KEY ISSUES
The past month has been an extremely challenging one, but with some positive news from an industry perspective.
We have been working extremely hard with various Government departments to develop measures to assist the industry through the current downturn, and on issues that will impact the industry post recovery.
I was therefore extremely pleased with the measures announced in last month’s Budget to assist our industry, which are detailed further below. I think when you look at the range of other sectors of the economy and industries crying out for Government assistance, to get a £1bn package for housing was extremely positive.
On the same day as the Budget we held our annual lunch. Sir Bob Kerslake addressed the gathered industry heads and in an extremely positive speech detailed how the Homes and Communities Agency (HCA) is planning to work with house builders to ensure the money allocated in the budget was spent quickly and effectively.
I must say that it is so refreshing to be working with a Government agency whose remit is about delivery and not policy, and it is a great credit to Sir Bob and his team that in the few short months they have been in existence, they have really started to make a difference.
ECONOMIC AFFAIRS
Budget successes
Despite the grim public finance projections, April’s Budget contained three very positive measures for home builders. I think HBF can legitimately claim credit for influencing all three announcements.
The most obvious, direct benefit for the industry was a £400m fund for the Homes and Communities Agency (HCA) to open up mothballed housing sites. We understand most of the money must be spent in financial year 2009-10, so there is a lot of pressure on the HCA and home builders to get the scheme up and running as quickly as possible. Implementation will involve negotiations between the HCA and individual house builders on a site-by-site basis to assess the best package of measures to open up a stalled site.
HBF had been working closely with the HCA in the run-up to the Budget and had strongly recommended such a measure to the Treasury, so the money is very welcome. Building on our successful input into the detailed design of HomeBuy Direct, the HCA has asked HBF to help design the new mothballed sites initiative. We have already held an early meeting, attended by a cross section of larger and medium sized home builders. We will keep members fully informed about the scheme as implementation details become available.
The second major Budget measure was a Government guarantee for mortgage-backed securities, the Treasury’s response to last year’s Crosby Review of mortgage finance. The intention is to increase funding availability for mortgage lenders. It is too early yet to judge whether the guarantee will be successful, but we can only remain hopeful.
The third Budget measure, a major victory for HBF, was the Government’s announcement that it is to undertake a review of the cumulative impact of regulation on new housing delivery. Members will be well aware that this has been a major area of HBF activity for the last 18 months. The Budget announcement confirms that our concerns are now shared at the very highest levels of Government. We will of course work very closely with CLG and Treasury, providing evidence and expertise.
Although the Budget did not include any significant announcements on the private rented sector, the HCA launched an initiative on 1st May intended to encourage institutional investors to fund new homes for private rent. The HCA has asked for expressions of interest from fund managers and investors interested in working with the HCA to develop a long-term funding model by Monday 1st June 2009. I am very pleased the HCA has taken the lead on this issue. There are a lot of people, including house builders, looking at schemes, but it needs an organisation with the credibility of the HCA to act as a catalyst to get some real life schemes up and running.
HomeBuy Direct (HBD)
HBD is now fully live, with the first few sales coming through. HBF continues to work with the HCA on implementation of the scheme to overcome the inevitable teething problems that have arisen. There are now five lenders signed up to support HBD – Lloyds/HBOS, RBS, HSBC, Barclays/Woolwich and Nationwide. Members involved in the scheme feel that in June we should be able to judge how successful it is going to be, both from a sales and a process point of view.
Cumulative impact of regulation
Building on our highly successful January presentation to officials from across Government, HBF members made a presentation in April to housing policy advisors at No.10 Downing Street. We have also arranged a presentation next month for senior executives at the HCA and the Conservative Party’s housing team.
Bank of England meetings
HBF arranged for a group of senior industry executives to meet Monetary Policy Committee (MPC) members Charles Bean and Dale Spencer in April, along with Bank of England officials. We were able to brief them on current trends in new home volumes and prices, including raising the issue of new home valuations and lender instructions to valuers.
John Stewart attended a meeting of the influential Bank of England Property Forum in April representing the residential sector. While the mood of last year’s meetings was one of pretty well unrelieved pessimism, a few positive glimmers were identified at the latest meeting.
