A weekly news summary covering all aspects of the house building industry from Pierre Williams, available to members only.
Housebuilders Spared Sound Tests
Following HBF lobbying, the Office of the Deputy Prime Minister has accepted homes could be built to high levels of soundproofing by using Robust Standard Details, which do away with the need for expensive post-construction testing. Building Regulations Minister Phil Hope, said: “The Government is satisfied that Robust Standard Details can provide an effective alternative to pre-completion testing but is now consulting on the issue in order to gain a wider spectrum of opinion.” The Government first proposed house builders test a proportion of new dwellings to prove they complied with acoustic regulations a year ago. Housebuilders were worried about the financial consequences of failing the test, as just one home falling short of the requirement would have meant testing of all similar house types and the developer having to pick up the cost of remedial work and any delay in the sale. (Building)
Call Foe extra Taxes to Close “Property Divide”
Homeowners should be taxed more heavily to close the gap between rich and poor a Labour think-tank has suggested. The Institute of Public Policy Research said stamp duty should be used as a lever to regulate home buying and selling; that full Council Tax rates should be applied to second homes and that Inheritance Tax loopholes should be closed. The proposal is serious as many of the policies suggested by the Blairite IPPR have been adopted by this government. However, the report’s author, Chris Holmes, the former director of Shelter, has come under attack for living in a £600,000 house inherited from his mother. (All media)
Northern Boom Slowing Down
House prices in the North are beginning to slow according to Persimmon. The company’s average selling price was 22% higher in the first half of this year, helped largely by a buoyant market in the North. However, a picture is now emerging that the region is running out of steam. Chief Executive John White, said: “The North has had a very strong run recently but now there are signs of that abating too.” He added that overall price inflation in 2004 would not top 4%. Despite this, the company promised to raise the full-year dividend by 15% - a move following a decision by Wimpey to increase its payout ratio. Persimmon reported a 31% rise in pre-tax profits to £146m on sales 4% higher despite a 9% fall in completions due to planning constraints. (Telegraph, FT, Times, Express)
Interest Rates May Rise
The next move in interest rates may be up, the Bank of England has warned.
With mortgage lending surging and consumer appetite for debt undimmed, Paul Tucker, a member of the Bank’s monetary policy committee, said households should brace themselves for tougher times ahead, explaining that rates had been cut below their long-term average in order to support an economy which was now “delicately poised”. However, in the short-term, rates are expected to be held at 3.5% (FT)
Wilson Bowden Surges
Wilson Bowden has posted interim pre-tax profits almost £5m higher than analysts’ forecasted, of between £82m and £87m. Shares jumped 12.5p to 1067.5p on news that HSBC was to upgrade its full-year forecast for the company from £207m to £215m. Ian Robertson, Group Chief Executive, said: “These record results demonstrate the strength of our spread of operations and the resilience of the housing market.” Robertson also used the opportunity to insist that the planning system was “worse than ever”. (Times, Mail, Telegraph, Independent, FT, Sunday Telegraph)
Urban Renaissance Uphill Struggle
Britain’s provincial cities have suffered a greater exodus of people in the past 20 years than previously thought according to census figures. It shows government-backed urban regeneration schemes are struggling to keep populations in Birmingham, Liverpool, Manchester and Sheffield, which on average lost 7.1% of their inhabitants over this period. The opposite is true of London which has grown considerably, while Leeds has managed to keep its population steady. Tony Champion, a professor of population studies who produced the findings, said: “It is very clear that the urban exodus continues apace in spite of the variety of urban regeneration initiatives.” (FT)
Pidgley Offers Crosby Managers a £25m Deal
Berkeley Group has announced plans to sell Crosby Group to its top management in an innovative seven-year deal. On the expectation that “Crosby could generate over £500m of operating cash flow in less than seven years”, the deal arranges for the first £450m to be returned to Berkeley, with any further profits split between Berkeley and the Crosby managers. If all goes to plan the Crosby managers should get windfalls of around £5m each. Tony Pidgley said the deal was in keeping with the entrepreneurial spirit on which Berkeley was founded: “There is more motivation when you own the business. They’ll be working night and day to get that golden share and if they do better than expected, Berkeley shareholders get half of it.” (Telegraph, Mail)
PPG3 to Add 10% to Build Costs
House builders predict that the cost of building homes will rise by 10% over the next 12 months as a consequence of complying with PPG3. The estimate was the finding of a study carried out by Maven Management involving interviews with 83 house builders and designers. 44% found the time between identifying and developing a site had increased by up to six months as a result of the regulations. Eight per cent reported that the build time had increased by more than one year. (Building)
Demand for Rented Homes Increases
Demand for rented homes has risen over the past three months, although rents are only holding steady across most of country and still falling in London and the South East. The number of properties to let has also increased at its fastest pace for a year. The Rics said 16% of people were considering renting out property to finance retirement whilst 40% were relying on using their property in various ways to provide retirement income. The result, it claimed, was that while fears of an imminent collapse have evaporated, there could be “significant falls” in prices over the coming years. (FT)