Dealing with Governments of any colour can be tricky at the best of times. Even when they are signed up to broadly the same overall objectives as the industry, namely growing volumes over the medium term, ensuring that the political and regulatory framework for delivering these objectives is in place can seem like a frustrating task. The ambition of 240,000 zero-carbon homes per year by 2016 is undoubted, but serious concerns are emerging about the regulatory and cost constraints being placed on you, the industry charged with delivering this goal. We are urgently raising our concerns with Ministers and officials, but the issues are unlikely to be solved in the short-term. My primary focus is to ensure that your businesses are able to operate in as free and fair an environment as possible, and our efforts to persuade Government will continue undimmed over the coming month. Key news Budget The Budget contains a number of small measures, but nothing major. Unfortunately the Chancellor did not raise the stamp duty threshold to £250,000, which would exempt 90% of first time buyers, one of a number of proposals in HBF’s Budget Submission. Contaminated Land Relief is to be extended, as we had recommended, but the landfill tax exemption for waste from contaminated land is to be phased out by 2012, a measure we opposed. The Government will consult on the definition of zero carbon homes during the Summer with an intention to set out a definition by the end of 2008. Further it will provide pump priming funding for a new 2016 Delivery Unit, something as you know I have been arguing strongly for. The stamp duty exemption for zero carbon homes has been extended to flats. Ministerial contacts Following an initial telephone conversation shortly after her appointment, I held a full meeting with the new Housing Minister, Caroline Flint, last week. We discussed the major issues of the Community Infrastructure Levy, the regulatory cost burden and the zero carbon homes objective. The Minister particularly noted our concern that the prospective future cost of CIL and zero carbon added to existing contributions from affordable housing and regulation generally, would make it difficult to meet the Government’s housing targets as more land became unviable. I will continue to raise this issue with Government and it was helpful that the Minister asked her advisers to hold further discussions with us. Cumulative cost burden of regulation Many of you have told me of your growing concern about the rapidly escalating cumulative cost impact of regulation on land values and development viability. With Affordable Housing already an onerous and rising burden, we face a further imposition with the CIL, and potentially very large cost increases over the next eight years as we move towards the zero carbon objective. We have already raised our concerns with the new Housing Minister, CLG officials and officials at HM Treasury. I will shortly be submitting a letter to the Prime Minister, arguing that the cumulative burden of regulation poses a serious threat to achievement of the Government’s housing targets. I also intend to make this a key theme of my speech at HBF’s AGM on 23 April, when the Housing Minister will be present. Lifetime Homes As part of its strategy for Housing in an Ageing Society published on 25 February, the Government announced that it wished to move towards Lifetime Homes standards for all new housing from 2013. I was extremely concerned that such a significant policy statement was made without proper prior discussion with the industry. Indeed we only heard about the timing and content of the announcement via a request for comment from the BBC. In the immediate wake of the announcement I wrote to Caroline Flint to express our concern about the additional regulatory cost involved, the failure to consider the wider implications for housing delivery and the lack of consultation. I will be following up this letter with a meeting with Baroness Andrews, the CLG Minister responsible for the Housing in an Ageing Society strategy. Michael Fallon Bill Michael Fallon MP’s Private Members Bill, which would give local authorities a statutory power to introduce Merton Rule-style policies to promote on-site renewable energy generation, passed its Committee stage in the Commons on 20 February. The Bill has been substantially revised following discussions between Mr Fallon and the Housing Minister, taking into account concerns raised by HBF. The changes negotiated by the Minister bring the Bill back into line with the recent PPS on Climate Change. We will continue to monitor closely its progress through Parliament. Zero carbon The 2016 Task Force has approved proposals for a delivery body to project manage work on trying to achieve the zero carbon objective. We are also pressing the Government for clarity on the zero carbon standard to ensure it can capture as wide a range of energy supplies as possible. Renewable energy We are participating in a number of Government events to discuss how the UK might achieve its proposed EU target of 15% of energy requirements from renewable sources by 2020. The EU proposal might require over 30% of UK electricity needs from renewables by 2020, and