INTRODUCTION It has been an extraordinarily busy period which we have attempted to capture in this report with information on our meetings at all the party political conferences; detail of the new Opposition Housing team; continued work with the Coalition on emerging housing policy and engagement with the Zero Carbon Hub on the vitally important issue of carbon compliance. The long wait for the Government’s Comprehensive Spending Review (CSR) is now over although the jury is still out in many areas as experts delve into the detail to try to understand the implications. We were naturally disappointed, although not surprised, that no new funding has been allocated for Homebuy Direct to continue in some form. This has been a lifeline for many first-time buyers over the past 15 months accounting for approaching 10% of all new home sales. Its demise, other than where it lives on as part of the Kickstart initiative, coincides with increasing fears that the mortgage market is becoming more difficult and may get worse next year as lenders begin to pay back the £300bn owed to the Bank of England. In addition CML has raised very serious concerns about the potential impact of FSA proposals for tighter mortgage regulation. CML believes that had the regulation been in place between 2005 and 2009 half the loans granted over that period would have been refused, including a staggering 60% of those granted to first time buyers. We will be making very strong representations to both the FSA and MPs of all sides about this and I urge you all to do the same. It really does feel to me like a dramatic over reaction to a situation which has already self-corrected. Lenders own restrictions have made obtaining a mortgage on normal terms almost impossible for anyone who doesn’t have a 25% deposit – which is why about 25% of 30 year old people in this country still live with their parents and why the average age of an unassisted first time buyer has risen to 37. The CSR did have some detail on the New Homes Bonus (NHB) which we now know will be paid on completions from April 2011; confirmation of large scale cuts to Local Authority finance, which the Government believes will make the NHB very attractive to Local Authorities looking to raise additional finance to avoid cutting services and staff; a new approach to providing social housing, which we hope will lead to a looser definition of affordable housing and a renewed commitment to reduce the regulatory burden on the house building industry – something as you know we have argued for over many years. We await with anticipation the detail behind this. KEY ISSUES Comprehensive Spending review The Chancellor of the Exchequer, George Osborne delivered his Government’s Spending Review in a statement to Parliament on 20th October. The Review covers the four year period from 2011/12 to 2014/15. In terms of housing, the headlines were; No new funding for HomeBuy Direct or Kickstart Confirmation that the New Homes Bonus (NHB) will be paid on completions with effect from the start of the 2011/12 financial year in April. Funding of more than £900m will be made available for the Bonus over the Review period, with £200m of this in the 2011/12 financial year. This funding will replace the current Housing and Planning Delivery Grant and is expected to fully fund the cost of the Bonus in its first year. During the rest of the Review period it is expected that the cost of the Bonus (which is not capped) would need to be increasingly funded by top-slicing central Government grant support to Local Authorities. The consultation on the NHB will be launched in November The impact of the NHB over the period will be increased by a reduction of some 26% in central Government grant to Local Authorities by the end of the Review period (2014/15) A renewed commitment to tackle regulation. The Review document states that the Government “will also reduce the total regulatory burden on the house building industry over the Spending Review period”, something HBF has pushed hard for over a long period of time. We understand further announcements about the process for tackling the regulatory burden will be made in the near future. A 74% reduction by the end of the Review period (2014/15) in the National Affordable Housing Programme (NAHP) budget Within the new NAHP budget there will be continued provision for mortgage support schemes (estimated at around £200m) There will be a major reform of the social and affordable housing system. This will include allowing RSLs to offer shorter term and more flexible tenancies with rents between social and market rates. Ministers hope that this additional flexibility will enable up to 150,000 affordable homes to be funded over the four year Review period. The Government will end ring-fencing of all local government revenue grants from 2011-12, Tax Increment Finance will be taken forward with a White Paper on local growth to be published later this year. The Government also commits to increasing “housing supply by reforming the planning system so it is more efficient, effective and supportive of economic development.” The above is taken from the HBF’s Spending Review analysis briefing. Members can download the full document please click here . The full official Government Spending Review document can be viewed online please click here. Initial assessment In the run-up to the SR, HBF met officials at CLG and Treasury to discuss in more detail the items covered in our Spending Review submission. Although the published detail in the SR on the NHB and promised action on regulation is only general, the direction of policy is clear and I think movement on both issues are a reflection of the work HBF has done in recent months. We understand further announcements