KEY ISSUES Since I last reported to you prior to the summer the HBF has remained extremely busy on the many fronts that are reported in this update. In the political arena we continue to work with the current Government and the Conservative Party to ensure both understand our perspective on the key challenges facing our industry. Over the summer we produced two major papers – the first “Preparing for Recovery “ sets out the key issues the next Government will face and what its priorities must be to ensure an adequate supply of housing. Our second paper “Making Localism Work” is firmly aimed at the Tories and sets out our thoughts on the issues they must address to avoid a further reduction in home building levels in the event that they are elected and shortly thereafter introduce the changes they are proposing in their Green Papers. We are also heavily engaged with HCA on both the HomeBuy Direct and Kickstart initiatives which HBF played a significant role in creating; with HSE and Gas Safe on the ongoing matter of gas flues safety and with OFT, CLG and BIS on our forthcoming industry Code for Consumers. ECONOMIC AFFAIRS Preparing for Recovery This important HBF paper has now been completed and sent to the Housing Minister, senior officials at CLG, Treasury, the Bank and HCA, and the Conservative shadow CLG team. It concludes that we face a massive shortage of housing, and that the private sector will have to deliver the vast majority of the new homes we will need over the next decade or more. To do this, the priorities must be an adequate supply of permissioned land, allowing house builders to build products home buyers want to buy and can afford, and a drastic reduction in the cumulative burden of policy and regulation. The paper is now available on the member’s section of the HBF web site Cumulative Burden of Regulation We are most discouraged by the Government’s silence over the impact of regulation. In the Budget (22nd April), the Government announced that, in a report at the 2009 Pre-Budget Report (PBR), it “will identify, working with industry and other partners, the best regulatory and policy framework to support the Government's long-term housing objectives”. While we have been assured a lot of work is going on behind the scenes, nothing has emerged publicly and, as far as we are aware, there has been no consultation with the industry. As the PBR is likely to be published in October or November, time is desperately short. We will keep pressing CLG on this very important issue. As well as the policy and regulatory burden (now known within Government as “land-value capture and cumulative regulation”), the PBR report will cover the supply of development land, infrastructure provision, measures to “promote a strong and diverse house building sector” and affordable housing provision. Housing Viability New home viability has become a major issue within the planning system. Excessive policy and regulatory demands, alongside a sharp fall in land values, have rendered many sites unviable. As a result, many house builders are seeking to renegotiate S106 agreements and housing mixes. Local planning authorities are required by PPS3 to maintain a five-year supply of viable land. And the Community Infrastructure Levy (CIL) will require local authorities to assess the impact of any proposed levy on viability in their area before deciding on a final CIL value. One of the most widely-used viability tools is the Three Dragons model. HBF has opened discussions with the Three Dragons to explore the data and assumptions used in this model and its various uses. It is most important for the industry that the model produces sensible, reliable results, based on realistic and accurate data. HCA Initiatives HomeBuy Direct (HBD) HBF senior staff and members continue to hold regular monthly meetings with the HCA at which we discuss progress with sales and identify obstacles and problems. Although the HCA has relaxed a number of important barriers to delivery as a result of our meetings, regular evidence collected by HBF shows that we have a long way to go to achieve the Government’s HBD target. Unfortunately, Lloyds (HBOS) has announced that from 10th September it will require a deposit of 5% of the purchaser’s equity share (usually 70%) in HBD sales. This leaves RBS as the only lender offering loans of 100% of the equity share. Kickstart We have also held several meetings with the HCA to discuss Kickstart. Members with successful schemes in Round 1 are currently undergoing Due Diligence. We understand the HCA will ask for Round 2 Expressions of Interest in the very near future. HCA Standards The HCA is currently working on harmonising the former English Partnerships and Housing Corporation Standards. We have held several meetings with the HCA to discuss the implications of its standards on housing numbers, densities and viability. The new standards will cover areas such as space standards and Lifetime Homes, the Code for Sustainable Homes and design. We understand the HCA will be consulting on its new standards in