New Home Valuation
HBF continues to work with the CML, RICS and CLG on the adverse impact of down valuations on the new home sector. We held a very successful briefing seminar for HBF members on 2nd April at which RICS representatives introduced members to the new RICS guidance note on new home valuation. We subsequently circulated copies of the new guidance to all HBF house builder and legal members. The CML and CLG were also represented at our briefing. The most difficult valuation issue remains lender instructions to value new homes at second-hand values. We will continue to push very hard to have this practice stopped.
Customer satisfaction success
HBF’s fourth annual Customer Satisfaction Survey, launched on 22nd April, once again revealed high levels of satisfaction among new home buyers. More than three quarters (77%) of new home buyers in the 12 months October 2007 to September 2008 were satisfied with the overall quality of their home, with only 13% dissatisfied, and 76% would recommend their home builder to a friend. Both figures were up one percentage point on the previous year’s results, a real tribute to the industry in such extraordinarily difficult market conditions.
OFT Code of Conduct
The Code of Conduct developed by NHBC, Premier, HBF and other trade bodies was submitted on 31st March in accordance with the required timetable.
At this stage no formal application has been made to the OFT to have the Code formally recognised. However it has been drawn up to meet the requirements of the OFT’s Codes scheme.
EXTERNAL AFFAIRS
Definition of zero carbon
Our comprehensive response to CLG’s consultation on the definition of zero carbon was submitted in late March. In this we stated our view that building regulations requirements should be capped at a 44% improvement on 2006 Part L, and the need for the overall definition to be both practical and affordable for the industry. We also said the Government needed to be clear about the priority it attached to zero carbon in relation to its other objectives and the overall impact of regulation on housing delivery.
To view a full copy of HBF’s response please click here
CLG received a large response with over 250 submissions in total. We understand a good proportion of these have come from house builders, developers and trade and professional bodies. It is likely the Government has a diverse set of views to consider and I am grateful to all of you who contributed to our work and who were able to respond as companies. It is important that the industry view is given full weight in determining the Government’s forthcoming policy position.
From the commercial perspective, the issue of cost of course remains critical and it is welcome that CLG has asked the Zero Carbon Hub to undertake some more work on this with the industry to inform its thinking. The Government is working towards announcing its policy position in the summer and I will keep you in touch with progress on this front.
Wales
We are continuing to engage with the Welsh Assembly Government to see what further assistance it may be able to provide to the industry in these difficult times.
As well as participating in the continuing series of Economic Summits being held by the First Minister, we had a very constructive meeting with the Deputy Minister for Housing, Jocelyn Davies, at the end of April at which we agreed to work with the Assembly Government to consider possible support measures to help kick-start stalled sites and the case for a Welsh equivalent of the HomeBuy Direct scheme.
We will seek to develop further our working relationship with the Minister and her officials on effective action to combat the downturn and to involve you as far as possible in the relevant discussions.
Relations with the Conservatives
Since my last update, the Conservatives have published their housing green paper – “Strong Foundations” – which complements their “Control Shift” green paper on localism published earlier this year.
The new paper confirms much of the earlier thinking on housing delivery. While welcome in stating clearly the need for an improved housing supply, it leaves many questions unanswered about how this would be achieved through a localist approach without current housing targets and greater flexibility for local authorities to change policy. New ideas in “Strong Foundations” include making movement within the social housing sector more flexible and proposing an ability for local communities to pursue some development outside the normal plan process where strong support for this had been demonstrated.
Key detail on planning is due to be included in a further green paper this summer and we are arranging to meet the team working on this to ensure members’ views can be taken into account.
We have also set up a meeting with the Conservatives to present and discuss our work on the impact of regulation issue and its implications for future housing delivery.
Skills
The Major Home Builder Group companies have continued to make and consolidate good progress on their Qualifying the Workforce (QWF) initiative. The results of the latest site audit undertaken by the companies in February were excellent, showing that 96.5% of the workforce held competence cards. Work is continuing to ensure those that require them also obtain suitable qualifications to comply with the initiative’s overall objective.
