KEY ISSUES Since I last updated you we have held a number of meetings with senior political figures in the main parties. These meetings have been constructive and allowed us to lobby for policy changes that will help facilitate house building, both in the short and longer term. The political party conferences, of which there is more detail below, and our own Housing Market Intelligence conference, outlined to me the significant differences in between how the current Government and the Conservatives, should they be elected, will try to deliver the one objective they do both agree on – increasing housing output. Clearly we are committed to working with both. My main focus, in both private meetings and when speaking at events, has been to ensure that Government understand the need to use the forthcoming Pre Budget Report to underpin the market stabilisation we have seen; and to impress on the Conservatives the need to impose some controls on their proposed localism policies to ensure housing delivery is maintained. The heavyweight speaker list at the HMI conference ensured it was a success. Over 200 delegates saw presentations from both the housing Minister John Healey and his shadow Grant Shapps. Sir Bob Kerslake outlined the steps the HCA are taking to get sites working again and the CML’s Michael Coogan explained the situation in the mortgage market. The presentation from Crest’s Chris Tinker and our own John Stewart on the impact that regulation on the industry is having was particularly well received. All the presentations can be viewed online please click here EXTERNAL AFFAIRS Political contacts As stated above, it has been a busy period for political contacts with the annual party conferences as well as the recent return of Parliament. We held a wide range of meetings with politicians and others at both the Labour and Conservative Party conferences, including informal dinner discussions that we jointly hosted with the Construction Products Association. I was delighted that housing minister John Healey was able to spend some time with us at our Brighton dinner. At the Conservative conference we held meetings with members of the shadow CLG ministerial team working on their forthcoming policy green paper on planning as well as with their policy advisers. These discussions suggest that the green paper may fill in some of the gaps in the details of how localism might work. We will continue discussions with our contacts in the run up to the launch of the paper and seek wherever possible to influence thinking to provide greater assurance for the industry. From our discussions with them it is quite clear that the Conservatives are committed to implementing their policy of localism and devolving power down to community level. We are thus attempting to move the debate on to identifying the steps that we feel are necessary to ensure this approach delivers their stated ambition of increasing housing output. Our paper ‘Making Localism Work’, which we have submitted to the Conservative’s housing team, details a list of controls we feel need to be introduced. I believe that they must ensure that Local Authorities produce a timely plan that adequately provides for housing need in their area; that the sum of these local plans adds up to a number of new homes that meets the national need; and that Local Authorities are sufficiently skilled and resourced to implement their plans, and a check is maintained to ensure they do. It is also essential that if the Conservatives come to power a proper transition plan is put in place to get from where we are now to where they want to be. We must above all avoid creating uncertainty and confusion at a time when the industry is recovering from the worst downturn in living memory. We will continue to push these points in our ongoing discussions with them, discussions that have so far been extremely positive. Housing as an election issue Housing is in fierce competition with other issues as the countdown to the forthcoming election picks up pace. Concerns about the wider economic position and the financial savings that government will need to make the other side of the election are preoccupying many. We will have to work hard therefore to ensure that the need for more homes, and conditions that enable the industry to deliver these receive full attention. Besides working on our own HBF manifesto for the election we are talking to other organisations with a housing focus to ensure we can co-ordinate our main messages as far as possible. In that way I hope we can ensure that housing receives the attention it deserves. Feed-in tariff We have submitted a substantive response to the Government’s recent consultation on the introduction of a Feed-in Tariff (FIT) whose aim is to provide an effective financial incentive to encourage the spread of smaller-scale renewable electricity installations. Such installations are likely to play a significant part in how a zero carbon standard is achieved and we lobbied hard earlier in the year to ensure that new as well as existing homes would be eligible for the FIT. Following John Healey’s confirmation that this would be the case, we have focused in our submission to Government on how the FIT can be made as practical as possible for developers or their partners to access so that it can as far as possible help mitigate the cost