Friday, 11th February 2011
Top stories this week
Grant Shapps to hold First Time Buyer summit.....read more
Government wins appeal on Regional Strategies.....read more
Chris Huhne announces review of the Feed in Tariffs scheme.....read more
RICS: Housing market remains sluggish.....read more
Stewart Baseley awarded CIH honorary membership.....read more
Pickles joins powerful speaker line up for HBF policy conference.....read more
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Government and political news
Grant Shapps to hold First Time Buyer summit
Housing Minister Grant Shapps will hold a First Time Buyer Summit next week to which HBF and other trade bodies have been invited to discuss possible further action to support those seeking to get on to the property ladder. Areas that are expected to be discussed include local approaches to increasing shared ownership or shared equity, the scope for mortgage insurance to support additional lending and the potential for innovation in mortgage products. HBF will report on follow up to the summit.
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Government wins appeal on Regional Strategies
The Coalition Government's intended abolition of Regional Strategies can be taken into account when making planning decisions, the High Court agreed this week.
The judgment - in a High Court case brought by CALA Homes - confirms that the intended scrapping of Regional Strategies is a 'material consideration' which can be considered by local planning authorities and planning inspectors when making decisions.
Planning Minister Bob Neill said:
"We are determined to return decision-making powers to communities and provide powerful incentives so people can see the benefits of building more homes, and the Bill will help achieve this.
"This judgment makes it clear that planners can take into account the Government's intention to do away with Regional Strategies.
"The Coalition Government made a firm pledge to sweep away these controversial strategies that have proved that top-down targets do not build homes. All they have produced is the lowest peacetime house building rates since 1924 and fuelled resentment in the planning process that has slowed everything down."
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HBF Note: this judgement does not alter the fact that the decision-making process must start with the development plan which, due to the previous Cala judgement, includes the Regional Strategy as a key element.
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CLG: Government boosts community ownership by releasing central hold on local assets
Local communities will get the freedom to sell, rent or share community owned assets bought with central government money, such as council buildings, shops and business parks, Decentralisation Minister Greg Clark announced this week.
Ministers are ending rigid 'clawback rights' that stopped community and voluntary groups selling or changing the use of community land or buildings that were funded by specific historic government grant programmes. A legacy of centrally imposed restrictions meant that original grant funding was clawed back if one of these local assets was sold or their original purpose changed - even if the government scheme had long since ended.
Communities will now be free to use their assets as security to obtain loans to sustain or expand their activities. If an asset is too expensive or no longer fit for purpose they will be able to sell it and move to more appropriate premises that better meets the needs of local people.
Greg Clark said:
"Community and voluntary groups who know their area best need a real say on how their local services, buildings and businesses are run. I'm determined to bust every centrally imposed barrier that holds communities back from acting in the best interests of local people.
"Today we're ending rigid central restrictions that stopped communities from maximising the potential of their public land and buildings by clawing back central funding. Ending clawback rights will put communities back in charge of community assets and gives them the freedom and flexibility to prioritise their current needs over dated central diktats."
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Chris Huhne announces review of the Feed in Tariffs scheme
Energy Secretary Chris Huhne has launched a comprehensive review of the Feed in Tariffs (FITs) scheme following growing fears that large scale solar farms could take up too much money.
Since FITs began last year more than 21,000 installations have been registered to date. The vast majority of these are domestic installations, including solar panels, wind turbines and microhydro plants.
Last year’s Spending Review committed Government to save 10% of the costs of FITs in 2014-15 through a review due to start in 2012 or earlier if uptake exceeded Government expectations. Because of the risk of an increasing number of large scale solar farms which could push FITs costs off track, and the need to give industry added certainty to invest, the Government has announced a comprehensive review into the scheme. The Government also hope to publish next month measures to support renewable heat within the budget agreed at Spending Review.
Chris Huhne said:
“The renewables industry is a vital piece in the green growth jigsaw and this review will provide long term certainty while making sure homes, communities and small firms are encouraged to produce their own green electricity.”