on both are due shortly. The Chancellor’s commitment to reduce regulation was especially welcome. Reducing the so called ‘Burden of Regulation’ is something HBF has pushed with successive Governments and officials for some years now. It is therefore extremely rewarding to hear that recognition of the need to manage the amount of regulation our industry faces has finally been made. HBF submitted a summary of recommendations to reduce the cumulative cost burden of policy and regulation to Treasury and CLG, as part of our Spending Review submission. (please click here to view) Our Burden Working Group has also been helping HCA develop its viability model. The model is expected to become a very important tool in the HCA’s discussions with Local Authorities on their investment plans and Affordable Housing grant. However, we now need to see the Government’s recognition of the issue of over regulation turned into clear policies. Without such policy in place, sites will continue to not be viable and the Chancellor’s commitment to increase overall housing delivery will be threatened. The Chancellor’s confirmation of the NHB is also significant. It also needs to be seen in the context of the significant reduction in central Government grant for Local Authorities - an average of around 30% across the board, meaning cash strapped Local Authorities will have to at least consider the potential income generated from house building. However, we will continue to push hard for concrete policy detail to be finalised on this as a matter of urgency. It is now five months since the RSSs were scrapped and all the feedback we are getting from Local Authorities is that they are still confused as to how to move forward. A consultation is due in December we believe, but I still fear that until clarity and root and branch detail is given to Local Authorities, they will be reluctant to commit to the promises made by Ministers thus far. In our extensive media work since the CSR and in our discussions with Ministers and officials this is something we are pushing hard. It was disappointing that there was no provision made within the CSR for additional funding for HomeBuy Direct or Kickstart. Grant Shapps did make the point in a conversation to me that HomeBuy Direct was still being considered, but that I was not to hold out much hope at this stage. We will of course continue to push in theses areas. The speech Osborne delivered confirmed recent press comments to the effect that there is to be a significant reduction in funding for the National Affordable Housing Programme. This funding reduction cannot, however, be divorced from what appears to be a radical shift of policy on the provision and funding of affordable housing as a whole. That said, the figure of 155,000 affordable homes that Osborne committed to delivering over the next four years is probably about where we have been in terms of delivery. Last year the figure was around 32,000. The question is that with the reduced grant, is this aspiration deliverable? HBF will wish to contribute actively to the wider discussion on this issue and we are renewing our case for a more flexible approach to the definition of affordable housing in planning policy as a part of that. CABE Alongside the Review, it was confirmed that the Department of Culture is withdrawing funding from CABE. It has since been reported that the other funding department, CLG, has also withdrawn its financing, but we are still to get this officially confirmed. The future of CABE therefore remains uncertain. CABE has said it “is now taking stock of the decision and looking at options to create new ways to support and champion good design.” Please click here to view the full Government spending review report. Please click here to view the press release HBF issued in reaction to the Spending Review. ECONOMIC AFFAIRS HomeBuy Direct The scheme ended on 30th September. The outcome has not been officially announced, but we expect in excess of 9,000 sales (against a target of 10,000), which represents around 9-10% of new home sales over the 15 months in which HBD was fully operational. Helping First-Time Buyers Given the enormous deposit gap faced by first-time buyers (FTBs), it is very important that we explore proposals which might allow home builders to increase sales to FTBs, apart from HBD. I am pleased to say we have had several approaches recently with ideas around Mortgage Indemnity Insurance or Guarantees. We will continue to work with these organisations as they develop their ideas, if necessary introducing them to officials in CLG and Treasury, and our contacts at the CML and individual mortgage lenders. HBF will also be embarking on a series of media initiatives aimed at highlighting the difficulties faced by FTBs. I will keep you informed as to progress on this. Mortgage outlook There are two clouds hanging over the UK mortgage market – funding and regulation. On funding, net mortgage lending is running at very low levels. CML forecasts it will this year amount to approx £12bn – the same as last year but down from £110bn and £108bn in 2006 and 2007 respectively. Next year the lenders have to start to repay the £300bn owed to the Bank of England and the Government, and this will place further strains on the lenders to the extent they are unable to refinance this, or extend the repayment date. In addition in recent weeks I have been told that the mortgage market has become more difficult with lenders tightening their lending criteria even further and continuing to discriminate in favour of second hand homes over new. On top of this CML has raised grave concerns about the proposed new regulations being suggested by the FSA. CML believes that over 50% of loans granted between 2005 and 