I am pleased that a number of other members are now also adopting such a policy and clearly skills and competence issues are going to be important as we hopefully move towards a recovery and grapple with the challenge of a raft of new requirements, including higher environmental performance standards for new homes.
We remain keen to assist any of you who may want to pursue your own QWF policy and we do of course have a national co-ordinator for such work – Peter Roberts – who would be pleased to talk to you if this would be of help. Please let me or John Slaughter know if you would like to explore the possibilities further.
European issues
We continue to monitor developments on the revision of the Energy Performance of Buildings Directive (EPBD) closely.
The European Parliament has recently adopted its own proposal for a revised Directive that would introduce an EU-wide requirement for “net zero energy” buildings from 2018, using a stricter definition than that proposed by CLG in its recent consultation. This suggests discussions with the Member States to finalise a workable version of the Directive may be difficult. We have already raised our concerns about this with the Government and are also stepping up our representations through our European trade association, the UEPC.
The UEPC has meanwhile prepared a manifesto to send to candidates standing in the forthcoming elections to the European Parliament, setting out developers’ views on the main areas of EU policy relating to the industry’s interests. We will be making this available for you to send to candidates in your area via our website please click here to view.
PLANNING AFFAIRS
Community Infrastructure Levy (CIL)
CIL requires a significant amount of regulations to be drafted and agreed before it can be commenced. An announcement in the Budget confirmed that this will now not be before 6th April 2010. In reality it was highly unlikely that any local planning authority would have been able to adopt a CIL approach to planning obligations much before that date and it is thus rather disingenuous of the Chancellor to suggest that implementation will be “postponed”.
Nevertheless, HBF continues to work with CLG and other stakeholders on various steering groups, policy groups and practitioners’ groups in order to steer the regulations towards a simple and practicable alternative to negotiated S106 agreements
We are working to ensure that CIL replaces as much as possible of the infrastructure currently required under S106 through the payment of a standard, pre determined monetary contribution set at a local level, taking account of viability within that local area. We are also discussing how to restrict S106 so that infrastructure defined under CIL regulations cannot be sought through any mechanism other than CIL, thereby effectively making CIL mandatory in those authorities where such infrastructure is being sought.
Draft regulations are expected to be published for a 12 week public consultation before the summer parliamentary recess (21st July).
Minor Amendments to planning permissions
S190 of the Planning Act will allow for minor amendments to be made to planning permissions after they have been granted. Such a position would clearly be very useful to members. CLG are currently undertaking research into how such amendments might be defined and how they differ from “non material amendments” which are already allowed under the existing planning legislation.
CLG consultants undertaking the work met the HBF National Planning Committee at their last meeting in March to discuss their thoughts and are due to submit their report to CLG within the next few weeks.
End of twin tracking
Demonstrating just how long it can be before primary legislation is actually brought into use (if ever), Section 43 of the 2004 Planning and Compulsory Purchase Act was commenced on 20th April 2009. This legislation gives local planning authorities the right to refuse to determine a similar application to one already being considered by the authority. Previously LPAs have had the right only to refuse subsequent similar applications thereby allowing the process of “twin tracking” ie: submitting two similar or identical applications in order to take one of them through the appeals process while continuing to negotiate with the LPA over the other.
It should be noted that the LPA have the right to refuse to accept twin applications rather than being obliged not to do so.
Appeals procedures
Changes to the appeals procedures also came into force on the 6th April.
The first change grants power to the planning inspectorate (PINS) to determine the process by which an appeal is heard (written representations, informal hearing or public inquiry). Criteria against how PINS will assess appeals are published on their website, please click here to view.
The second, associated change, allows applications for costs to be awarded in the case of written representation appeals thus removing the practice of requiring formal hearings solely in order to make a claim of costs for unreasonable behaviour. Members should be aware that the new PINS guidance on the definition of unreasonable behaviour includes the late withdrawal of an appeal for no good reason. However, the above change to the process of twin tracking will no doubt reduce the number of such last minute withdrawals.
