A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
HBF News
HBF comments on property age divide
HBF Executive Chairman Stewart Baseley’s letter replying to Andrew Rawnsley’s article analysing the impact of the housing supply problem on the younger generation was published in The Observer on 28 May. The letter stated:
“Andrew Rawnsley is right to recognise the impact of the growing wealth gap between generations. The latest government figures show that if house building remains at 2005 levels, there will be a shortfall of 50,000 homes every year. Increasing numbers of first-time buyers are being denied the chance to purchase the single most important asset, as the current property-owning custodians of the country's future pull the ladder up after them.
Those who oppose house building should be aware of this injustice and its economic and social consequences.”
Building reports that No 10 steps in to resolve warbler protection row in response to HBF calls
Building reported that !0 Downing Street has hosted a crisis meeting to seek a solution to the planning freeze created by the Thames Basin Heaths Special Protection Area following letters from HBF to the Prime Minister and other Ministers. The article also reported that HBF has commissioned its own research on appropriate mitigation standards to enable new development to go ahead. HBF Director of External Affairs, John Slaughter, was quoted as saying: “We don’t feel that enough work has been done to substantiate the mitigation measures that English Nature has proposed.” (Building 26 May)
Political News
Conservatives say the Government is watching you – and your garden
Conservative Shadow DCLG Secretary, Caroline Spelman, has accused the Government of planning to use spy-in-the-sky cameras to confiscate homeowners' back gardens for new housing as well as gather evidence for Council Tax revaluation. In a statement, she said: "Ruth Kelly is creating a database of every garden in the country to help cram more development into suburban communities, regardless of local opinion.
"One very real concern is that this Government will use spy technology, along with its compulsory purchase powers, to grab people's gardens and impose inappropriate development. Labour have England's gardens in their sights and they'll either tax them or concrete over them." (Daily Express, 29 May).
…. And plan for water recycling systems in all new homes
The Guardian reported that a plan to require all new homes to be built with dual plumbing systems, which use recycled water for flushing and gardening, is being prepared by the Conservatives. According to the story the water would be harvested from rain water, and "grey water" - including baths, showers and washbasins - under the plans being actively considered. The article also reported that the Environment Agency believes using rain water for garden watering, flushing and washing machines "can save up to 50% of household water use". The use of grey water could save 18,000 litres per person a year, or a third of daily household water use. (Guardian 31 May).
Government could make water meters compulsory
Households in south-east England could be forced to fit water meters to help curb demand in drought-hit areas. After hosting a summit on Thursday with the water companies, consumer groups and regulatory bodies, David Miliband, the Environment Secretary, said the Government would “look at the scope for increasing [metering] in areas of water stress”. This could include allowing more companies to fit compulsory meters where water is particularly scarce. Mr Miliband also confirmed the Government would keep the regulatory regime for water under review, especially the targets on repairing leaks. Ministers have, however, rejected the idea of a national grid for water. Mr Miliband said the proposal was dismissed by the industry, the regulator, consumer groups and Government “on the grounds of its disproportionate and unjustifiable cost”. (Financial Times 2 June)
Corporate News
Linden announce profit rise
Linden announced a pre-tax profit increase of 178% from £4.7 million to £12.8 million in 2005. Turnover leapt by 33% to £280 million and Linden upped its completions by 17% to 1,100 despite selling its north west division to the management. Chief Executive Philip Davies said: "Last year we faced a challenging market, but Linden was successful in reducing construction costs, allowing room for increased sales incentives and lower prices. The company has focused on growing its land bank to 3,662 plots, most of which has detailed planning permission.”
Housing Market
Nationwide comments on sluggish house price growth
Nationwide reported that house price growth was sluggish for the second month in a row in May with prices rising 0.2% in the month. The annual rate of house price growth slowed slightly to 4.7% compared to 4.8% in April. Group Economist Fionnuala Earley commented that despite generally strong levels of mortgage approvals “not all drivers are supportive of rising house price inflation.” She added that “there are now further reasons to expect some cooling in the rate of house price inflation over coming months” with Nationwide taking the view that “financial markets are now expecting two increases in the base rate by next summer. The impact on demand will depend crucially on whether the Bank of England actually raises interest rates. In our view, the decision is still very close.” http://www.nationwide.co.uk/hpi/historical/May2006.pdf
New mortgage approvals down
The Bank of England said that there had been 106,000 approvals for new mortgages in April, down from 114,000 the previous month and the weakest figure since September. The Bank said that the total amount of outstanding mortgage loans rose by £8.5 billion to £999.2 billion at the end of April. "Today's data set presents a picture of recovery that is losing steam," Kelvin Donaldson, a property economist at Capital Economics, said. "There can now be little doubt that mortgage demand has peaked and is on the gentle slide downwards."
