A weekly news summary covering all aspects of the housebuilding industry. Available to members only.
Barker II Interim Report
Interim Report of Second Barker Review published…
There are continuing concerns about the planning system’s level of complexity, plan-making and development control delays, which can hold back desirable economic investment, according to the Interim Report of the “Barker Review of Land Use Planning”, written by Monetary Policy Committee member Kate Barker. The Interim report does not, however, make any specific recommendations, as the final report (to be published with the Pre-Budget report in November or December this year) will explore what might be done to improve the planning system.
The interim report reveals little appetite for a radical reform of the system. The new system is still bedding down and the focus of final recommendations will be on refining the current system. The analysis observes that there are too few financial incentives for local authorities to adopt a “growth agenda”. While the report is not about housing, the importance of housing supply to factors such as labour mobility, local labour supply and the formation of business clusters is noted.
The report also says “the need to deliver land for housing may be having a knock-on effect of distorting the market for employment land”. On brownfield land the point is made that it is possible that only larger developers have the ability to handle complex issues, which acts as a barrier to entry for smaller players.
The report also notes a commonly held false perception that the country is over developed, pointing out that only 8.3% of England’s land area is urban. (Link to Full Report, Link to Executive Summary)
… which is welcomed by HBF…
HBF welcomed the interim report, with Executive Chairman Stewart Baseley commenting: “We warmly welcome Kate Barker’s analysis of the current planning system. As she states, there is a pressing need for the planning system to become more responsive and efficient, not least with regards to housing.” (HBF Press Release)
… the CBI…
The Confederation of British Industry also welcomed the Interim Report as endorsing the Confederation’s call for improvements to be made to the planning system. New Director General Richard Lambert commented: “For the majority of planning applications, business does not want the government to scrap the whole system and start again from scratch. Recent reforms need to be built upon, supported by greater resources for planning departments.” (CBI Press Release)
… the TCPA…
The Town and Country Planning Association also welcomed the Report, while calling for further-reaching reform of a national framework for infrastructure planning and an end to “nosey parker” planning at local level. TCPA Director Gideon Amos said: “Communities and businesses alike want simplicity and certainty from planning so the mention of alternative policy routes is welcome particularly if it means minor householder development can be removed from planning. There is a strong case to get rid of nosey parker planning processes and simply require a larger proportion of home extensions to meet a clear code in Building Regulations, instead of being debated around the planning committee table. This would free-up local authorities for more positive proactive planning and development” (TCPA Press Release)
… and the FT…
An editorial in the Financial Times on 5 July described the Report as “a sensible analysis of the impact of planning on productivity”. The FT noted that business has two broad demands of the planning system. Firstly, that it operates quickly and consistently in considering individual corporate developments. Secondly, that it can deliver big infrastructure projects in a timely and efficient way. (Financial Times, 5 July)
… while RICS questions the need for a further review…
The Royal Institution of Chartered Surveyors questioned the need to look at the planning system. Head of Policy Brian Berry said: “Further review of the planning system is misconceived at this point in time as it follows so soon after the Barker Review of housing and the fundamental review of the planning system enshrined in the Planning and Compulsory Purchase Act 2004. Another root-and-branch review of the land use planning system is unnecessary at this stage, as it is too early to judge how the new system will perform.” (RICS Press Release)
… and environmental lobby raises concerns
Friends of the Earth described the Review as “a major threat to the interests of communities and the countryside”. Executive Director Tony Juniper commented: “This Treasury-commissioned report is an attack on the regulations that safeguard our towns, villages and countryside. While Kate Barker pays lip service to community involvement, her review lays the framework for business to ride roughshod over the interests of local people and their environment.” (Friends of the Earth Press Release)
The Campaign to Protect Rural England (CPRE) inevitably criticised the report. Spokesman Nicholas Schoon said: “It's as if this report was written by two people facing in opposite directions. One of the writers appears to recognise the critical role of our planning system in protecting the environment for the benefit of us all, and in moving us towards sustainable development. The other writer appears to be a Treasury apparatchik hell bent on weakening the planning system in order to deliver a development boom for footloose international capital, whatever the cost to the environment and the countryside.” (CPRE Press Release)
Economic News
No surprise as rates left unchanged
As had been near unanimously anticipated by commentators and the financial markets, the Bank of England’s Monetary Policy Committee decided to leave the repo rate unchanged at its July meeting. (Bank of England Press Release)
Political News
Improvements can be made to the Planning system, says Minister
In an interview to the Financial Times, prior to the publication of the Barker Report, Housing and Planning Minister Yvette Cooper said that there was room for significant improvements in the planning system, “and that’s what we want Kate Barker to advise us on”. The Minister said that Local Authorities were being given greater financial incentives to counter “nimby” housing objections from locals. Ms Cooper also hinted that the Government is unlikely to introduce a tax on second home-owners: “In most parts of the country, the number of second homes is extremely small… is not a significant factor in affecting affordability.” (Financial Times, 3 July)
Conservatives to encourage green energy
The Conservative Party presented the interim findings of its Energy Review, which is examining the country’s future energy challenges. One of the key components of policy direction is to improve the regulatory structure for renewable and decentralised energy (including the remit of OFGEM) “to spark a revolution in green energy”. This objective will be designed to help promote microgeneration. In the next phase of the Review, the party will develop “policies to encourage the installation of energy efficient technologies in domestic and commercial buildings.” (Conservative Party Energy Review - Interim Findings)
Corporate News
George Wimpey issues a trading update…
George Wimpey gave a trading update on the first six months of the year, ahead of the publication of interim results on 1 August. Total UK housing completions rose by 28%, compared to the first half of 2005, to 5,854, with private completions up 24% at 5,138. The company also revealed that US completions in the first half were slightly below last year’s levels at 1,968, due to a slowing US market.
