A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
HBF News
HBF meet Ruth Kelly
HBF Executive Chairman Stewart Baseley together with John Stewart and John Slaughter met the new Secretary of State for Communities and Local Government, Ruth Kelly, on 11 July. The Secretary of State inquired about the industry’s capacity to deliver more homes and asked what HBF’s main issues were. We raised the pressing need to resolve the Thames Basin Heaths Special Protection Area problem, set out our views and the further work we are undertaking in relation to the proposed Planning-gain Supplement and PPS3 issues and sought a proper assessment of the potential market impact of the introduction of Home Information Packs (HIPs).
Economic News
Unemployment continues to rise
The ILO defined measure of unemployment rose to 5.4% in the three months to May, 0.3% higher than in the preceding three months, and the highest rate since the third quarter of 2000. The claimant count measure of unemployment rose by 5,900 in June, although the rate remained unchanged at 3.0%, the fifteenth increase in the last sixteen months.
Concurrently, the pace of earnings growth slowed. The headline measure of average earnings (which includes bonus payments) revealed a rise of 4.1% in the three months to May compared to the same period a year earlier, a slowing from 4.4% in the three months to April. Once bonuses are excluded from the calculations, earnings growth followed a less volatile path, edging up from 3.7% to 3.8%, a growth rate that has remained fairly constant over the last six months. (July Labour Market Statistics)
Retail sales boosted by weather, the World Cup and discounts
UK retail sales were up 2.3% in June on a like-for-like basis compared to the same month a year ago, according to the British Retail Consortium (BRC). For the second quarter as a whole, like-for-like sales were up 4.1% compared to a year ago, an acceleration from 2.7% in the three months to May, while total sales rose 6.8%.
The BRC Director General commented: “Despite the boost from the World Cup, warmer weather, and some early clearance sales, June was not as good as May. Also this performance is being compared with a weak June 2005. Although the gain is indeed encouraging, much of the growth, especially in housing-related sectors, remains discount-driven. Consumer confidence is still fragile and retailers will be hoping factors beyond their control do not weaken it further.” (BRC June Retail Sales Monitor)
New appointments to the MPC
Chancellor Gordon Brown announced that Tim Besley and Andrew Sentence will join the Bank of England’s Monetary Policy Committee to take the Committee back up to its full complement of nine. Tim Besley, who will join the Committee from 1 September, is Professor of Economics and Political Science at the London School of Economics. Andrew Sentence is Chief Economist and Head of Environmental Affairs at British Airways, and will join the MPC from 1 October. (HM Treasury Press Release)
Political News
Energy Review published
The Government has published its Energy Review, in which among other proposals it highlighted the importance of the energy efficiency of new homes. The Review recognised that “new homes use around a quarter of the energy to heat and light compared with the average existing stock”, but stated that measures will be put in place to “take us towards our long-term ambition of making all new developments carbon neutral”. The Review also stressed the need to provide people with more information “about their energy use over time and advice on saving”, with the proposed Home Information Packs to include data on the energy efficiency of each home. More generally, the Government is aiming for 20% of electricity generation to come from renewable sources by 2020. (Energy Review)
HBF Comment: HBF Executive Chairman Stewart Baseley commented on the Energy Review: “Ensuring that new homes meet suitable environmental standards of performance is a vital part of combating climate change. The housing industry has already made great advances in recent years, with new homes today being on average 6 times more energy efficient than those built in 1900. We stand ready to do more in future and are discussing with Government the best means of encouraging further cost-efficient and customer-friendly ways of advancing standards. However, the biggest energy efficiency gains of all that we can make from housing are those relating to the existing housing stock. If domestic emissions are to be seriously addressed, then the performance of the existing housing stock must be urgently tackled.”
Conservatives launch anti HIPs campaign
The Conservative Party has started a campaign against the Government’s plans to introduce Home Information Packs (HIPs) in June 2007. The campaign is based on several key objections. The Conservatives say that buyers will still need to pay for valuations and surveys. HIPs will not include information about flood risk, natural subsidence, electrical safety, radon gas or contaminated land. If the home is taken off the market for more than 28 days then an updated pack will be required if the old one is more than three months old. There is no proper pilot scheme to test the scheme and there is currently a shortage of qualified home inspectors.
Shadow Housing and Planning Minister Michael Gove said: “The case for this pricey regulation is unravelling week by week as the small print is revealed. HIPs have not even been launched and they are already on their last legs. If people trust these dodgy HIPs, I fear they will be lulled into a false sense of security. If they don't and commission their own survey, costs will be duplicated. Either way, home buyers and sellers will pay the price for this new Government red tape on the housing market. The Government would be better to scrap this scheme than peddle expensive, deficient and unreliable information to young couples and families." (Conservatives Press Release)
An Opposition Day debate on HIPs called by the Conservatives was postponed and will now be held on 19 July. HBF is briefing MPs on its position ahead of the debate.
HIPs will not cut valuation fees, say lenders
Mortgage lenders believe that the introduction of Home Information Packs, and specifically the Home Condition Report (HCR) within the pack, is unlikely to lead to a reduction in valuation fees. A survey of lenders carried out by the Council of Mortgage Lenders (CML) found that “two thirds believe that the fee level they charge for valuations will stay the same after HIPs have been implemented”. The study also reported that “lenders representing half the industry believe that the HCR would not affect valuation procedures immediately, but this proportion dwindles to only 5% one year further on”. (CML HIPs Study)
Corporate News
Taylor Woodrow trading update
Taylor Woodrow gave a trading update ahead of interim results, which will be published on 3 August. The company announced that it completed 3,369 homes in the first six months of the year, 5% more than in the first half of 2005 and increased the landbank by 10% from December to 38,498 plots. The company also completed 1,512 homes in the US over the period, 9% down on last year “as a result of delays in receiving habitation certificates in some markets”.
The company commented: “In the UK, we anticipate delivering modest growth in unit completions for the full year, together with some improvement on the margins achieved in the first half of 2006.” (Taylor Woodrow Trading Update)
Housing Market
House price growth picked up in May
The Department for Communities and Local Government (DCLG) reported that house prices increased by an unadjusted 1.0% in May, as the annual rate of price growth rose from 5.1% in April to 5.6% in May.
Price growth in the south of the country continued to pick up. London house prices rose by 7.1% in the year to May, an unchanged rate from April, the South East saw an acceleration from 2.8% to 4.5% and the South West from 3.7% to 5.1%. Of the English regions, only the North East saw faster annual price growth than London, at 7.6%. (DCLG May House Price Index)
Consultation/Key Publication Dates
Code for Sustainable Homes Implementation Autumn
Home Information Packs (HIPs) Revised Regulations published 14 June
HIPs – 10 to 12 planned trials Autumn 2006
HIPs Introduction 1 June 2007
Consultation on DCLG structure June 2006
Implementation of new DCLG structure September 2006
HBF Events
HBF Annual Planning Conference 14 September
For a full list of HBF events please visit HBF Events & Meetings
For details of HB Media events click here
Paul Samter
Senior Analyst - Economic and Policy Affairs
Home Builders Federation
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