<h1></h1> Key Issues None of us needs a sneaky look at a minister’s notes to realise that the state of the housing market has deteriorated further over the past month, and the situation and its implications for us all remains our number one priority. We have been privately lobbying hard within Government to ensure they are aware of the situation house builders now find themselves in and have also gone public through the media to highlight the consequences of allowing the situation to continue, stressing the impact on the wider economy. We have also submitted our ideas on potential areas for action to Government. This Housing Market Package calls amongst other things for an immediate time limited Stamp Duty Holiday on all sales up to £1m; the creation of a First Time Buyer Deposit Scheme and an immediate half point cut in interest rates. Current market situation As we know, the primary cause of the continuing downturn is the credit crisis and mortgage famine, but declining consumer confidence is also hitting demand. Home buyers will be influenced by evidence of falling house prices and predictions of worse to come, and I have heard the very first reports from home builders that some buyers are holding back out of fear about the security of their own job. In the housing industry, we are now seeing job losses across the board from smaller operators to some of the industry’s biggest players, with some also reporting office closures. The Government’s response to date to our representations, was first to allow housing associations to relax their space and sustainability standards when considering purchasing new homes from the private sector, and then to announce on 14th May, £300m of Housing Corporation funding for associations to buy new properties from home builders. Whilst this is a significant amount of money, and any positive measures at all must be welcomed at the minute, most of it is not new money but a reallocation of Housing Corporation funding and frankly “its a drop in the ocean” compared with the amount needed to make any significant difference. We will continue to press for implementation of more of the measures in our Housing Market Package and keep working hard to ensure the industry’s concerns are heard across government. For example, in response to my 19th March letter to the Prime Minister about the burden of regulation, and my letter to the Chancellor on 30th April outlining HBF’s Housing Market Package, we have been invited to meet No.10 policy advisors in early June. This will give us the opportunity to further discuss the current state of the market and its implications for the economy and the Government’s longer-term housing targets. We continue to supply a flow of up-to-date information on conditions in the new homes sector to officials at the Treasury, CLG and Bank. The Bank of England’s latest Inflation Report refers several times to evidence from the HBF Monthly Survey. Richard McCarthy, Director General Housing & Planning at the CLG, was our guest at a May meeting of larger home builders, giving us the opportunity to update him on conditions in the industry and the market. I was also able to take a group of chief executives to meet several members of the Monetary Policy Committee on 19th May. It enabled us to update them on conditions in the industry and the implications of current market conditions for jobs, industry capacity and future house building levels. They were left in no doubt about the seriousness of the current crisis. We have continued our discussion with senior officials at the CML, on housing market conditions, the shortage of mortgage finance and the likely impact of the Bank’s Special Liquidity Scheme on mortgage lending. Press reports suggest banks will draw down as much as £90bn from this facility. The CML has now publicly stated that net mortgage lending this year is likely to be about half last year’s total. Until the larger banks have completed the process of recapitalisation and confidence in the banking sector is restored, we are not likely to see any significant easing in the mortgage market. Indeed, conditions may get even worse over the next few months. I am pleased that HBF has been invited to join the Bank of England Property Industry Forum. While these confidential discussions are primarily about commercial property, they provide HBF with an important source of intelligence on the commercial market and they allow us to explain residential conditions to Bank officials and senior executives in the commercial sector. ECONOMIC AFFAIRS Council tax on empty new properties In a meeting with Treasury tax officials, HBF raised member concerns about inconsistent and over-zealous local authority application of council tax to empty new properties. This is proving particularly onerous for home builders in the current severe market conditions. While council tax is a CLG matter, HBF has agreed to provide further information to Treasury. The HBF contact is Stanley Jackson (stanley.jackson@hbf.co.uk). Cumulative cost burden of regulation During May we held the first of a series of member briefings for the housing minister and CLG officials, demonstrating with real site examples the impact of regulation costs on viability. HBF staff continue to discuss regulatory costs with CLG officials. Private rented housing We have begun discussions with the BPF and Treasury about institutional investment