In his written Ministerial Statement, Mr Huhne said:
“In light of the economic and fiscal situation, inherited by the Coalition, it is imperative that we take a more responsible and efficient approach to public subsidy, including where this subsidy is funded through energy bills. Specifically the Spending Review committed to improving the efficiency of FITs and finding £40million of savings, around 10%, in 2014/15.
“Since the Spending Review, I have become increasingly concerned about the prospect of large scale solar PV projects under FITs, which was not fully anticipated in the original scheme and could, if left unchecked, take a disproportionate amount of available funding or even break the cap on total funding. Several large solar installations have already received planning permission. Industry projections indicate there could be many more in the planning system. In light of this uncertainty and the risk that such schemes could push FITs uptake off trajectory and may make the Spending Review savings difficult, I have decided to end the potential for damaging speculation and bring forward the review of the Scheme to look at ways of correcting these early teething problems”
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Please click here to read the ministerial statement in full
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Industry news
NHBC proposes independent Accredited Contractor Scheme under the Flood and Water Management Act 2010
The Flood and Water Management Act (FWM Act) will introduce major changes to the way the industry undertakes the adoption of sewers and lateral drains, new requirements for bonding and require greater use of Sustainable Drainage Systems.
The implementation of the Act is currently a major area of work for HBF and we are actively representing the interests of the industry in discussions with Defra and other parties to determine the detailed transition to the new regime.
Alongside this, NHBC has proposed that an independent Accredited Contractor Scheme be established which, as well as helping to raise standards, would act as an alternative to bonding. This has the support of the HBF and others in the sector making representations to the Government.
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ONS: Output in the construction industry, 4th quarter 2010
This bulletin shows output in the construction industry for the fourth quarter of 2010.
Headline figures are:
The total volume of construction output in the fourth quarter of 2010 fell by 2.5% compared with the third quarter of 2010;
All new work fell by 2.0% and repair and maintenance fell by 3.7%;
The total volume of construction output in the fourth quarter of 2010 rose by 8.0% compared with the same quarter in 2009;
All new work increased by 14.5% and repair and maintenance (R&M) decreased by 3.3% compared with the same quarter in 2009.
The negative growth in quarter four can be partly attributed to the impact of the poor weather in December. However, the exact extent of this impact cannot be determined.
The volume of new private housing work in the fourth quarter of 2010 was 3% lower compared with the previous quarter. New private housing output in the fourth quarter of 2010 was 18% higher compared with the same quarter in 2009.
The volume of new work in the public housing sector in the fourth quarter of 2010 was 3% higher than the previous quarter and 36% higher compared with the same quarter in 2009. It was the highest output since the first quarter of 1980. New work in this sector has been increasing for the last seven quarters.
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HCA: plans for Peterborough ‘zero carbon’ homes are approved
Construction of Britain’s largest development of ‘zero carbon’ homes is expected to start soon following approval of the scheme by Peterborough City Council’s planning and environmental protection committee this week.
The homes in Peterborough are being delivered as part of the Government’s Carbon Challenge programme, managed by the Homes and Communities Agency (HCA).
Morris Homes, working with architects Browne Smith Baker and landscape architects Barnes Walker, will build 295 homes to Level 6 of the Government’s Code for Sustainable Homes on a 17-acre (seven hectare) former factory site close to Peterborough United’s London Road football ground in Fletton.
The sustainable development will provide a mixture of 63 two-bedroom, 90 three-bedroom and 68 four-bedroom houses plus 74 two-bedroom apartments in a seven-storey block. The apartment block, complete with a grass roof and green walling, will include a 278-sq metre (3,000 sq ft) food store and parking space for cars and cycles.
40% of the homes – 72 houses and 48 apartments – will be offered under social rented or shared ownership terms to people on the housing needs list. This is enabled by a grant of £7.8m from the HCA’s National Affordable Housing Programme 2009/10.
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ONS: Housing and planning key facts, England
This quarterly leaflet contains tables of key figures and web links to a fuller collection of data shown in the Department for Communities and Local Government’s Live Tables.