of the zero carbon policy. We will continue to be involved in these discussions. False self-employment We also responded to the Treasury’s consultation proposing changes to the tax rules relating to self-employment in construction. Concerned that under the current CIS rules it might be losing out on significant tax revenues, the Treasury has proposed a radical change in the rules to deem that all working in construction would be classified as employed for tax purposes unless they met the terms of one of three proposed exemptions. We have several concerns about this proposal. The evidence base would not warrant the change, there would be additional supply chain cost pressures and administrative burdens for house builders, the new rules do not appear any easier to implement than the current ones and in any case the proposed exemptions would not adequately cover genuine situations of self-employment in the industry. We met Treasury in mid-September to represent these concerns and have set them out in detail in our response. We have worked with other business and trade bodies to ensure that we can collectively make as strong a case against the proposals as possible and I will keep you informed of further developments. Energy Performance of Buildings Directive We are continuing to keep a close eye on the negotiations to revise the EU Energy Performance of Buildings Directive. A revised Directive could potentially establish an EU requirement for all new buildings beyond a specified date to meet a low or even zero energy standard. There remains pressure to complete the negotiation ahead of the December Climate Change Summit in Copenhagen and we are therefore liaising closely with the UK Government and the European authorities to ensure that proper account is taken of the industry’s view on what is feasible and what is not. It remains imperative that the negotiation does not cut across the merging position on zero carbon here. Update on Zero Carbon Homes CLG consulted in December 2008 on the definition of zero carbon homes for purposes of their policy that all new homes should be zero carbon from 2016. In July 2009 the Housing Minister John Healey announced some early decisions that had been reached in the light of that consultation. He also announced the setting up of a specialist task group. This group will be looking at proposals for energy metric and an energy efficient standard which will help realise the Government’s ambitions for the highest practical energy efficiency level realisable in all dwelling types. This task group has been established under the management of the Zero Carbon Hub and has been meeting throughout August and September. HBF and member companies have been attending and findings will be reported back to the Minister in early November. The energy efficient standard will eventually be incorporated into the Building Regulations and as such will need to be consulted on. This is likely to happen in 2010. We are told this will not affect the 2010 revisions to Parts F and L. I am grateful to members who have assisted us with this important work and believe that progress has been made towards achieving a better understanding of what constitutes a practical level of ambition that also makes allowance for the different potential of different types of dwelling. This will remain an important focus of work during the rest of the year. ECONOMIC AFFAIRS Pre Budget Report (PBR) The PBR, which we are expecting mid to late November, provides the Government with a timely opportunity to underpin the market stabilisation we have seen in recent months and demonstrate its commitment to maintaining housing provision. In the next few weeks we will be meeting with a junior Treasury Minister and senior Treasury officials. We will also make a written submission to Treasury setting out the measures we feel are required to maintain the very welcome, but fragile recovery we have seen so far this year. The main point we will be making is that the measures the Government has taken over the past year to stimulate the market must be maintained. In particular, the increased SDLT threshold should be extended into 2010 and the HomeBuy Direct time limit extended beyond 31st March. Now is not the time to be withdrawing support as doing so could have a seriously detrimental impact on the market, reducing housing output and industry employment. Amongst a number of other suggestions we are also advocating more support for first-time buyers; the introduction of a Government-backed mortgage indemnity guarantee (MIG) scheme; and for the Government to exert more pressure on the banks to increase mortgage lending. A full copy of our submission will be put on to our web site shortly. In its April Budget, the Treasury said it would produce a special report on housing delivery for the PBR. This is to include identifying “with industry and other partners, the best regulatory and policy framework to support the Government's long-term housing objectives”. It is therefore very discouraging that, as far as we are aware, there has been no such consultation. Nor have we heard anything about measure to improve permissioned land supply or overcome the unacceptable delays in local authority preparation of LDFs. The emphasis seems to have been almost exclusively on minor measures to bring new entrants into home building. Given