in the private rented sector, including prospects for residential REITS. If the buy-to-let market has been permanently damaged by the housing downturn, as seems quite likely, we need to explore whether there may be a different model for the future based around institutional investment, which could open up new opportunities for home builders. Sales incentives and mortgage lenders Following the launch of our Code of Conduct on the transparency of incentives, we have been discussing with the CML and lenders further measures to ensure lenders’ confidence in new home values is restored. The CML, in consultation with the HBF and Homes for Scotland, is nearing completion of a Disclosure of Incentives Form which all home builders will have to supply to lenders’ conveyancers. This is likely to be launched in September and I will keep members fully informed. EXTERNAL AFFAIRS Michael Fallon Bill Michael Fallon MP’s Private Members Bill on the circumstances in which local authorities can introduce “Merton rule” style policies has passed its third reading in the House of Commons. Following earlier discussions between Ministers and Mr Fallon, the Bill went through unamended to the Lords – so maintaining the compromise of not allowing councils to go beyond the provisions of the PPS on Climate Change. We will continue to keep a close eye on the Bill’s progress through the Lords. Lifetime Homes I met CLG Minister Baroness Andrews at the end of April to raise and explain our concerns about the Government’s announcement of its aspiration to move to the general adoption of Lifetime Homes standards by 2013. I set out our particular concern that this proposal had been announced at the current time with insufficient advanced consultation with the industry. We stressed the need to give further thought to the cost and other practical implications of the proposal and to consumer views. It was agreed to conduct further detailed discussions with officials on the points we raised. Meetings with MPs Our programme of meetings with MPs whose constituencies have significant housing plans or needs is continuing. These informal bilateral meetings are in general proving a positive and effective way of building understanding of the industry’s issues and perspectives, and are offering opportunities to improve local dialogue with councils and delivery bodies. We will inform members in the areas concerned of positive developments arising from these meetings. Environmental Audit Committee As part of its current inquiry on the environmental implications of the Government’s housing targets, HBF along with the NHBC, gave oral evidence to the House of Commons Environmental Audit Select Committee on 20th May. The main focus of the Committee’s questioning was on the progress being made towards achieving the zero carbon homes standard and the issues involved. While outlining the work we are doing, the hearing provided a good opportunity for us to set out our perspective on this major challenge, including its cost impact as part of the wider burden of regulation facing the industry. Minister for the South East We also held a useful meeting with the Minister for the South East, Jonathan Shaw MP. We focused on delivery issues that would arise following the final adoption of the Regional Spatial Strategy and ways in which we might work with the Minister to improve dialogue with local authorities. The Minister was interested in running possible regional events with HBF and also to involve us in initiatives he is taking on skills. PLANNING AFFAIRS Fees for Discharge of Conditions There remains considerable confusion around the new regulation that allows a fee to be charged for confirmation that conditions attached to a grant of planning permission have been complied with. It is clear that the intention behind the new fee was to introduce a charge for the approval of details to meet a condition. Unfortunately the wording of the regulation is unclear and refers to a “written request for confirmation of compliance” rather than “approval of details”. Conditions can, of course, contain three stages of compliance; approval of details, compliance with such approval and, in some cases, ongoing compliance. Confirmation of compliance, as stated in the new regulation, is, we believe, a totally separate process, unrelated to the “consent, agreement or approval required by condition” as set out in Article 21 of the Town and Country Planning (General Development Procedure) Order 1995. The wording has created problems not just for the industry, but also for local planning authorities, with some introducing a fee for applications of approval of details and some not. We have held meetings with CLG officials and representatives from the Planning Officers Society (POS), which represents local authority chief planners, in order to seek greater clarity. However, despite legal advice and our agreement with the POS that the regulation does not relate to the process of approval of details, there is little that can actually be done to correct it in the short term. Due to the necessary parliamentary procedures required to change the wording of a regulation, the earliest we could get any redrafting would be April 2009. Until that date the inconsistency and confusion will remain. In the meantime, CLG is seeking further legal advice as to whether the regulation would be open to legal challenge. With