KEY ISSUES Despite the difficult economic environment with all its well documented consequences for home builders and suppliers large and small, the sheer number of significant other issues and challenges our industry has to face inevitably dominates much of HBF’s workload. Some of these issues, such as our work on the Homebuy Direct scheme and the discussions we have instigated with HCA about how best they can deploy their funds to help unlock mothballed sites, are clearly aimed at addressing the current downturn and assisting homebuilders in the short term. Other items, notably the response to the Government’s consultation on the definition of zero carbon; developing a working relationship with the Tories; responding to their recent Green Paper on localism, which could have serious implications for our industry; and continuing our work to educate all key influencers on the impact the escalating cost of proposed regulatory requirements will have on future housing supply, are all longer term issues which will dominate our industry for many years to come. As ever I have attempted to provide you with a brief summary on these and many other subjects within this report. ECONOMIC AFFAIRS HomeBuy Direct (HBD) and Government measures We have continued our discussions with the Homes and Communities Agency (HCA) on the practical implementation of HBD. With around £3.2bn of new home sales at stake (likely to be around 18000 units), it is critically important for the industry that this initiative is a success. I am delighted that 79% of the £480m of HCA funds was allocated to HBF member companies, especially as HBF put forward the initial proposal to Government. We have been in close contact with the OFT to encourage them to process the necessary OFT clearances as quickly as possible. The mortgage situation remains fluid. A number of lenders have agreed to support HBD, and HCA discussions are ongoing with several other major lenders. We have discussed support for the scheme with several large lenders and we know the Government is putting pressure on lenders to support HBD. Pressure from HBF, individual home builders, the HCA and Government will continue over the next few weeks. Although there is no formal start date for HBD, HBF has proposed to the HCA and CLG that we should create a press launch to generate additional buyer interest in the scheme. They have both responded positively and discussions are ongoing. HCA Chief Executive, Bob Kerslake, and Chairman Robert Napier, were guests at the Major Home Builders Group meeting on 20th January. Following this discussion we carried out an urgent data collection exercise for the HCA among larger HBF members to identify the number of ‘mothballed’ sites that could, with appropriate HCA intervention, be put into production. We continue to work with the HCA on this initiative. Cumulative impact of regulation I know our work on the regulatory burden has aroused a great deal of interest within Government and among HBF members. The full presentation from our seminar for Government officials on 7th January is too bulky to distribute, and is rather indigestible without the explanation possible at a live event. Therefore we have been working on a report version of the presentation which members could use, whether for their own interest or to help explain the situation to others outside the industry. We hope to be able to distribute this in the near future. Private rented sector HBF Director of Economic Affairs John Stewart has had discussions with a range of experts in the sector. Establishment of a professional, institutionally funded private rented sector could bring considerable benefits to home builders in the future. For example, it would be a new source of demand which may be less subject to violent market cycles. Also, forward bulk sales could help underwrite large urban schemes, especially regeneration projects. There are a number of possible models being explored. Our initial intention is to try to bring some larger home builders together with experts in the sector to explore the best ways forward. Once we have a clearer picture of the implications of these models for home builders, we will be able to provide information to the wider HBF membership. However Governments have been trying to bring institutional money into the sector since at least the early 1980s, so there are no easy answers. Affordable housing It is quite clear the current model for delivering Affordable Housing, which is reliant on land value subsidy through S106 agreements, cross-subsidy from RSL market sales, and ready access to keenly priced private finance, with sharply reduced grant rates, is no longer viable. We have begun to explore alternative models with other stakeholders, including Treasury and CLG officials. The industry must play a part in finding a better delivery model because the impact of Affordable Housing on land values and development viability is so onerous. We cannot leave this task up to the social housing sector and Government. Ministerial roundtable John Stewart was invited to a very useful roundtable discussion of housing experts, chaired by Margaret Beckett. The discussion was wide ranging, including issues such as industry capacity for the recovery, the cumulative impact of regulation, mortgage funding, HomeBuy Direct and the private rented sector. Key contacts John Stewart and I met officials at the Bank of England to update them on market conditions and house building. We held one of our regular meetings with Richard McCarthy, Director General Housing and Planning at CLG, and his officials. We also arranged an important meeting jointly with the CML between senior house builders and senior executives from four major mortgage lenders. The discussion allowed us to understand much better each other’s perspectives on issues such as mortgage lending volumes, mortgage terms, lenders’ influence on new home valuations, disclosure of incentives, HomeBuy Direct and other possible Government measures to improve mortgage lending on new homes. New home valuation On 2nd April, HBF will be hosting a morning roundtable discussion with representatives of the RICS to discuss a forthcoming RICS guidance note on new home valuation in Central London. HBF members attending will see an advance copy of the guidance note. Anyone wishing to attend should contact: rosie.hinchliffe@hbf.co.uk. Places will be limited. EXTERNAL