the constraints imposed by permissioned land shortages and the cumulative burden of regulation, it is difficult to see quite what the Government hopes to achieve by trying to attract new entrants with different business models to traditional home builders. Mortgage Regulation The Financial Services Authority recently set out its proposals for reforming mortgage regulation to ensure that the market works better for consumers and is sustainable for all market participants. The proposals reflect the FSA’s changed approach to a more “intrusive and interventionist” style of regulation. I think the consultative approach they are taking is the correct one. Increasing mortgage availability is absolutely critical to sustaining any recovery and boosting housing supply. I think few could argue against the need for better mortgage regulation, nor with the broad principle that lenders should take greater responsibility for their lending decisions. But we must avoid hasty decisions or over-restrictive rules which could have far reaching unintended consequences and reduce desirable market flexibility. I also agree with the FSA’s decision not to impose caps on LTV or LTI ratios. We need to maintain product flexibility. Over regulation would not be helpful to consumers as we look to sustain the recent market stabilisation, nor in the long term. We will be submitting a response to the consultation in advance of the January deadline and will be consulting members in due course. Kickstart The first allocation of Kickstart money was released in September with £10.2m being given to 10 sites across England. Then in mid October Housing Minister John Healey announced at our HMI conference that another £51m has been released in the second wave of 27 schemes. In total the two announcements will see some 2750 homes built on sites that had previously stalled due to the economic downturn. When HBF first proposed such a scheme, the home building industry had many mothballed sites which, given the right demand and supply stimulus, could have been quickly brought into production. We believe measures to pump-prime such sites should remain a primary focus of Government funding. By helping boost housing production, the scheme will increase private and affordable housing output, increase employment, boost supply chain activity and help progress towards the zero-carbon homes target. Both in our recent meetings with the Housing Minister, and through our submission to Treasury ahead of the PBR, we have stressed the importance of maintaining and, if circumstances so indicate, being prepared to increase the HCA’s budget for such measures, as well as giving the HCA maximum flexibility with its existing budget. We have also detailed our belief that there is a specific need to look at the stimulus measures needed to help home builders restart construction on larger, more strategic sites. Such sites would normally have a construction profile of some years – much longer than the funding envelope so far provided for the Kickstart initiative, which is based on housing completions up to the end of 2011/12. Measures to help unlock such developments could be of considerable economic and social importance for the areas concerned, including regeneration areas. HomeBuy Direct (HBD) With the current constraint on mortgages and the highly restrictive loan-to-value ratios available, HomeBuy Direct (HBD) is especially valuable as it helps first-time buyers overcome the deposit gap. Because it is a new scheme it has understandably taken somewhat longer than was first envisaged to gain momentum. However there is now a sizeable pipeline of prospective transactions, with more in sight, so it is critical therefore that HBD is able to run its course effectively. As things stand currently the scheme is set to close on 31st March 2010. Because of the three months or more it normally takes for initial expressions of interest to become completed sales, this cut-off point will sever the flow of transactions through the scheme just as it is reaching its optimum level. This would result in many potential sales being lost, and lower levels of housing production and employment. Clearly it would be particularly unfortunate if production had to be cut because HBD had ended just as Kickstart is beginning to boost production. Through our regular meetings with the HCA, and in our PBR submission, we have been stressing the vital important that the existing funding envelope for HBD is extended so that the initiative can fulfil its real potential, help thousands more first-time buyers to get a foot on the housing ladder and help the industry maintain housing production and jobs. I believe the HCA is listening to our concerns and I will update you as soon as any progress is made. Industry Consumer Code Positive discussions have continued in recent weeks with CLG regarding the Consumer Code, which is still on schedule to come in to operation in April 2010. In the meantime the Code Body Advisory Forum will be implementing a programme of training courses and information distribution the purpose of which will be to ensure all developers and interested parties are fully informed about how the Code will work before the launch date. PLANNING AFFAIRS Community Infrastructure Levy We have now submitted our formal representations on the consultation draft regulations