A weekly news summary covering all aspects of the house building industry from Pierre Williams, HBF's Head of Media, available to members only.
Housebuilders to get Affordable Homes Cash
The government is preparing to exclude smaller housing associations and give private housebuilders, as well as larger housing associations, hundreds of millions of pounds to build the affordable homes it wants. This major shift of channelling taxpayers’ money into private industry will form the centre of the Housing Bill in the Queen’s Speech later this month, according to the Guardian. Ministers have decided on the move after heeding complaints from private industry saying there is little incentive to build lower cost homes and because of delays in planning. (Guardian)
Brownfield Supply Limits
The first detailed study of the country’s stock of brownfield land by English Partnerships, reveals just 11% of the total 66,000ha is suitable for development. The rest is either tied up by regulatory constraints or financially unviable. As such, the total currently available in the south-east amounts to just 18 months supply and three years’ worth in the country as a whole. Despite putting a gloss on the report, EP has been forced to warn that the government’s 60% brownfield target for housing “cannot be guaranteed” beyond the immediate future and has warned that realising the “huge potential” of brownfield will require major public investment. Pierre Williams for HBF, said: “It is concerning that the detail needed to establish whether housebuilding can indeed take place on brownfield has only now been examined in detail.”(FT, trade press)
Bank Plays Down Threat of Negative Equity
Despite warning that some homebuyers might face negative equity if interest rates continue to rise, Bank of England Governor, Mervyn King, has played down fears of an 80s-style property crash. He said: “There is no indication that the scale of debt problems have risen markedly in the last five years and we can draw real comfort from that.” But he added that people must “think carefully” about the level of debt they could afford, and warned: “There is a risk that heavily-indebted households will be badly affected by changes in economic circumstances or interest rates” The Bank has also hinted that further rate rises are likely, given the expectation of strong economic growth next year. (All media)
Economists Question Rate Rise
Although moderate, last week’s interest rate rise has been questioned by some economists who feel it might have been unjustified given the latest figures showing High St activity has slowed down. The HSBC said: “The consumer seems to be wrong-footing the Bank of England. Recent figures show the consumer is already cutting back. This suggests the Bank was premature in cutting rates just as it was premature with its cuts earlier this year.” Other economists claimed optimism about a recovery in manufacturing could also prove premature, again suggesting the rate rise might not have been necessary. (All media)
And….House Prices Stall
The latest from the estate agency index, Rightmove, says prices fell 0.1% last months compared to a rise of 3.3% the previous month. The figures show a fall of 4.1% in the North and 2.2% in the South East, but rises in the Midlands, Wales and London. The overall slight fall has prompted renewed comment that the Bank of England’s quarter-point rise in rates was unnecessary. The Nationwide also said it is expecting the market slowdown rather than crash (Express, FT)
Banks to Unveil US-Style Mortgages
A consortium of banks is attempting to revolutionise the housing market by introducing what the Chancellor wants - long-term, fixed rate mortgages with penalty-free early redemption if interest rates fall. The consortium, led by Northern Rock, is calling on the European Commission to back the scheme. Economists say it would boost growth and the Chancellor believes this type of mortgage is a key component in ending the boom-bust cycle of the market. If all goes to plan, these mortgages could be available in just two years. A spokesman for the consortium said: ”This will give consumers a much better deal. The UK is always very precarious when rates go up because we end up being over-borrowed. We have this great flexibility when rates fall but now we have had a rise of just 0.25%, everyone is panicking about a 1990s-style crash.” (Times, Independent, Guardian, FT, Telegraph)
Return of the Sellers Pack
The government is determined to push through its second attempt to reform the conveyancing process with a new form of the sellers’ pack. Despite trials of the initial scheme in Bristol three years ago proving unpopular with both sellers and agents, Home Information Packs will be included in the Queen’s Speech next week. The National Association of Estate Agents said: “Whatever way you look at it, it’s going to increase the cost to the homeowner. It will just mean extra red tape.” The organisation also claimed there would be too few surveyors to complete the home inspections required but the Consumers’ Association was delighted. (Mail, Times)
Rics Attacks New Homes
The Rics has attacked the size and soundproofing of new homes and suggested plasterboard is to “blame”. It called for better insulation and workmanship if Prescott’s campaign for smaller, higher-density housing is put into action and said that its own survey revealed 77% of people would “not even consider living in a flat”. It added that the government would have a “tough sales job” of convincing people to live at higher densities. (Mail)
Tax Inspectors Set to Check on Home Buyers
House buyers will be subject to visits from tax inspectors when the Stamp Duty Land Tax comes into force on December 1. Inspectors will be checking that the right amount of tax has been paid, especially on those homes bought close to the pinch points where higher rates apply. Up to now, the Inland Revenue had no legal powers to enforce the “duty”, although as the Government would not give title to a purchase without it, payment was unavoidable. However, now that it is becoming a tax, inspectors have a mandate to carry out spot checks and they are expected to take a strong line. This will put extra pressure on those trying the traditional methods of escaping higher thresholds. The change will also make conveyancing slightly more complex, adding at least £50 to bills. But the greatest worry is that the move detaches Residential Stamp Duty from Commercial Stamp Duty, allowing the Treasury to raise Stamp Duty on residential but not commercial. (FT)
HBF Note: This has clearly been introduced to clear the way for higher Stamp Duty on residential only
Kippers
They’re now known as “kippers” - Kids In Parents’ Pockets Eroding Retirement Savings. Such is the problem faced by the younger generation in getting a foot on the housing ladder that 6.8 million over 18s still live with their parents, of which 2 million are over 30 and one million over 36. To support and, ideally get rid of them, parents pay out £20 billion a year - much of which goes providing them with a deposit on their first home. Prudential, which carried out the survey, said: “The findings may come as a rude shock to parents who may be stuck with their kids for much longer”. (Mail)