AFFAIRS Relations with the Conservatives We are continuing to give priority to building our relations with key members of the Conservatives’ front bench team. We have remained in close contact with Shadow Housing Minister Grant Shapps and recently held a very constructive meeting with Shadow Chief Secretary to the Treasury, Philip Hammond. Major strands of Conservative thinking are becoming clearer. The Treasury team is looking at the issue of how to guard against future credit and property asset bubbles and we will maintain dialogue with them on this important subject. Most recently the party has also published its “Control Shift” policy green paper on devolving more power to local authorities and communities. The HBF member briefing regarding the green paper is available to view here. While the green paper is not specifically about housing it has major implications for housing provision, proposing the abolition of current regional and local supply targets, much greater freedom for local authorities to determine their planning policies and a new form of financial incentive to reward housing provision meeting local needs to replace the current Housing and Planning Delivery Grant. The proposals would pose real risks to housing supply at least during a transitional phase, but arguably beyond that and we will be giving priority to probing Conservative thinking and highlighting the risks in our current discussions with the party. Definition of zero carbon We are currently finalising our full HBF response to the consultation on the definition of zero carbon. I am most grateful to all of you who have assisted us in this task, including those who participated in our successful working meeting on 19th February in Birmingham. This proved invaluable in enabling us to compare views with you and to ensure that HBF’s own submission is broadly aligned with your own. I would certainly encourage all of you who can to make a submission to the CLG on this issue as it is hard to overstate the importance of getting it right to the future business climate for our industry. I am also most grateful to those of you who have been able to share information with us on costs – which remains a critical issue, particularly in the current climate – given our concern that the government has underestimated these. Overall our message to Government is not that we are hostile to improving performance standards, but to set out cogently what we believe the industry can reasonably deliver, what can best be achieved by wider means and the cost and other obstacles that need to be overcome if we are to be able successfully in future increase both housing supply and carbon efficiency. It is also vital in my view that our industry is not asked to take on burdens or risks that are greater than those facing other parts of the economy in tackling climate change. This is a difficult set of messages to convey to government, but I am convinced that it is of the utmost importance that we articulate it fully and consistently so that we can achieve a deliverable solution for all parties. Skills The retention of industry skills capacity is a major challenge in view of the downturn. We are working hard with Government and the Homes and Communities Agency to explore ways to help more skilled people remain within the industry. We are also looking at additional ways in which it might be possible to support apprentices either via publicly assisted projects or initiatives such as simulation projects that could provide experience of the work skills needed to complete vocational qualifications. Given the importance of doing anything we reasonably can on skills to assist the industry once we begin to see a market recovery I would very much welcome any thoughts you may have that we might pursue with ConstructionSkills, the HCA and Government. London We recently held a successful meeting with the Mayor of London’s Chief Housing Adviser, Richard Blakeway, led by our Regional Chairman Simon Wright. This should provide a basis for constructive dialogue on London housing issues for the future. Immediately, the Mayor’s team is most interested in working with us on shared equity schemes and measures that might help kick-start stalled developments. For the future, however, the door appears to be open for a genuinely two-way discussion on delivery issues. Wales We are continuing to seek closer dialogue with the Welsh Assembly Government (WAG) in the light of the slowdown and the WAG’s continued ambitions for an accelerated timetable for working towards zero carbon homes standards. We attended the WAG’s fourth Economic Summit in early February to again represent our concern that there needs to be a clearer focus on helping the housing industry in view of its importance for the Welsh economy and the Government’s wider policy objectives. We have been encouraged to continue dialogue with the Deputy Minister for Housing, Jocelyn Davies, and have a further meeting planned with her after Easter. In addition, in responding to the recent consultation on existing Welsh HomeBuy schemes funded from social housing grant we have argued strongly for the introduction of the equivalent of the HomeBuy Direct scheme in England to help maintain housing market activity and assist first-time buyers. On zero carbon, the WAG has now established a Welsh zero carbon hub which we expect to work closely with the UK hub set up last year. At a recent event on the hub’s work, the WAG reaffirmed its ambition to try to move faster than the zero carbon timetable in England, but maintained its position that it would wish to use the definition of zero carbon adopted following the current consultation. With the final decision on the anticipated devolution of building regulations to Wales said to be very close, this area of work will remain a priority for us in arguing the industry’s case on what is and is not possible. Energy Performance of Buildings Directive On the European front I wanted to draw your attention to the fact that the European Parliament and Council are currently considering the revision of the Energy Performance of Buildings Directive. The Directive is the piece of European legislation that requires us to provide Energy Performance Certificates on the sale of homes. The issues under consideration in the proposed revision range wider than possible changes top EPCs, however, and could affect the future nature and