the strategy will have direct implications for achievement of the zero carbon objective. We will keep you informed of developments in this new area. Liberal Democrats John Slaughter has met new Liberal Democrat Shadow Housing Minister, Lembit Opik. Mr Opik is keen to hear our views as he is reviewing his party’s housing policies. He was particularly interested in our thoughts on how to achieve the zero carbon objective. Economic affairs Callcutt Review HBF staff met CLG officials in early February to discuss the Government’s response to the Callcutt Review recommendations. Officials appeared most concerned about those relating to an industry customer satisfaction survey and changes to company accounting rules to make landbanking more transparent. We explained that the current HBF Customer Satisfaction Survey was a robust and accurate measure of new home buyer satisfaction, and that we did not believe an independent, state-funded survey (as recommended by Callcutt) would offer any improvement. We also stressed that the current survey had widespread support among the larger home builders, critical for its continued success. One solution would be to migrate the Survey to the new body we are proposing to create to oversee an OFT Compliant Code. We have subsequently written to CLG officials reinforcing our views about the robustness of the current survey, but accepting that, subject to member support, we would consider the OFT Code body taking over responsibility for the survey. On landbanking, I believe changes to international accounting standards are not a realistic possibility. HBF suggested to CLG officials that, in any event, because quoted house builders controlled only a modest proportion of potential residential development land, such a step would provide very limited information. Also, the quoted companies already provide a great deal of information about their land holdings. We suggested instead that CLG already had a much more valuable source of information to hand, namely Strategic Housing Land Availability Assessments. Since local authorities were already required to collect comprehensive, local information on land availability, CLG merely needed to collect this information regularly. We understand an official CLG response to the Callcutt Review will be published shortly. I referred in my last Update to research on build-out rates for larger sites, as recommended by Callcutt. The results of this research were released during February. While the report is quite academic, a key recommendation is that the academics who undertook the study “see no case to impose artificial ‘build out’ rates upon the industry through planning conditions”. OFT Code of Conduct As you will be aware, we are working with NHBC and other industry bodies to explore how the industry might establish an OFT Code of Conduct. HBF and NHBC representatives met OFT officials responsible for their Code scheme during February and outlined the industry’s draft proposals. The OFT asked for further information, but our suggestions seemed broadly acceptable. A further meeting of all the bodies involved in devising a Code is planned for mid March. Bank of England and Treasury During February I met officials at the Bank and Treasury to discuss market conditions and likely trends in house building over the next year or two. We continue to maintain close contact with both organisations, including providing them with regular results from our industry surveys. Key statistics Official statistics show that private housing starts in England fell by 5.5% in 2007, with a 12.6% fall in RSL starts. Total starts fell 6.2%. Private starts were down on a year earlier in three of the four quarters of last year. However completions are still rising. Total completions in England rose 8.8% in 2007, to 174,868, with a 9.3% rise in private completions. It is inevitable that completions will decline going forward in response to last year’s fall in starts. CLG has also released revised 2004-based regional household projections. The overall England projections (223,000 additional households per year from 2004-26) remain unchanged. However London’s projected household growth has been cut quite sharply, whereas projected growth in the Eastern region, and to a lesser extent in the South East, South West and East Midlands, has been increased. The new figures reflect revised estimates of the regional distribution of inward migration. Planning affairs Community Infrastructure Levy (CIL) We continue to liaise with CLG and others over both the clauses in the Planning Bill and the details of the implementation of the Community Infrastructure Levy (CIL). Our own HBF Sounding Board continues to meet regularly, as do the CLG led Policy Group and Practitioners Group. I am most grateful to those of you who are giving considerable time so we can adequately reflect the views of the industry on emerging policy and proposed practice. I firmly believe that CIL could have the biggest impact on the industry for many years. We have the opportunity to get it right by continuing the debate with government and others and we must ensure that we take every advantage of that opportunity. Key issues that have arisen already and