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Housing market news
RICS: Housing market remains sluggish
The housing market remained sluggish during January, due to continued lack of buyer demand and low levels of supply, says the January 2011 RICS UK Housing Market survey.
7% more surveyors reported demand for property fell rather than rose (from -12 in December), indicating potential purchasers remain cautious about the outlook for the economy and the possibility of mortgage rate increases later in the year.
New instructions, which indicate supply levels to the market, were also moderately negative, with 3% more surveyors reporting instructions fell rather than rose – although this is an improvement from -14% in December.
Alongside this, newly agreed sales continued to drop at a broadly similar pace to the past few months. Weakness in market activity was also reflected in actual sales transactions, as average sales per surveyor (in the three months to January), slipped back to 14.6. This compares with a reading of 15.2 in December and is the lowest figure since June 2009.
Meanwhile, 31% more surveyors reported house prices fell rather than rose in January. Although negative, this net price balance has now improved for three months in succession and stands at its best level since July last year. Significantly, the majority of respondents reported prices were unchanged between December and January reflecting the continuing shortage of good quality stock on the market.
Across the UK, all regions continued to record negative net price balances during January, with the East Midlands (-59) and Yorkshire and Humberside (-46) registering the weakest numbers. By way of contrast, in London the price balance improved to just -4. More significantly, price expectations in the Capital actually turned positive (albeit to only +1) for the first time since the middle of 2010.
Despite the slow market, surveyors remain cautiously optimistic about future prospects, with the sales expectations net balance edging up from +8 to +10. Meanwhile, price expectations remained negative, but less so than last month, with 26% more surveyors predicting falls than rises. This is the strongest reading for this series since June last year.
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CML data shows a stable but subdued mortgage market in 2010
New data from the Council of Mortgage Lenders shows that mortgage lending stabilised in 2010 following very sharp falls in 2008 and 2009.
There were 529,300 loans advanced for house purchase in 2010, worth £77.1bn, an increase of 3% by volume and 11% by value compared with 2009. Loans for remortgage were at a 13-year low, following the global financial crisis. They totalled 313,200, worth £39.3bn, in 2010, down 23% by volume and 24% by value from 2009.
House purchase lending in 2010 accounted for 57% of all mortgage activity, up 9 percentage points from 2009, and loans for remortgage accounted for 29%, down 7 percentage points from 2009.
There were 14,500 loans to first-time buyers advanced in December, worth £1.7bn. This was down 3% by number and 6% by value from November and down 42% by number and 41% by value from the previous December. The typical first-time buyer in December 2010 had a deposit of 23%, a slight tightening in criteria from 21% in November. They also borrowed 3.23 times their income and spent 12.9% of their income on interest payments, the lowest proportion since February 2004. For 2010 as a whole, first-time buyers took out 194,600 loans, worth £23.3bn, down 1% in number and up 6% in value from 2009.
Lending to home movers also fell in December. The number of loans advanced fell by 4% from November to 25,400 and the value fell by 7% to £4bn. Home-mover loans were also down 33% by number and 29% by value from December 2009. Home movers in December borrowed on average 68% of the value of their property, unchanged from November. They spent an average 9.5% of their income on interest payments, also unchanged from November.
Since 2007, there has been a clear shift away from interest-only mortgages, in particular for first-time buyers. In December only 6% of first-time buyer loans were interest only, compared with pre-2007 when around 30% of all mortgages to first-time buyers were interest only.
Michael Coogan, Director General of the CML, commented:
"2010 was about the mortgage market continuing to adapt to the post-credit crunch environment, and the full year data shows that the lending industry is now on a more stable footing but at historically low levels of activity. House purchase lending held up, and shows the market is open for business. However, it is still not serving all customer groups that may want to borrow, in particular those without a significant deposit.
"Access to funding for lenders is expected to stay under pressure this year, but it will now be matched by lower consumer demand due to the economic backdrop and a range of uncertainties which will impact the timing of borrowing decisions. We conclude that this will lead to gross lending levels in 2011 staying flat compared to 2010, with downside risks."
