Weekly News Summary 6 October, 2003

7 October, 2003

A weekly news summary covering all aspects of the house building industry from Pierre Willaims, available to members only.

Wilson Bowden Calls for Release of Government Brownfields

Government Ministers should stop blaming housebuilders for landbanking and instead release their own vast reserves of brownfield land. Wilson Bowden, which lobbied at the Labour conference, called for greater volume as the most effective way of addressing affordability. Chief Executive Ian Robertson and Legal Director Nick Townsend accused the Government of double standards: “The government has often accused us of land hoarding but every site we have in our ownership is being worked on. The government needs to look at its own land and decide whether it can say the same.” The National Land Use Database estimates a total of 66,000 hectares of brownfield is available of which 28,500 is suitable for housing - enough for 880,000 homes. Government owns at least 30% of this. (Times, Telegraph)

However…Euro Rules Hamper Brownfield Clean Up

Plans to accelerate housebuilding on brownfield could be wrecked by new European laws that will raise clean-up costs. A summit next month to discuss the EU’s Landfill Directive is expected to conclude that it will leave the South East with barely any hazardous waste dumps. This could more than double decontamination costs. The remediation research group Cl:aire, said: “There is no doubt that the cost of dig and dump decontamination is going to rise due to increased transport costs and stricter analysis requirements - possibly by more than 100%.” Government figures show that of the country’s 60,000 hectares of brownfield, 20,000 are contaminated. (Trade press)

New Tax on Homes?

The Chancellor may be plotting a big tax hike on housing - using the boom in prices as justification. The black hole in public finances arising from the government’s spending splurge could be filled by a rise in Stamp Duty, a new-style property tax based on the value of homes or even Capital Gains Tax on the profits from sales. Peter Williams of the Council of Mortgage Lenders, said: “Our worry is that Brown is preparing the ground for something big.” Pierre Williams for HBF, said: “This is very much a concern. The Government has already benefited hugely from the housing boom. Since 1997, Stamp Duty revenues have trebled and Inheritance Tax take is up by 60%.” (Sunday Times)

HBF Note: With government spending seemingly out of control on borrowing of £35bn this year against a forecast of £27bn, this has to be a worry. After all, the Chancellor has provided adequate proof that he considers housing an ideal source of tax.

Rates Rise Unlikely in Near Future

Interest rates are unlikely to rise until well into next year according to the latest analysis by both the FT and Sunday Times. However, other commentators are not so sure. The discrepancy arises from all analysts agreeing that rates will have to rise, but some expecting the Bank of England to wait for the growing economy to gather speed before putting the brakes on. (All media)

Slow Rise for House Prices

The new FT house price index says prices have slowed sharply and is completely at odds with the strong growth claimed by mortgage lenders’ indices. In the year to September, the FT says prices have increased just 2.9%. This difference can be blamed on the failure of the lenders to take cash buys into account. (FT)

Prediction of 20% Fall

In a new prediction of future gloom, the consultancy Capital Economics says prices are likely to crash by 20% when interest rates start to rise. It says with average prices now five-times average earnings and record levels of household debt, the tide will have to start turning when interest rates rise again. A spokesman said: “In reality it is just the same as last time around - an asset boom fuelled by a combination of fear and greed. The strains are already starting to show with first time buyers at an all-time low.” (All media)

Rooker: “Most Green Belt is Rubbish”

At a conference fringe event last week, regeneration minister Lord Rooker dismissed fears that the Government’s massive house building programme would destroy the countryside. In a clear attack on the anti-development lobby, he spoke of an “obsession with Green Belts” and added: “Most Green Belt is rubbish. It’s not areas of outstanding natural beauty, it’s not National Parks.” At the same event, Housing Minister Keith Hill accused local councils of being “too negative” on development. He said: “It’s the role of elected members to represent their communities but it is not their role to resist sustainable growth. I am aware of the need for culture change.” (Trade press)

VAT Scrapped on Serviced Plots

All land sold for housebuilding is to be VAT-free following a Government re-think. Until now, landowners selling serviced plots had to impose VAT on any infrastructure works - typically sewerage and water connection - carried out to make the plot suitable for housebulding. Now the costs of this work will be VAT-free. (Evening Standard)

Construction Booms But Housing Shortage Continues

In a feature article, the Observer considers why strong growth in construction has not resulted in increased housebuilding Construction businesses are making record profits with the sector recording its 56th consecutive month of uninterrupted growth. But this is not leading to an increase in housebuilding. It is this fact, coupled with excellent results from housebuilders, that has resulted in recent accusations of landbanking. Planning reform, if successful, will come with a demand from Government for a reward in the form of some kind of land tax - which itself might reduce the incentive to develop.

PPG3: Feeling the Squeeze

New homes are shrinking as a result of PPG3. Rics figures show homes built today are 40% smaller than they were 80 years ago. A Redrow development of three-storey homes in Cheshire was recently highlighted in the press because the narrow stairwells caused problems for residents moving in large pieces of furniture. Responding, Pierre Williams for HBF said the drive for high-density was having a real impact and is based on the mistaken notion that we are running out of land. (Sunday Times)

Best Value Living Standards Revealed

A survey comparing house prices with statistics on education, health and crime has produced the first map of England showing the best - and worst - places to buy a home. The survey revealed a clear North-South divide, with the North faring much better. In top spot was the village of Beeford in East Yorkshire. Among the worst are southern coastal resorts including Budleigh Salterton in Devon, Sidmouth and parts of Brighton. The survey is being seen as a useful tool for property developers in deciding where to look for sites and in marketing. (Observer)

HBF Note: This survey should not be confused with “Crap Towns” a book published this week highlighting the worst places to live in the UK

Silliest Councillors in the West

Residents of a new development have been “humiliated” by local councillors who decided to name a road in memory of a local comedian. Most occupants of Benny Hill Close, Eastleigh, were not aware of the name being selected before moving in. Some have written to the council demanding a change. (Express)