2009 would not have been made if the proposed regulations had applied. They estimate that 3.8 million mortgages would not have been granted compared to about 151000 arrears cases and 38000 repossessions that would have been avoided. It is clear to me that if CML’s analysis is correct, and that if the FSA proposals are implemented, the implications for our industry are very serious. I have been invited to attend the Government’s Home Finance Forum this week and will be arguing these points very strongly. EXTERNAL AFFAIRS Political contacts During September HBF attended all three main party political conferences. As in previous years, we focused on holding face to face meetings with Ministers, MPs and other political contacts. We also held a successful dinner at the Conservative Party conference which was attended by Grant Shapps, John Howell and a number of newly elected MPs. These contacts and discussions are useful in building understanding of industry issues with politicians and helping to influence the course of debate at Westminster. The parliamentary year ahead will be an important one for the industry with the Localism Bill proceeding alongside consideration of the details of the new planning system and the financial incentive for home building. We will therefore be building further on our political contact programme in coming months. Now that Parliament is sitting again we are also maintaining a programme of HBF meetings with Ministers. I recently met Bob Neill to discuss arrangements and issues relating to the Localism Bill and the preparation of the new National Planning Policy Framework, and we have agreed to continue dialogue during the passage of the legislation. We are also organising a dinner discussion for senior members with Grant Shapps during November. New Labour front bench team Following the announcement of the new Labour Party leader, Ed Miliband, just before the party’s annual conference, the full Shadow Cabinet and Ministerial team has now been put in place. It is welcome that the Shadow CLG front bench team has both experience, and an interest, in housing issues. The Shadow Communities Secretary is Caroline Flint, with whom we built good relations during her stint as Housing Minister in 2008. It should help that she then heard at first hand from us and the industry of the challenges we face, including on the impact of regulation. Assisting Caroline Flint will amongst others be Alison Seabeck, who has worked on housing issues over many years, and Jack Dromey who has also had a longstanding interest in construction and housing prior to becoming a MP at the recent election. We are seeking to meet and brief the Shadow team at an early stage and it is of course important that there should be an effective Opposition voice on housing – all the more so at this time of major change. Housing Market Intelligence conference Our 8th Housing Market Intelligence Conference was held on 12th October with keynote speeches from Grant Shapps, John White Chairman of Persimmon and Michael Coogan of CML. Shapps used the forum to announce a pledge to reduce the burden of regulation – a commitment repeated in the Spending Review by George Osborne. John White called for more accurate information on house prices, stating that monthly figures from bodies such as the Halifax and Nationwide could be misleading. Instead, he said, they should get together and issue accurate quarterly figures. Coogan outlined his fears (detailed above) for the implications of the proposed FSA regulations, saying they could rule out a massive 51% of current loans. For a copy of all the speeches and presentations visit the Housebuilder website please click here. Engagement strategy We have continued to develop our strategy for engaging the new Government and Local Authorities and communities, assisted by a task group of member company representatives. The first phase of this work has now been completed and I recently circulated to you a summary of our plans. These involve the development of key messages for both Government – national and local – and the public and media, together with an evidence base that will help us and you to make the case for more homes in our day-to-day dealings. A first important tool we have put on our website to assist members in talking to Local Authorities is our New Homes Bonus Calculator that enables you to plug in the number of units in a proposed development and calculate what we would expect this to generate in terms of revenue for a local authority through the proposed incentive. We are also working to bring together other sources of information that will assist you in dialogue with councils and communities. (Please click here to view) In terms of public messaging, we are seeking to raise awareness of the issues in the local and regional media as well as nationally. We have already successfully achieved prominent coverage in Bristol and Leeds on the lost NHB revenue implications of Local Authorities significantly reducing their planned provision of housing and are working on further such stories. We also plan to highlight this issue in the national media and develop a strong narrative in respect of the difficulties faced by the younger generation in getting into the housing market. Alongside these initiatives, we are also talking to other bodies with an interest in housing to identify common ground and explore the potential for joint working to influence future policy decisions. These discussions have included a useful meeting with the Local Government Association who are interested in working with us on a number of fronts, including discussing detailed issues relating to the implementation of the NHB. Overall our strategy will continue to evolve and I will of course