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Buy-to-let market continues modest improvement
The buy-to-let market grew by 7% in 2010, according to the latest data from the Council of Mortgage Lenders. At the end of the year there were an estimated 1.3 million buy-to-let mortgages outstanding, worth £152bn, accounting for 12% of the total value (11.5% by number) of mortgages outstanding.
The total value of buy-to-let lending in 2010 was £10.4bn (22% higher than in 2009), and the total number of loans advanced in the year was 102,000 (10% higher than the previous year).
In the fourth quarter of 2010 there were 28,600 new buy-to-let loans advanced, worth £3bn. This was a rise of 6% by volume and 7% by value from the third quarter.
In terms of loan performance, the buy-to-let sector has seen a further improvement in the number of mortgages in arrears. While direct comparisons with the owner-occupied sector are difficult because of the additional option of appointing a "receiver of rent" on a buy-to-let loan, the general picture is that the share of arrears cases accounted for by buy-to-let loans is now only just over the overall buy-to-let share of the mortgage stock, having previously been notably higher than the owner-occupied sector. Low interest rates are a key driver of this narrowing of the gap, since the largely interest-only buy-to-let sector gains greater benefit from lower interest payments than the predominantly capital-and-interest owner-occupied sector.
Looking ahead to the prospects for the buy-to-let sector in 2011, the CML expects strong rental demand to remain, driven not least by the continuing deposit constraints to entry to the owner-occupier market.
Commenting on the latest results and the outlook for the buy-to-let market, CML Director General Michael Coogan commented:
"Funding remains a key constraint on growth in buy-to-let lending, but demand seems to be resilient and loan performance has improved. Looking ahead, loan performance could potentially be adversely affected by rising rent arrears or interest rate rises, but at present there is no indication of these pressures materialising in practice. There is also a strong counterbalancing growth influence on the buy-to-let market, as tenant demand seems set to remain high in the face of continuing deposit constraints to entering the owner-occupier market."
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RICS: Cautiously positive outlook for the London housing market
The housing market in London looked more positive during January, with chartered surveyors reporting increased buyer demand and steady levels of supply, says the latest RICS UK Housing Market Survey.
17% more surveyors reported demand for property rose rather than fell (from minus 3% in December), indicating that purchasers may be beginning to feel more optimistic about the regional market. New instructions, which indicate supply levels to the market, remained fairly flat with 1% more surveyors reporting instructions fell rather than rose, a slight drop from plus 1% in December.
Newly agreed sales continued to fall, with 14% more surveyors reporting that activity fell rather than rose during January. Weakness in market activity was also reflected in actual sales transactions, as average sales per surveyor (in the three months to January), remained low at 14.
Meanwhile, 4% more London surveyors reported house prices fell rather than rose in January. Although negative, this net price balance has now improved for three months in succession and stands at its best level since July last year. Across the UK, all regions continued to record negative net price balances during January, with the East Midlands (minus 59%) and Yorkshire and Humberside (minus 46%) registering the weakest numbers.
Ian Perry, RICS spokesperson, comments:
“Despite the slow market, surveyors remain optimistic about future prospects, with the sales expectations net balance edging up from plus 15 to plus 19. Meanwhile, price expectations in the capital actually turned positive (albeit to only plus 1%) for the first time since the middle of 2010. This is the strongest reading for this series since June last year.
“The housing market in London is looking more optimistic with demand rising, However, uncertainty over prospects for employment, alongside the shortage of mortgage finance, particularly for first-time buyers, continues to weigh on transaction levels. What is clear is a regional pattern emerging, with London seeing a greater level of price resilience while in much of the North and Midlands the market remains under greater pressure."
Please click here to view the full survey
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Economic news
CBI: Growth still expected in 2011, but it will be slow
The CBI is continuing to forecast that the UK economy will grow in 2011, but at a slow pace.
