A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
HBF News
HBF/BPF/CBI/RICS research questions effectiveness of PGS
The Government’s proposed Planning-gain Supplement (PGS) may not deliver enough funding for new local infrastructure and could render some smaller developments unviable. A report by planning consultants Knight Frank, jointly commissioned by the HBF, British Property Federation, Royal Institution of Chartered Surveyors and Confederation of British Industry, found in an analysis of 18 case studies that less revenue would be raised from a PGS than under the current S106 system of negotiation, even if the rate were set at 30% of the uplift in land value.
The research also found that large redevelopment schemes would provide less revenue than the current system while some small developments may become unviable. The levy is extremely sensitive to the calculation of planning value, and hence could be very problematic and costly to monitor and collect, potentially adding further delay to the planning system. The PGS might eliminate local authorities’ discretion to allow developers cross subsidise development.
HBF Executive Chairman Stewart Baseley said: “HBF fully accepts that to achieve a step-change in housing supply, adequate infrastructure needs to be provided. However, this research shows that the PGS is complex and may not raise sufficient money. More thinking, consultation and research is required. The HBF stands ready to work with the Government to find a workable route forward.” (HBF Press Release)
Economic News
Chancellor gives backing to August rate rise…
Chancellor Gordon Brown gave his backing to the MPC’s decision to raise rates in August and hinted that he expects a further increase. In a statement to the International Monetary and Financial Committee at the International Monetary Fund meeting in Singapore on 17 October, Mr Brown said: “We know that if we are to sustain growth in the future we must never be complacent and always be vigilant to risks. So that is why I have said I supported the pro-active forward-looking action taken by the Bank of England in August and why we will continue to base public sector pay settlements on our two per cent inflation target.”
… while the September decision to keep rates on hold was unanimous
The minutes of the Monetary Policy Committee meeting on 6/7 September revealed that the decision to keep rates on hold was unanimous amongst the Committee members. The minutes stated: “Given that inflation was projected to remain above target for some time, a majority of Committee members judged that the data had been supportive of the decision they had taken in August to reduce the degree of monetary accommodation. But they concluded that the news since then had not been sufficient to warrant a change in the Bank Rate this month.” (MPC Meeting Minutes)
Political News
A third of young households cannot afford a home..
With mortgage costs reaching their 1990 peak, a third of all working households under 40 cannot afford to buy even at the low end of local housing markets, according to research from the New Policy Institute commissioned by the Joseph Rowntree Foundation. Mortgage costs are currently a third of average earnings for first-time buyers.
The report highlights that household growth is projected to rise to around 220,000 extra households per year between 2006 and 2021, considerably higher than the rate at which dwellings are increasing, of around 150,00 per annum. The report comments that “this would seem to require a substantial increase in the rate of house-building”. Housing costs were found to be a much higher share of disposable income for those on lower income, with the poorest fifth paying 25% of net household income. (Summary of Report Findings)
… as Government reasserts its promise to build more homes
Housing Minister Yvette Cooper was interviewed on the BBC Radio 4 Today Programme, and used the findings of the JRF report to support the Government's programme to increase housebuilding. Pointing out the disparity between the 30% growth in households in recent years compared with the 50% drop in homebuilding, she called for a "new consensus" to back increased homebuilding across the country. She stressed that the opposition to new homebuilding around the country "should not be underestimated."
The Minister also repeated her backing for the proposed Planning Gain Supplement, following questions that the Government are not providing enough money for the infrastructure to support new homes in the growth areas, particularly the Thames Gateway. (BBC Radio 4)
… and home builders’ support the call for increasing supply
Chief Executive of Bovis Homes, Malcolm Harris, also spoke on the Today Programme, while Ian Robertson, Chief Executive of Wilson Bowden, was interviewed on BBC Five Live's "Wake up to money". Both backed the Government’s ambition to increase the number of homes being built.
Mr Harris offered a perspective on affordable housing: “There is one issue though; that is the definition of affordable housing is rather too narrow in my opinion. The industry has responded to the challenge and is building now more smaller homes which should be included within this category. Around 70% of people in the UK currently own their own home. From all the research that is undertaken we know that around 85% wish to purchase so we have 15% of people who do not own their own home and wish to. The industry and government are looking at ways of assisting that 15% which is by provision of shared ownership, by the industry designing new homes that can be brought to the market at a very affordable price." (BBC Radio 4)
Mr Robertson was clear in what is holding up the supply of new more affordable homes: “The big issue is still planning, and to an extent land supply. The more sites and the more land we get planning permission on, the greater the supply of affordable homes. The less supply of land and planning then the lower the figure is. Government have made efforts on both, and there are some improvements in the supply of land. But I would say if you look back to the time of the Barker Review and compare the planning system now with then, it's probably more complicated rather than less, and it's probably more complicated on brown land than on green." (BBC Radio 5 Live)
HBF Comment: HBF Executive Chairman Stewart Baseley commented on the report: “JRF’s highlighting of the shortage of housing supply in the UK brings welcome attention to a profound social problem in the making. If demand for housing of all types is not met, then houses affordable to young families and those on low incomes will become increasingly out of reach. Given both the aspirations of Britons to home ownership, and the plight of thousands of homeless families, tackling the housing shortage is an imperative.”