keep you in touch with progress, but please be assured that we are already acting on what we have proposed. PLANNING AFFAIRS Over the past couple of months, we have attended a plethora of workshops, sounding boards, conferences and meetings on the Government’s proposals for “radical reform” of the planning system However, we are still awaiting the detail we require to enable us to make a coherent judgement of the merits of their plans. I hope that the publication of the Decentralisation and Localism Bill, currently programmed for late November will give us the detail we require. At a meeting on 13th October with Bob Neill MP, Parliamentary Under Secretary of State, we were also assured that the National Planning Framework would now be produced alongside the Bill in order to clearly explain how the new system would work. John Howell MP, Parliamentary Private Secretary to Planning Minister Greg Clark, attended the last meeting of the National Planning Forum, of which HBF is a member, on the 8th October to discuss the issues to be addressed by the framework. He followed this up with a workshop of key organisations involved in planning delivery which included HBF. It is clear that the National Planning Framework will be a key foundation of the new planning system and we will continue to keep members up to date as and when details begin to emerge. We are well aware of the current confusion in the planning system brought about by the policy vacuum left by parts of the old system being removed well in advance of any of the details of the new process being discussed or published. We continue to urge the Government either to produce such guidance or, as seems more likely, if they intend not to write any such guidance, to make it very clear to local planning authorities that there will be nothing forthcoming. Many Local Authorities are currently reluctant to take any decisions on either development plans or planning applications for fear that their actions will not “conform” to the new Government’s masterplan for the planning system. But they are missing the point. Open source planning, as described by the Conservative Green Paper published before the election, allows Local Authorities and local communities to make their own decisions, indeed, to make their own rules, in their own way. The National Planning Framework is just that – a framework not an instruction manual. We must, therefore, as a development industry, also see this as an opportunity to propose our own solutions, in partnership with nervous Local Authorities and their communities. We must go out and sell the benefits of our development proposals. The tools we need for the future are now different to those we have used in the past. HBF has already started to help members with some of those tools. Our simple New Homes Bonus Calculator, allows you to easily calculate the cash benefit of your proposed development to the Local Authority. We are also working on other tools such as a proposed methodology for assessing housing markets and land availability along the lines of the old government guidance on Strategic Housing Market and Land Availability Assessments. If you require other tools please let us know and we will endeavour to assist. Our links with other organisations as well as central and local government bodies will help us find the most appropriate partners to provide the new building blocks of the new planning system. There is an old saying that “necessity is the mother of invention”. In the current planning policy vacuum in which we and local planning authorities currently find ourselves it is up to us to try to cease the initiative and invent what we need. TECHNICAL AFFAIRS Zero carbon Following Grant Shapps’ parliamentary statement in July, attention has focused particularly on work to revisit the “Carbon Compliance” element of the zero carbon policy relating to on-site renewable energy requirements. As things stand, Carbon Compliance would – taken with the proposed minimum requirement for fabric efficiency - require an improvement of at least 70% on Part L 2006 to be achieved through on-site measures. The Minister has asked for the evidence base for such a 70% improvement to be re-assessed to consider what is technically and commercially feasible for different types of development. The Zero Carbon Hub has set up a task group involving all interested parties to conduct this work. Ensuring all the relevant issues are considered and that recommendations are based on appropriate data is vital and we are giving high priority to our involvement in the task group. We have also successfully sought the opportunity for HBF member company representatives to be involved too. The work of this current task group is dealing with one of the most important regulatory issues the industry currently faces so we will keep you in close touch with what emerges from it. The Hub has been asked to present its main findings to the Minister before the end of the year. Building Regulations Government Consultation - Your ideas on future changes to the Building Regulations HBF continues to have a dialogue with CLG regarding ‘Ideas on Future Changes to the Building Regulations’. We have identified areas of duplication in the current Regulations as well as ones that could be easily merged together. We have also pointed out Regulations that indeed could be dispensed with. We have looked at and commented on the relationship between Building Regulations and other policies and codes, again pointing out areas of overlap, duplication and conflict. Our view remains that there is real scope for fewer Regulations overall which will result in future Regulations being simple, sensible and straightforward. This kind of approach has the potential for real cost