The statement commented: “In the UK, current market and price conditions remain stable. Against this backdrop we expect private completions in the second half to be at broadly similar levels to those in the second half of 2005. Our strong order book and our continuing focus on margin improvement in the second half will enable us to make further progress for the year as a whole.” (George Wimpey Trading Update)
… as does Wilson Bowden…
Wilson Bowden commented on “a notable improvement in many parts of the housing market during the first half of 2006” in a trading update ahead of interim results due out on 6 September. David Wilson homes saw a 2.5% fall in completions in the first half, compared to the same period a year earlier, to 2,135, while average selling prices rose by 6%. This was partly achieved by “an increase in the average unit size, underlying selling price inflation and mix”. (Wilson Bowden Trading Update)
… Galliford Try…
Galliford Try gave a trading update for the twelve months to 30 June, ahead of full results to be published on 7 September. The company’s house building arm completed 1,054 homes, the first time it has exceeded 1,000, which includes four and a half months trading from Chartdale, which was acquired in February. The company noted: “The housing market picked up in the second half of our financial year, and our housebuilding division exceeded its sales targets in a market that, with the limited use of incentives, remains at an acceptable level.” (Galliford Try Trading Update)
… and Bovis
Bovis Homes’ trading statement, ahead of interim results to be published on 11 September, revealed that the Group completed 1,262 homes in the first half of 2006, a 16% increase compared to the first half of 2005. Of this, 141 were social homes (11.2% of all completions), which compared to 246 (22.6%) in 2005. The statement also noted that: “A more significant proportion of the Group’s social houses for 2006 are scheduled to be completed in the second half of the year.” (Bovis' Trading Update)
Barratt to build 1,400 homes in West Scotland
Barratt Developments announced that it has secured nine redundant school sites in South Lanarkshire, West Scotland, on which it will build almost 1,400 new homes. The project will start next year and run until 2011 and part of the scheme will include specialist contractors building new replacement schools. The new homes will include flats and houses aimed at first-time buyers, starting at under £100,000.
Barratt Group Chief Executive David Pretty said: “Our West Scotland division is already one of the largest housing providers in Scotland and this important partnership project with South Lanarkshire Council will form a major part of its output going forward for the next five years. In common with major population centres across the UK, West Scotland is undergoing a period of historic renewal and transformation and we’re very proud to be playing a key role in that. New homes for all sectors of the market, alongside new state-of-the-art schools, can only be tremendously good news for the South Lanarkshire area, where new housing is in seriously short supply.” (Barratt's Press Release)
Housing Market
Prices fall in June
House prices fell by a seasonally adjusted 1.2% in June, according to the Halifax House Price Index. Prices over the second quarter as a whole were up 9.4% compared to the same period a year earlier. Halifax expect the market to remain stable over the rest of the year but the annual rate of growth to ease.
Chief Economist Martin Ellis said: “A combination of factors, however, is expected to cause activity and house price inflation to ease over the remainder of 2006. Substantial increases in utility bills and above inflation council tax rises are putting pressure on householders' finances with the majority of the impact of these increases yet to be felt. Recent upward movement in the pricing of fixed rate mortgages and mounting speculation of higher interest rates are also likely to constrain demand. Additionally, the ongoing historically high level of house prices relative to average earnings will curb housing demand.” (June Halifax House Price Index)
Equity Withdrawal remains strong
The volume of Mortgage Equity Withdrawal (MEW), which estimates secured borrowing that is not invested in the housing market, rose slightly in the first quarter according to the Bank of England. MEW totalled £12.5 bn in the first three months of the year, which equates to 5.8% of post-tax income. This share was almost unchanged from 5.7% in the preceding quarter, which was the highest share since the third quarter of 2004. (Bank of England Press Release)
Other News
Planning restrictions to be cut for micro-generation
The Government announced that it will reduce planning restrictions on micro-renewable technology, such as solar panels and small wind-turbines, as part of measures to simplify the planning system around minor developments, following a report by the Householder Development Consents Review Steering Group. The Government will publish detailed proposals on micro-generation in the Autumn.
Housing and Planning Minister Yvette Cooper said: “It is absurd that you should be able to put a satellite dish up on your house but should have to wrestle with the planning process for small scale micro-generation which is no more obtrusive and can have a real impact on tackling climate change. We want far more micro-generation to be treated as permitted development and we also should be able to simplify the system for small developments such as extensions.” (DCLG Press Release)
CPRE dismay at political consensus against it
In an column in the Guardian on 4 July, CPRE President Sir Max Hastings attacked the growing consensus backing what he described as a “plan to carpet England in general, and the South East in particular, with new homes.” Under the headline “Call me a Nimby, but its madness to concrete vast tracts of countryside”, Sir Max slates Kate Barker’s Review of Housing Supply as advancing “scenarios for levels of housebuilding so intemperate as to intoxicate even the insatiable industry lobby”, accuses the Guardian of heaping “scorn on rural Nimbys, who I assume includes me” as well as attacking think tanks the Policy Exchange and Adam Smith Institute for arguing in favour of large scale house building. Sir Max concluded “I don’t know about you, but I do not fancy living in a Britain whose aesthetic and environmental standards are set by the House [sic] Builders’ Federation and Ruth Kelly.” (Guardian, 4 July)
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 Graduates Conference 12 July
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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