Conservatives accuse Labour and Liberals of planning property tax
The Conservatives accused the Liberal Democrats of planning a house price tax that would add £2,000 a year to household bills and attacked a Government scheme being introduced in Northern Ireland.
Shadow Local Government Secretary Caroline Spelman said: “It is clear that both Gordon Brown and Menzies Campbell are plotting to introduce a house price tax - and cynically tap into the rise in property values in England in recent years. Brown and Campbell are conspiring to pick the pockets of middle England. Families and pensioners who have saved and improved their homes face the threat of soaring tax bills, without any improvements in their local services. Just because house prices have risen doesn't mean that local residents can afford higher local taxes; law-abiding, decent people are already struggling to meet the rising cost of mortgages, utility bills and local taxes. These sinister Lib-Lab plans for weighty tax bills just aren't welcome on England's doorsteps." (Conservatives' Press Release)
Minister calls for incentives to improve home energy ratings
Housing Minister Yvette Cooper called for Energy Performance Certificates (EPCs), which are a compulsory part of the Home Information Packs and rate a home’s energy efficiency, to be linked to incentives such as green mortgages. The Minister said she would be meeting mortgage lenders and energy companies to discuss such incentives. She also pledged £4 million to support the six area trials for HIPs due to be run by the Association of Home Information Pack Providers from November.
Ms Cooper commented: “Other countries offer green mortgages which give homebuyers money to meet the costs of making energy saving improvements. In England, sixteen councils have piloted schemes with energy companies where council tax rebates are offered to people who make energy saving changes to their homes. EPCs offer great scope for incentives like these.” (DCLG Press Release)
Nick Salmon, head of the anti-pack campaign Sellers Pack Law Is Not The Answer, said: "We await full details of just how this huge sum of tax-payer money is going to be spent but we can immediately question why the government is ploughing our money into trials that are being run by a body that represents companies seeking to make vast profits from HIPs. There must be robust and independent scrutiny of these so-called trials to ensure objectivity."
Peter Bolton King Chief Executive of the National Association of Estate Agents said: "The Association has always said that it was vital that any trials thoroughly test not only the systems but whether our concerns about the effect on the market caused by a lack of first day marketing and reduction in housing supply are justified. We have not been told how these trails are to be conducted and have doubts as to their effectiveness in a voluntary scenario." (NAEA Press Release)
Housing Market
House prices steady according to Rightmove
Rightmove reported that asking prices rose by 0.2% in the four weeks to 9 September, to stand 9.8% higher than a year ago. This followed a 1.6% fall over the preceding month, while the annual rate of growth picked up from 9.0%.
Commercial Director Miles Shipside commented: “Asking prices are at a virtual standstill. The market appears to be correcting affordability issues itself and does not need further intervention from the Bank of England. At this pivotal stage it is likely to do more harm than good.” (Rightmove September House Price Index)
Other News
Number of non decent homes falls
The number of homes failing to meet the Government’s standard for decent homes fell from 7.1 million to 6.3 million between 2001 and 2004, according to the 2004 English House Condition Survey published by the DCLG. 5.1 million private sector homes were non decent (29% of the private stock), while 1.3 million (31%) of social sector homes were non decent.
The thermal comfort criterion was the most common reason for homes failing to meet required standards, with 4.6 million lacking effective insulation or efficient heating. (English Housing Condition Survey 2004)
HBF Events
Chance to inform the DCLG’s policy direction at Housebuilding 2006
The Department for Communities and Local Government is giving developers the chance to discuss the latest housing and planning policies directly with DCLG representatives at the Housebuilding 2006 exhibition.
The DCLG has extended an open invitation to housebuilders to come onto its stand M37 on October 10 and 11, to find out more about its future policy direction and raise any concerns about current issues.
HBF Technical Conference 2006: Codes and Regs – The Way Forward
9 November 2006 - Nottingham Belfry Hotel, Nottingham
For those not attending Housebuilding 2006, the HBF Technical conference offers the opportunity to catch up on the technical issues of the moment. This parallel conference will be once again looking at the hot topics of the Code for Sustainable Homes and Building Regulations, and will address any further developments since HB06.
Current speakers are included from the following organisations: DCLG, LABC, HBF, Robust Details ltd.
For further information please contact events@hbmedia.co.uk or 020 7960 1646. To register your place on-line visit www.hbmedia.co.uk
Consultation/Key Publication Dates
Code for Sustainable Homes Implementation Autumn
Home Information Packs (HIPs) Revised regulations 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
Housing and planning incentives To 17 October
Planning and Pollution Control Consultation Closes 6 December
Part B of Building Regs – Document Autumn
Implementation April 2007
Water Regulations Consultation Document Autumn
HBF Events
HBF Annual Planning Conference 14 September
Housing Market Intelligence 2006 10 October
Housebuilding 2006
Business Design Centre, London N1 10 &11 October 2006
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
Housebuilding 2006
10 and 11 October 2006, Business Design Centre, London N1
Now in its third year the exhibition, housing market intelligence conference, management conference programme, free briefings and the Housebuilding Innovation Awards bring together all that is new in the housebuilding industry.
Visit www.housebuilding2006.com for more information.
Pre-register today to be entered in to a prize draw to win two trips to the Ashes Down Under (match tickets, flights and accommodation)