Extending the life of planning permissions
There has been considerable recent discussion in the press over the problem of planning permissions granted with only a 3 year implementation window coming to the end of their life with no prospect of implementation due to the current economic situation. The ability to renew a planning permission merely by applying to vary the condition relating to the implementation time limit was removed by the 2004 P&CP Act. Hence, to reinstate this provision, it is argued by many, would require a change to this primary legislation. However, there are others who suggest that secondary legislation could be used to address the problem of many applications required to be subject to a new application with the associated high costs of such a process.
CLG are known to be looking at how such extensions might be granted. However, any such change would be likely to be limited to an extension of 2 years, would relate to the permission as originally granted (ie: no amendment of either the details or the S106 agreement) and would allow the LPA to refuse such an application for extension of time. Indeed, even secondary legislation (if it is possible at all, which is, currently still uncertain) would take some time to find the necessary parliamentary time to be passed.
TECHNICAL AFFAIRS
S38 agreements and commuted sums
The position statement paper produced by the working group looking in to Section 38 agreements and commuted sums is now available on the HBF website, please click here to view.
Using this HBF positioning paper, a commuted sum set by a highways authority has been challenged by a member company. This has resulted in a reduction of the commuted sum by around 35%, which in this particular case amounts to a saving in the region of £430,000. This in turn has resulted in a reduction of inspection fees by over £30,000.
HBF continues to look at the issues raised in this areas and will report further findings/information obtained through our newsletters and on the HBF website.
Gas flues in ceiling voids – update
The latest meeting of HBF Gas Flues working group reviewed the current industry position and has subsequently asked the HBF legal group to look at certain aspects surrounding liability and responsibility.
The Corgi TB200 document is currently being updated by Capita who runs the new ‘gas safe register’ and HBF is represented on this group. One of the revisions giving concern to the working group is the proposal to change the ‘not to current standards’ rating to an ‘at risk’ rating. We are talking to the TB200 group about this and its implications.
Discussions continue with CLG, HSE, Capita (Corgi) and NHBC on this issue.
Building Regulations
Part F (means of ventilation) and Part L (conservation of fuel and power)
The consultation documents into parts F and L of the Building Regs are now expected to be published in early June. It is anticipated that a new SAP calculation methodology tool will be available at the same time.
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 nearing completion. The consultation for these will run together and is expected out in early July
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)
The CLG working party continues it’s work towards the preparation of the consultation document for Part J. The current progress points towards a possible consultation date of around early July.
As mentioned previously it is 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.
Code for Sustainable Homes
We continue to hold our quarterly meetings with CLG and BRE to discuss technical aspects and the process of compliance with the Code for Sustainable Homes. We also have a HBF group looking at ways the code can be made to work more smoothly from a house builders and assessors point of view.
There is growing concern surrounding the lack of certainty within the code, and indeed the amount of time currently being taken by assessors and the BRE to process and issue certification.
As previously mentioned a consultation review of the code for sustainable is due shortly. This is expected to come out in 2 parts. The first consultation is around the policy followed by one looking at the technical issues.
We will be feeding our concerns surrounding the code into the consultation process.
Draft Flood and Water Management Bill.
This 359 page consultation document was released last week. It is intended to give a more comprehensive and risk based regime for managing the risk of flood and coastal erosion and embraces all kind of flooding. The bill has several aims but these can be grouped under the headings of Security, service and sustainability for people and their communities.
We are currently looking at this and will be setting up working parties/groups to respond to the areas concerning our industry. Any member wishing to be part of this group should contact Dave Mitchell. (Contact details below)
The response deadline is 24th July 2009
If you have any queries regarding any of the technical issues above please contact HBF’s Technical Director Dave Mitchell – dave.mitchell@hbf.co.uk or on 0207 960 1621
AND FINALLY...
It was great to see so many familiar faces at our lunch last month. It is a real credit to our industry that despite all the setbacks we have had in the past year or so, setbacks that would have led to the demise of many industries, there is still a dogged determination to emerge and succeed. It really put in to focus for me the importance of what we at HBF are doing, and I assure you we are totally committed to working on your behalf in every way possible to ensure we emerge from this downturn and as an industry are successful again, as quickly as is possible.
I will report again in mid June.