While retail sales are positive
Retailers reported their strongest rise in sales for 18 months despite an unexpected slump in confidence among British households.The CBI's monthly survey of 350 firms with 40 per cent of the retail market showed retail sales volumes rose at their fastest pace in 18 months in May and are set to rise faster in June.
The level of home owner debt and property wealth have both boomed
Britain’s mortgage debt has reached £1trillion. Rising house prices have pushed up home-owners' total debt so that it almost equals the country's entire economic output of £1.2 trillion. The mortgage debt has more than doubled since 1996, when it was just £410billion, according to Bank of England figures. Balanced against this, total property wealth - the value of peoples’ homes minus their mortgage debt - is £3.6trillion.This means that on average, each of Britain's 17.8 million home-owners has just over £200,000 of housing equity. (Daily Mail 1 June)
Other News
SEERA say a water action plan is needed now
The South East urgently needs an action plan to manage water use, says the South East England Regional Assembly’s Planning Committee. Regional Planning Committee Chairman Cllr Christine Field said:
"There must be incentives for manufacturers and consumers to switch to water efficient appliances such as washing machines and bathroom fittings, while building regulations should enforce water efficiency in new developments. Delivering this sort of behaviour change is a national responsibility, but failure to change people's wasteful ways with water could have a serious impact on the South East.”
http://www.southeast-ra.gov.uk/news/releases/2006/01june.html
London Plan review gives climate change top priority
Mayor of London Ken Livingstone announced that his London Plan Review will set radical new objectives for planners and developers that will require new developments to connect to “decentralised” local energy supplies and achieve the highest standards of sustainable building design. The Review also doubles the carbon emission reductions that developments must achieve through onsite renewable energy from 10% to 20%. The Mayor said: 'London should lead the way in showing the world how one of its greatest cities is planning to meet the challenges of climate change.” The announcement follows last week’s publication of Supplementary Planning Guidance on Sustainable Design and Construction to guide developers and planners on how to use the existing policies to best effect in addressing the consequences of climate change. http://www.london.gov.uk/view_press_release.jsp?releaseid=8187
Roads cover twice as much of the country as housing
New research into land use by property website propertyfinder.com has revealed road builders - not house builders - are having most impact on the English countryside. The research shows roads take up more than twice as much of the land area of England as domestic buildings. 2.4% of England – roughly a fortieth of the entire country - is concreted over for the benefit of motorists. Homes take up only 1.1% of England’s land. A strong link is also indicated between areas with dense transport networks and lower house prices. Only Central London appears to buck this trend. On average, 20.4% of the land area of central London belongs to trains and cars (90% of this is road space). But in the capital, the more space that is given over to transport; the higher house prices.
However, Nick Leeming, Key Accounts Director of propertyfinder.com, commented: ‘For every new home built on a greenfield site, twice as much space needs to be devoted to new roads. Not only does the taxpayer have to foot the bill for more road maintenance, building new roads encourages greater car use. Building on brownfield sites is the best way to preserve England’s green and pleasant land for future generations. An Englishman’s home used to be his castle; if we continue to expand the road network, an Englishman’s home might as well be his caravan.' http://www.property4media.com/uk/pressrelease.php?cat=&co=&id=14746&mode
IPPR oppose new subsidies for first-time buyers
The government should not introduce fresh subsidies to help first-time buyers enter the housing market, according to a report from the Institute for Public Policy Research. The IPPR believes assistance is best targeted at ensuring the low paid have decent incentives to save rather than on helping homebuyers directly.
The Institute said lower income buyers were less likely to benefit from home ownership than wealthier people as they lacked a financial buffer to cope with often volatile incomes and unexpected costs of maintenance.
RICS comment on skills capacity in construction
According to the Royal Institution of Chartered Surveyors, the availability of cheap craft workers and technicians from eastern Europe has helped fill skills gaps and restrain wage growth in construction. Employment costs have, however, started to rise as construction order books have. RICS estimates that up to 10 per cent of vacancies in industry have been filled by east Europeans during the past two years.
Housing Associations to launch REIT
A consortium of 17 housing associations that own a total of £10 billion of property is to launch a residential Reit (real estate investment trust) early next year according to the Financial Times. It is understood the partnership is close to hiring investment bankers to advise on the flotation that could raise - at the very least - £200 million. The housing associations, which are working closely with the Joseph Rowntree Foundation, the social charity, are set to use Reits as a new funding avenue to pay for their development activities. (Financial Times 2 June)
Consultation/Key Publication Dates
Code for Sustainable Homes Implementation Autumn
Home Information Packs (HIPs) Consultation Closed 31 December
HIPs – 10 to 12 planned trials Autumn 2006
HIPs Introduction 1 June 2007
Housing and Regeneration Consultation Closed 19 May
HBF Events
HBF Graduates Conference 12 July
For all full list of HBF events please visit the HB Media website click here
John Slaughter
Director of External Affairs
Home Builders Federation
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