requirements of national building regulations relating to energy and carbon efficiency. In view of this we are playing an active part in industry lobbying at the European level through our European trader association, the UEPC, as well as representing our areas of concern to CLG who lead on this for the UK Government. We will keep you informed of developments which may also have implications for the decisions made on the definition of zero carbon. PLANNING AFFAIRS Sha la la, la la la la la! My regular column in Housebuilder magazine this month draws attention to the necessity of ensuring that we maintain an adequate land supply for housing so that we can respond quickly to the inevitable upturn in the market (whenever it may arise). I am, therefore, pleased that our recent discussions with CLG officials have focused on the subject of strategic housing land availability assessments and the criteria for government awards of housing and planning delivery grant for 2008/9. The first has allowed us to present evidence of good and poor practice in land availability assessment as part of the land supply assessment checks carried out by the department in January. Due to be published shortly this document will provide a valuable commentary on what local authorities and other stakeholders are doing well and where practice might be improved in order to ensure that we have robust land availability assessments, updating of which will be easy and meaningful. A critical part of the process is, of course, the involvement of developers and landowners in discussions over both methodology and site assessment. I am most grateful to those of you who are already taking part in the assessment process and for the feedback that you have given us which allows us to speak authoritatively and convincingly to government to ensure that they maintain pressure on local authorities to produce robust and realistic assessments both now and in the future. Killian Pretty Review – the implementation The Government response to the Killian Pretty Review (published in November 2008) has now been published and I am glad to see that both Ministers and Officials are keen to address each and every one of the 17 recommendations of the Review team. We are, therefore, extremely pleased that HBF has been included on the implementation Sounding Board at CLG and that a number of HBF members will be able to contribute to the “practitioners virtual group” giving comments and guidance on the practical implementation of any proposed changes to the planning application process. Of course, many of the recommendations of the Review Team require no more than a change in approach or attitude to existing legislation and guidance. Nevertheless, where legislation, regulation or just guidance needs to be amended or introduced to ensure we develop a faster and more responsive system of development management (as development control is now referred to – itself a first step towards changing attitudes) we are well placed to ensure that any proposed changes are given a hefty dose of reality check before we embark down any tedious and fruitless blind allies. TECHNICAL AFFAIRS Gas flues in ceiling voids – update The revised guidance was issued to members on the 6th February. Clarification around occupied properties has been added along with a link to the HSE safety alert which was issued shortly after our original note to members. The HBF sub group is to meet again to review the current situation surrounding this issue. We continue discussions surrounding this issue with CLG, HSE, Corgi and NHBC. S38 agreements and commuted sums The HBF group met in February to look at progress in this matter. The position statement paper produce by the group surrounding this issue is available on the HBF website - please click here to view. The paper explores the history of highway adoption and the role and influence of planning and Building Regulation decisions upon this. It then talks about the adoption process and the Highway Authorities justification for such payments and offers guidance on alternative procedures to secure adoption. The group continues to look at this subject and will report further findings/information obtained on the HBF website. In the meantime any feedback on the alternatives that have been proposed would be gratefully received. Building Regulations Part F (means of ventilation) and Part L (conservation of fuel and power) The consultation documents for these are expected out in sometime in April. Once these consultations are released HBF will be setting up working parties to consider the industry response. Part A (Structural Safety) and Part C (Resistance to moisture and weather) The consultation documents for Parts A and C are now being prepared. Although no firm date for their release is available they are expected to follow Parts F and L. As with Parts F and L once these are released HBF will set up a working party to consider the industry response. Part J (Combustion appliances and fuel storage) A working party has been set up within CLG to prepare a consultation on Part J. It intended to be a light touch look at the current document with a few updates on certain references and standards. It will also include references to biomass and will look at the issue surrounding the use of carbon monoxide detectors. This will probably come forward as a consultation document quite quickly. Code for Sustainable Homes A consultation review of the code for sustainable is due shortly. This could well come out in 2 parts. The first consultation around the policy followed by one looking at the technical issues. If you have any queries regarding any of the above please contact HBF’s Technical Director Dave Mitchell – dave.mitchell@hbf.co.uk or on 0207 960 1621 AND FINALLY... As you can see there is a lot going on across a range of issues which impact our industry and as ever the team here at HBF will do their best to ensure our voice is heard and the industry’s views and ideas properly represented. Inevitably space only permits me the opportunity of providing you with a brief update on many of these matters within this report but if you would like further information please do hesitate to contact me or any of the HBF team. Finally as this update is a little later than usual and with the Easter holiday in early/ mid April (hopefully generating improved sales) I will next update you at the end of April.