The impact of December’s bad weather means the UK’s leading business group now expects this year’s GDP growth rate to be 1.8%, down slightly from an already sluggish 2.0%. Its forecast for 2012 is for slightly faster growth of 2.3%, down from a forecast of 2.4% in December.
Although a number of risks to the outlook remain, the UK economy is still on the road to recovery, and the CBI maintains its view that the risk of a double dip into recession is low.
John Cridland, CBI Director-General, said:
“The early estimate for GDP growth in the final quarter of last year came as a surprise to everyone, suggesting that underlying growth may have been weaker than previously thought.
"We must wait and see just how weak it was, and how much was down to December’s bad weather, but we do expect growth in 2011, albeit rather anaemic and sluggish, which will accelerate during 2012.”
Despite the New Year rise in VAT, a bounce back after the bad weather of December is expected to help quarter-on-quarter growth edge up to 0.6% in Q1 2011. The CBI’s forecast for the remainder of 2011 is broadly unchanged, with steady but modest growth of 0.5% expected over each of the next three quarters.
Quarterly growth rates are still expected to accelerate gradually during 2012, with the economy forecast to expand by 2.3% over the year as a whole. This is still rather subdued for this point in a recovery.
Inflation will remain stubbornly high during this year, partly due to the impact of higher VAT but also due to pressure from rising energy and commodity prices. CPI inflation will exceed the Bank of England’s 2% target in 2011 for a second year running.
The CBI predicts that the Bank will start to normalise monetary policy in the spring, with interest rates edging up gradually, reaching 2.75% by Q4 2012. With this gradual rise in interest rates and the VAT increase falling out of the equation from January 2012, inflation is forecast to settle close to target throughout 2012.
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MPC leaves the Bank Rate on hold
The Bank of England’s Monetary Policy Committee this week voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200bn.
The Committee’s latest inflation and output projections will appear in the Inflation Report to be published at 10.30am on Wednesday 16th February.
The minutes of the meeting will be published at 9.30am on Wednesday 23rd February.
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Mortgage market begins to shake off shackles of seasonal slowdown
The residential valuation sector got off to a flying start in 2011, with a 27% increase in valuation activity year-on-year in January, according to the latest research by Connells Survey and Valuation.
This is the second successive annual increase in residential valuation activity in January, but the growth was not just an annual improvement. In January, the total number of valuations for residential property increased by 9% compared to December 2010, although a proportion of this figure can be attributed to delayed transactions and valuations which had to be put back because of Christmas holidays and the adverse weather in December.
Paul Staley, Corporate Services Director of Connells Survey and Valuation, comments:
“The onset of Christmas – and December’s arctic weather – boosted activity in January. A large proportion of valuations were rescheduled in December, and many borrowers and buyers delayed decisions until after the New Year. But the seasonal phenomenon doesn’t mask the underlying positive trend of growth, driven by a strong pick up in buy-to-let investment and remortgaging. We’ve seen a very strong start to 2011, and if activity continues in a similar vein throughout the year, we will see further growth in the valuation sector.”
The number of valuations for prospective buy-to-let landlords rose for the second successive month, with 8% more valuations conducted in January than in December.
The number of first-time buyers on the market increased in January, with 10% more valuations conducted for first-timers than in December – although this was a slight dip of 7% compared with January 2009.
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HBF news
Stewart Baseley awarded CIH honorary membership
HBF Executive Chairman Stewart Baseley was one of three housing figures awarded honorary membership of the Chartered Institute of Housing this week.
In making the awards, CIH President Paddy Gray said:
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“I am absolutely delighted that CIH is awarding honorary CIH membership to three very distinguished members of the housing community. Stewart Baseley, Michael Coogan and John O’Connor are influential figures and have all made significant and valued contributions to the housing sector.”
Stewart Baseley said:
“CIH has a vital role to play in helping to address the housing crisis this country faces and increasing housing supply. Its lobbying at Government level will be essential if policies are to be shaped such that they allow its thousands of housing professional members striving to build and improve communities to succeed. I am extremely proud to be made an honorary member of CIH and will do all I can to help achieve the many mutual objectives it shares with HBF.”