this in mind, HBF is considering if a legal challenge would be appropriate. It should be noted though that the standard fee of £85 is per application not per condition, and the fee is charged regardless of the number of conditions in each application. Planning Bill The Planning Bill should receive its third reading and Report stage in the House of Commons on 2nd June before it is passed to the House of Lords for debate. It is likely that the Lords will have time for just two debating sessions prior to the summer recess and that these will deal solely with the proposals for National Policy Statements and the proposed Infrastructure Planning Commission. Debate over Community Infrastructure Levy (CIL) and the other clauses regarding the planning system will be deferred until the autumn. HBF is lobbying for changes to the Bill in respect of CIL, the dropping of the proposals for local member review bodies and paying for appeals, and the retention of the right of the appellant to determine the type of appeal hearing. TECHNICAL AFFAIRS The definition of zero carbon A growing sense of reality is informing the debate on what the definition of a zero carbon home should be. The UK Green Building Council’s (UKGBC) task group on zero carbon chaired by Mark Clare has reported that there are real practical, as well as cost issues that mean up to 80% of new developments will not be able to meet the objective solely through the use of on or near-site renewable energy. The Government has said it will take account of these findings in holding a further public consultation on the definition this year. The UKGBC concludes that the definition of zero carbon needs to be more flexible than that so far used for the purposes of the Code for Sustainable Homes and the Government’s stamp duty exemption. Our view is that we need to go even further and clearly distinguish between what it is practical and reasonable to achieve in terms of the fabric efficiency of the home, and what should be tackled via investment in suitable forms of energy supply that require their own policy framework. We are arguing this case strongly with Government and others and have also of course demonstrated to Government the significant likely adverse impact of a narrow definition of zero carbon on future housing delivery arising from its cost. The Future of Building Control – consultation A group of HBF members met last month to discuss the Future of Building Control consultation. A draft response is now being circulated and our response will be published on the website. The closing date is 10th June and we urge members to send in their own response. Building Regulations Part G (hygiene) - consultation The consultation on Part G has been published by CLG on 13th May 2008 and HBF is now organising a working group of members to discuss how the industry responds. Any member wishing to be part of this should contact dave.mitchell@hbf.co.uk. We are also urging members to send in their own response - closing date is 5th August. Building Regulations Part L (conservation of fuel and power) – revision As part of the preparatory work for the forthcoming 2010 and 2013 amendments to Part L, CLG has set up a Domestic Industry Advisory Group. The group will look at the key issues arising out of the 2006 revision; the factors that need to be addressed through the 2010 and 2013 Part L updates; and the programme required to deliver them. HBF is represented on this group as well as three of the four working parties that have been established by the group. The Building Regulations Advisory Committee has also set up working groups for Parts L and F, and HBF is actively involved in these. S38 Agreements and commuted sums HBF is now seeking independent advice on the legality of commuted sums in general (our previous advice related to a specific case). We have asked members to let us have details of where they are paying commuted sums and how much they are being charged so that we can understand the scale of the problem. Code for Sustainable Homes The Nil Rating Certificate for those not having their homes assessed should now be available to download from both the HIPs and the Code websites as either a pdf or as a Word Document. It is required for all new homes built to Building Regulations applications made after 1st May 2008. AND FINALLY… I hope this update has given you an insight in to the work we are doing on your behalf. These are challenging times, but we are a resilient industry and we have come through challenging times before. We will continue to work hard to ensure that the Government is fully aware of the challenges facing our industry at the moment, and will rattle the sabre when necessary. As you will see, whilst the effect the current economic climate is having on our industry quite rightly remains the main focus of our endeavours, there are still a large number of other factors affecting our industry that require our attention. It is therefore important that we continue to balance our workload accordingly to ensure the best possible operating environment moving forward, both through the current downturn and in to the recovery that will come. Please do not hesitate to contact me or any of the team here at HBF if you would like to discuss any of the issues raised in this report or indeed any other subject. At this time your feedback and input on how we are representing you is critical.