savings to all stakeholders. HBF has also arranged to meet the Better Regulations Executive to discuss our suggested approach. Code for Sustainable Homes – RDL sub licence BRE Global has announced the appointment of Robust Details Limited (RDL) as a licensed Code Service Provider. This allows RDL to provide certification services under the Code for Sustainable Homes, bringing the total number of operators to three along with BRE Global and Stroma Accreditation. Under licence from BRE Global, RDL will be able to train and licence Code Assessors, and provide quality assurance and final certification to Code-rated dwellings. RDL is starting on a small scale with a pilot phase involving a controlled number of projects. This is a new venture for RDL and so the aim of the pilot phase is to develop and refine the service, systems and processes before offering the service more widely. Part F (means of ventilation), Part J (Combustion appliances and fuel storage) and Part L (Conservation of Fuel and Power) L1A, L1B, L2A and L2B. The 2010 regulations for the above three parts of the building regulations have all been released and came into effect on the 1st October 2010 All of the Documents can be found on the planning portal www.planningportal.gov.uk/approveddocuments Also available on the same website, and connected to Part F, is a Domestic Ventilation Compliance Guide which gives detailed installation and commissioning guidance for fixed ventilation systems. Also available with regards to Part L are two compliance guides; The Domestic Building Services Compliance Guide and the Non-domestic Building Services Compliance Guide. SAP software We have heard from one software supplier that on the 30th September the SAP software was provisionally approved by the BRE for all SAP, EI, DER, TER and FEE outputs. All SAP 2009 software approval is currently provisional, pending more detailed examination by BRE of software. A subsequent release is planned for early November with full approval. We will keep you updated on this important issue. Part G (Sanitation, Hot Water and Water Efficiency) This regulation came into force back in April 2010 and the document can be downloaded from the planning portal HBF would like to know of any difficulties being encountered with this part of the building regulations regarding compliance. Consultation on draft regulations and proposals for schemes for the transfer of private sewers to water and sewage companies in England and Wales This consultation was released on the 26th August 2010 and looks at how the UK Government and the Welsh Assembly Government will implement the transfer of private sewers and lateral drains connected to the public sewerage system into the ownership of the statutory water and storage companies (WaSCs). HBF has formulated an initial response which is available to members on our website. Whilst the initiative is generally welcomed there are some concerns surrounding the proposals within the consultation. These basically surround the exclusions to automatic transfer discussed in the document and the lack of any transitional arrangements. A series of DEFRA hosted consultation workshops will take place in October and the consultation closes on the 18th November 2010. Flood and Water Management Act We still expect to see two consultations shortly relating to the Flood and Water Management Act. These will be on Mandatory Build Standards (MBS) and the Sustainable Urban Drainage (SUDs) standards. As mentioned in previous updates these are going to be two vitally important consultations for our industry and as such once they are issued, HBF will be holding workshop/consultation meetings to formulate an industry response. We would urge members to; Try to attend these meetings Submit your own company responses. We will advise on workshop/consultations meeting dates as soon as we know when the consultations will be released. In the meantime if you are interested in attending can you please register your interest with Rosie – email rosie.hinchliffe@hbf.co.uk HBF has also arranged to meet officials from the Cabinet Office to discuss SUDs. HBF Technical Conference 2010. Thinktank, Birmingham, Tuesday 9th November. This year’s conference will look at the regulatory burden facing the industry. It will include presentations on Building Regulations, the Code for Sustainable Homes and the Flood and Water Management Act. To book a place or for further details please Email events@house-builder.co.uk or ring 020 7960 1646. AND FINALLY… My apologies that this report is somewhat longer than usual but I hope you have found it useful. 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 would also like to congratulate David Pretty and the New Homes Marketing Board (NHMB) for undertaking such a successful New Homes Month initiative. The campaign achieved extensive coverage in the local and national media. The Daily Telegraph carried a NHM supplement, as did many regional and local papers across the country. Many lifted the copy direct from the New Homes News magazine the NHMB produced, of which nearly 100,000 were sent to hundreds of house building sites in England, Wales and Scotland. As such the coverage got across exactly the messages we wanted to on the benefits of old over new; the fact new build homes are greener and so cheaper; the fantastic service provided by developers; and of course a focus on the fantastic customer satisfaction results we achieved in last years HBF CSS survey. In total, around 200 articles that promoted the benefits of buying new over second hand homes appeared throughout the month. In such difficult trading conditions, such positive media exposure can only have helped, Well done to all involved. I will update you again in due course.