and guidance note on community infrastructure levy (CIL). Given the amount of time and effort we (and many of you) have spent on the subject over the past two years it is immensely frustrating that the consultation did not adequately address a number of, what we believe to be, fundamental pre-requisites of a successful replacement process to the long, drawn out, and uncertain outcome of current Section 106 agreements. It is also interesting to note that my frustration is shared. Not just by others in the development industry (British Property Federation and the Major Developers Group), but by those on the other side of the CIL fence – local authorities - at both elected member and officer levels (through the Local Government Association and the Planning Officers Society). I was, therefore, pleased (if that is the right word) to sign up to a joint submission to the CIL consultation that reiterated many of our own, individual concerns over the Government’s proposed approach to CIL. Unfortunately, none of the points made in that statement are new. They are the same issues, with the same problems, that we identified as being critical to the success of CIL in our original submission to CLG when we suggested an alternative to the ill-fated Planning Gain Supplement (PGS) back in 2007. We have suggested that the Government revisits its timetable for the introduction of CIL. There remain too many problems with the current regulations to ensure that we have a smooth transition to a standard, single payment regime for making contributions towards community infrastructure before its proposed introduction in April next year. We will, therefore, be continuing our discussions with both the Government (at ministerial and official levels) and the Conservatives. West Midlands Regional Spatial Strategy (RSS) The West Midlands RSS has been published with the Panel proposing a regional target of 397,900 homes by 2026 – a marginal increase on the 365,600 advocated by the Assembly. Despite representations throughout the process by HBF and others that the Assembly’s housing target went nowhere near to addressing the level of housing need indicated by the CLG’s household projections, the panel decided to take a very cautious view. The panel’s reasons for doing so are related to uncertainties associated with the recession and the ability to increase momentum coming out of a recession. The HBF will be writing directly to the CLG raising specific concerns about the reasoning of the panel and some of its recommendations, not least a requirement for all housing to meet as a minimum the Building for Life Silver standard. The next stage is that the Secretary of State will consider the panel’s report before he publishes his ‘proposed changes’ probably early in the new year. Once his modifications are published a fresh round of consultation will ensue before the RSS is finally formally adopted and published. TECHNICAL AFFAIRS Gas flues in ceiling voids – update As mentioned last month we asked some of our larger members to answer a short questionnaire to substantiate the work being done on this issue. Subsequently, HBF is due to meet with both the HSE and Gas Safe again to look at and review the results of this questionnaire. We believe that the results clearly demonstrate that our members have acted responsibly and the appropriate action has been taken. We will also be reinforcing the point that Gas Safe, through its registered installer network is better placed to research any non compliant installations prior to June 2007. Code for Sustainable Homes The CLG timetable for the launch of a consultation on the Code for Sustainable Homes remains the end of the year. We continue our meetings with CLG and BRE on both the process surrounding the code and the technical manual. Our meetings with regard to the process are almost complete and early indications are that as a result of these a reduced evidence base will be required by assessors which will see a reduction in time in preparing information and getting final code approval. CLG have five subgroups looking at various sections of the code. They are Energy, Waste, Accessibility, Surface Water Run-off and Process. Some of our members are reporting problems in the surface water runoff section and we would welcome detailed information surrounding this to feed into the sub group. Building Regulations Part F (means of ventilation) and Part L (conservation of fuel and power) The consultations for Parts F and L closed on the 17th September and we understand that over 400 responses were received by CLG. The summary of these should be available by the end of the year. HBF’s response is available on our website. Part J (Combustion appliances and fuel storage) The consultation document for Part J (combustion appliances and Fuel Storage Systems) is now out. HBF is setting up a group to look at an industry response to this. If you are interested in being part of this group please contact HBF’s Technical Director Dave Mitchell The closing date for responses to this consultation is 26th November 2009. AND FINALLY... I hope you have found this report useful and as ever, should you require more information on anything or indeed wish to let us have your views on any of the items please don’t hesitate to contact me or any of the team here at HBF I will update you again in December.