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HCA seminar for HBF members: The Private Rented Sector Initiative (PRSI) – Lessons Learnt
The HCA will be hosting a seminar for HBF members entitled “The Private Rented Sector Initiative (PRSI) - Lessons Learnt”, on 22nd February, from 11.00am to 2.00pm.
Places are limited and will be allocated on a first come first served basis. If HBF members would like to attend please email your details to rosie.hinchliffe@hbf.co.uk
The seminar, which is free to HBF members only, will be held at the HCA offices in Tottenham Court Road, London.
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Events
HBF Policy Conference 2011 – Pickles joins powerful speaker line up
Communities secretary Eric Pickles has confirmed this week that he will speak at the 2011 HBF Policy conference, topping a powerful line up that also includes Monetary Policy Committee member Professor David Miles, CBI director general John Cridland and Lloyds commercial director of mortgages Stephen Noakes.
The conference in London on Thursday March 31 will focus on the Localism agenda, solutions to the challenges of the mortgage market, the affordable housing situation and the progress towards zero carbon. The keynote speakers will be supported by leading HBF experts including executive chairman Stewart Baseley, director of economic affairs John Stewart and planning expert Andrew Whitaker to provide detailed analysis of each of these key issues.
Also speaking will be Richard Hill, deputy chief executive of the Homes and Communities Agency, and the chief executive of the Zero Carbon Hub Neil Jefferson.
An expert panel will discuss and review the detail of the Localism Bill and the National Planning Framework.
As ever, the HBF Policy Conference will be a must-attend conference at the beginning of an important and fascinating year for the industry.
Please click here to book
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HBF Annual Industry Lunch 2011
Tuesday 10th May – Marriott Grosvenor Square London
Housing Minister invited to speak at this year’s Annual Industry Lunch
HBF can confirm that the HBF AGM & Annual Industry Lunch will take place on Tuesday 10th May at the Marriott Grosvenor Square Hotel, London. The day will begin with the AGM and Open Council meeting and be followed by a drinks reception and the annual lunch.
Please click here for more information and to download a booking form.
If you have any queries about any of the above please contact the events team on 020 7960 1646 and events@house-builder.co.uk
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Save the Date! - HMI conference and annual report launch,
Wednesday, 12th October 2011, Savoy Place, London
The ninth annual Housing Market Intelligence conference will be held on 12th October 2011 and will include the launch of the annual Housing Market Intelligence Report. Over the best part of the past decade, the Housing Market Intelligence conference has established itself as the leading event for business planning and strategic thinking in the private sector house building industry.
Full details available soon. Keep up to date with events by registering for alerts at www.house-builder.co.uk
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Save the date – The Housebuilder Awards 2011
Thursday 3rd November, Millennium London Mayfair Hotel
The Housebuilder awards, the highlight of the house building calendar, celebrate the very best of industry and the achievements of those leading the way in innovation.
Details of how to enter and to book a place at the awards will be posted shortly. Keep up to date with events by registering for alerts at www.house-builder.co.uk
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Habitat for Humanity – Hope Challenge 2011!
HBF’s nominated charity Habitat for Humanity has announced that its annual fundraiser ‘The Hope Challenge’ will take place next year from 11-13th July. The event involves a weekend in the stunning Peak District national park where participants take part in a series of challenges and have to build their own shelter in which to spend the Saturday night.
Want to know more? Then email hopechallenge@habitatforhumanity.org.uk or call 01295 264240.
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HBM Business Manager to travel to Nepal – can you help?
Housebuilder Media Business Manager Helen Board will next year travel to Nepal with HBF’s nominated charity Habitat for Humanity, to work with homeless people in what is one of the poorest countries in the world.
During her time there she will work with the HFH people on the ground to build a home for a family.
To make the trip possible she has to raise £2600 and is looking for sponsorship.
Please click here to sponsor Helen or to find out more
For other HBF events visit the website
For HBM events visit
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Rosie Hinchliffe
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