are due to be discussed at the CLG Policy group are: • The process of setting the charge • Apportionment of the charge to different land uses • Reflecting viability in setting the charge • Infrastructure definition • Infrastructure delivery • Offsetting • Residual S106 contents • Cash Flow Members who wish to contribute to the ongoing debate and discuss potential solutions to any of the perceived problems associated with CIL are encouraged to contact either John Stewart or Andrew Whitaker at HBF head office. Eco-Towns We are expecting “shortly” the much awaited announcement by CLG of the shortlisted Eco Towns that will be progressed from the 50 or more submissions made to them. I am well aware that a number of HBF member companies are part of various bids submitted under the call for Eco Town proposals. There is considerable confusion around the whole process of bringing such developments forward or, indeed, as to how they will contribute or be counted towards the government housing target of 240,000 dwellings per year by 2016. We have been contributing to the TCPA Eco Towns Experts Group in order to seek to produce guidance notes and discussion papers regarding the whole concept of Eco Towns. We are also aware of others, such as English Partnerships, who seem to have their own agenda and views of how Eco Towns will work in practice. There are still many questions to be answered over the delivery of Eco Towns. The first step must be to announce exactly what and where we are talking about. Technical issues Code for Sustainable Homes The new rules requiring a mandatory Code rating for all new homes will be implemented on 1 May 2008, with homes not assessed under the Code receiving a ‘nil rating.’ This latter rating has a standard format, which can be seen in Annex B of the CLG document available here. We are continuing discussions with CLG about the technical guidance and with BRE about the assessment process and we now understand that the revised Green Guide will be published in the summer. Home Information Packs/Energy Performance Certificates The date for requiring all new homes to have EPCs on completion remains April this year, by which time the software amendments necessary for implementation will be completed, and it has been confirmed that enough accredited assessors are available to issue the Certificates. S38 Agreements and commuted sums HBF is considering withdrawing from the DfT Steering Group looking into commuted sums as there seems to be more interest in finding ways of subsidising highway authorities’ budgets than in assessing the legal position or indeed in supporting the Government’s house building aspirations. We had hoped that the forum would be a mechanism for resolving some of our members’ issues and improving relations between our industry and highway authorities. Water HBF attended the All Party Parliamentary Group on Water’s Inquiry into the Future of the UK Water Sector and made a submission. A copy is on the website. We have also responded to the Ofwat consultation on the 2009 Price Review and to the CCWater Consultation on their Forward Programme 2008 to 2010. Copies are also available on the website. We have asked for volunteers from members to assist in the responses to Defra’s recent consultations on Improving Surface Water Drainage and Options and Draft Statutory Social and Economic Guidance to Ofwat. The closing date for comments is 30 April 2008, and a meeting has been set up for the first week in April. If anyone else would like to attend please email sian.lewis@hbf.co.uk. BT National Agreement HBF has now agreed the new contract (for HBF members only) for 2008. Negotiations are continuing on the arrangements for new technology, and if you have any queries do please contact the Technical team on technical@hbf.co.uk. Swedish technology A free seminar has been arranged to give developers the opportunity to meet Swedish experts and researchers in low/zero carbon technologies in London on 17 March. And finally… Customer Satisfaction Training The New Homes Marketing Board (NHMB) has developed an exclusive training initiative, part-funded by ConstructionSkills, to help smaller home builder members of the HBF to improve customer satisfaction, sales and profit. CCF training is designed for those operating at a Supervisory/Managerial/Director and/or Board Level and offers practical and tailored advice covering both the customer buying experience and quality of the new home when delivered. NHMB’s partner in this initiative is the experienced In-house Research and Training Ltd (IHRT). Due to ConstructionSkills funding, NHMB are able to offer this training to HBF small members for a limited period at an exclusive discounted rate of £500 plus VAT per day (50% of actual cost). This training is available initially for 2008 only. Limited places are available and will be offered on a first-come first-served basis. This month’s update comes to you slightly later than usual in order to include matter arising from the Budget on 12 March. With Easter now fast approaching our next update will appear at the end of April. In the meantime, please do not hesitate to contact us at St James’ Street with any queries or comments you have.
