both inflation and economic growth outlined above were described as “broadly balanced” and included factors such as the degree of spare capacity in the economy, the outlook for spending by households and business, world economic activity, the evolution of energy and import prices and “the degree of wage and price inertia”- a factor further complicated by uncertainty over the magnitude and potential impact of migration on supply. (Inflation Report)
Retail sales show sings of pick up
Retail sales were up 6.8% on a like-for-like basis in April, compared to a weak April 2005, according to the British Retail Consortium (BRC). When March and April are taken together, to account for the differing timing of Easter this year and last, like-for-like sales rose 2.2%.
BRC Director General Kevin Hawkins commented: “While any uplift in sales is welcome, the distortion arising from the timing of Easter and the weather underlines the need for caution in interpreting these figures. Discounting has also played a big part in these results. We need to see the figures for this month, which will be directly comparable with last May, before forming any tentative conclusion about the underlying trend.” (BRC April Retail Sales Monitor)
Political News
The ODPM is dead, long live the DCLG
Following last week’s reshuffle, the ODPM has been renamed the Department for Communities and Local Government. New Secretary of State Ruth Kelly will continue to be supported by Yvette Cooper and Baroness Andrews as junior Ministers on housing and planning issues.
PM’s remit to Ruth Kelly as head of Communities and Local Government…
In an open letter welcoming Ruth Kelly as Secretary of State for Communities and Local Government, the Prime Minister outlined the key challenges.
Mr Blair wrote: “You will need to deliver the Government’s policy in response to the Barker review of housing supply. Helping hard working families and first time buyers get their foot on their housing ladder should be a key priority.”
The PM also highlighted the planning system: “I want you to build on the work Kate Barker is now doing on land use planning to identify further proposals for reform of the planning system. Ensuring that planning achieves the right balance between supporting economic growth and delivering sustainable development is a key long-term challenge. I would like you to work with Alistair Darling and Douglas Alexander on this, as the Energy Review and Rod Eddington’s transport work will be relevant for your work on planning.” (Full Letter from PM)
… who takes up the baton of increasing housing supply…
Ruth Kelly stressed the Government’s desire to increase the level of housebuilding to 200,000 units per year in England in an interview on BBC Radio 4’s Today programme and a speech to Department for Communities and Local Government stakeholders.
In the radio interview Ms Kelly described housing as a personal priority and hinted that a change in housing may be needed: “I think that we need to put a greater emphasis on increasing housing supply in the future. That may mean changing planning regulations to make sure that more housing comes forwards. It also means changing the social culture in this country where too often people have been protective of their own space and wanting more affordable housing to be built. That has to be rooted out.”
In her speech, Ms Kelly further emphasised the commitment to increase supply “otherwise buying a house will become progressively further out of reach for those on middle and lower incomes”, while noting “it is crucial – as with many of our policy areas – that this is delivered in ways which protect our valuable countryside and respect the environment.” (Full Text of Speech)
… while the Conservatives slate her plans
The Conservatives criticised Ruth Kelly’s plans and comments, claiming that they give a “green light” to plans to weaken planning protection for suburban communities. Caroline Spelman, Shadow Secretary of State for Local Government, commented: “Ruth Kelly has taken over the controls of John Prescott's bulldozers. Britain's open spaces are now under real threat from over-development. Labour Ministers claim they want to regenerate urban sites, yet sneakily they don't class back gardens as 'green' space. Councils are increasingly powerless to protect against growing suburban sprawl and ugly 'densification'. Conservatives believe that local councillors should be able to stop blocks of flats being dumped in neighbourhoods if out of character with the area.”
The Conservatives also said that they are supporting a proposed new law by MP Greg Clarke to stop back gardens being classified as brownfield land. (Conservatives Press Release)
Corporate News
Bovis see pick up in the market
Speaking at the company’s AGM, Bovis Chief Executive Malcolm Harris revealed an improvement in market conditions: “Further to reporting the Group’s results for the year ended 31st December 2005, on 13th March 2006, we have experienced a steady housing market with modest sales price improvements. The changes to our product mix and marketing strategy are delivering the results anticipated and we continue to build an improved forward sales position. Cumulative sales reservations are now over 20% ahead of the comparable period last year. Based upon current trading conditions, we anticipate profits for the half and full year will be in line with our expectations.” (Bovis AGM Statement)
Housing Market
Official data shows rise in activity and prices in the first quarter
The number of residential property sales in England and Wales rose by 37.4% in the first quarter of this year compared to the same period a year earlier, according to data released by HM Land Registry. The average price of homes sold rose by an unadjusted 0.7% from the fourth quarter of 2005, and 5.0% from the first quarter of 2005. The price of detached new homes rose by 8.6% over the year. Regionally, the north of the country saw the largest price rises with 7.4% in Yorkshire and Humberside, 7.6% in the North West and 8.1% in the North, although London also saw relatively strong growth of 6.3%. (Land Registry Q1 Residential Property Price Report)
Other News
EP recommends 20% rate for PGS
English Partnerships (EP) restated their support for introducing the proposed Planning-gain Supplement (PGS), at a rate of 20%, when appearing before the ODPM Select Committee. EP said that whatever system was adopted there must be a clear transparent system for developers and ruled out the concept of variable rates for the sake of clarity. EP Chief Executive John Calcutt pointed out that if the tax is set too high then there will be incentives for avoidance and there should be a phased payment of 25% up front and 75% upon completion. (EP Website)
SEERA’s response to PGS
The South East of England’s Regional Assembly (SEERA) has conducted its own Financial Impact Assessment into the proposed PGS and found that either a PSG or a so called “roof tax” would yield in excess of the current system to fund infrastructure, with the one proviso that the current plans do not state how transport infrastructure will be funded under the scheme. On the negative side, the PGS would reduce Local Authorities ability to fund one-off “trophy projects” through planning obligations in Section 106 agreements. SEERA also point out that some kind of redistributive system would be required across the region as there would be large differences in revenues raised, which are often not correlated with infrastructural requirements in each locality. (SEERA's Financial Impact Assessment of PGS)
Consultation/Key Publication Dates
Code for Sustainable Homes Implementation Autumn
Home Information Packs (HIPs) Consultation Closed 31 December
HIPs Dry Run Timeline published 16 Mar
HIPs Introduction 1 June 2007
HBF appears before Select Committee on PGS 16 May
Minister appears before Select Committee on PGS 18 May
Housing and Regeneration Consultation Closes 19 May
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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