late October. I am delighted to advise that Chris Tinker, Group Board Director & Regeneration Chairman at Crest Nicholson, has been selected as HBF’s nominee on the HCA Design and Sustainability Advisory Panel. Chris has taken a leading role in our work on the cumulative impact of regulation, and I know he will robustly defend the industry’s interests on this Panel. Industry Consumer Code To our surprise, the OFT announced in July that “its 'backstop' recommendation to the Government of a statutory redress scheme must now be made, but the OFT acknowledges that the Government will wish to take into account the ongoing progress in deciding whether, or when, to act on the OFT's recommendation”. So the ball is now in the Government’s court. The department of Business, Innovation and Skills (BIS) is the lead department, but in practice CLG will be doing most of the work. CLG will now liaise with the OFT who will no doubt keep an eye on progress behind the scenes. Following this announcement, members of the Code management board and advisory forum have held several meetings with CLG and BIS officials, and I have personally spoken to John Healey, Housing Minister, about our progress with a voluntary Code. The Government seems supportive of our approach, although a number of outstanding issues have yet to be resolved. We very much hope Ministers will not implement a statutory redress scheme, at least until our Code has had time to bed down and show that it is working effectively. Members will no doubt have heard that Zurich, having unexpectedly withdrawn from the Code in February, has now announced that it has withdrawn from offering new home warranties. We do not yet know whether this will have any influence on Government or OFT thinking about the Code. The next big step will be the Code body’s launch of a major education, training and awareness programme for home builders. Details will be announced in due course, with a view to starting the programme in November. This is an essential first step before we go live with the Code. I very much hope HBF members, large, medium and small, will give this programme their full support by involving staff at all levels and in all relevant areas (senior management, sales and marketing, legal, production, customer service). We must show Government that we have the industry fully behind the Code, and that it will successfully serve the best interests of new home buyers. New Home Valuations HBF has been attending a series of meetings arranged by CLG and involving home builders, lenders, the CML, valuers and RICS. The objective is to try to improve the practice of new home valuation which is clearly causing considerable problems for the industry. One of our key objectives – supported by most lenders, the CML and RICS – is to establish a consistent approach to new home valuation, in line with the Red Book and the recent RICS guidance note. CLG Stakeholder House Price Survey HBF was asked to advise CLG and the consultants carrying out a survey of key stakeholders (home builders, estate agents, lenders, City analysts and academics) seeking views about trends in house prices and the outlook for prices. HBF stressed to CLG and Ipsos MORI, who undertook the house builder interviews, that the information was market sensitive, and that house builders participating in the survey must be given feedback on the findings as a quid pro quo for their cooperation. I understand most of the 20 house builders approached by Ipsos MORI agreed to be interviewed. EXTERNAL AFFAIRS Relations with the Conservatives Policy work has been continuing behind the scenes in the Conservative Party as it prepares a further green paper on planning and regeneration due to be launched this autumn. We held a further meeting with Bob Neill, Shadow Minister responsible for the paper, and have provided further comment and advice to him and his advisers. We also completed our major paper on “Making Localism Work” which we have sent to all the key members of the Shadow CLG Ministerial team and their advisers. We are currently seeking informal feedback on the ideas we put forward in our paper for avoiding a hiatus during transition to any new locally-based regime and the longer-term safeguards required if it were to deliver the housing needed across the country. The stakes are clearly high. As you may have read in the newspapers recently, we understand that Shadow CLG Secretary Caroline Spelman has written to Conservative MPs and activists setting out the Party’s commitment to localism if elected and suggesting that councils should go slow on current plans deriving from the Regional Spatial Strategies if they regard these as “controversial”. It remains a priority therefore for us to engage the Conservatives to influence their thinking where possible and mitigate the adverse consequences their headline policy could cause for housing delivery. The Observer ran a front page story about the letter last Sunday and asked HBF for a quote. Our statement – which we have also issued in response to requests for comment from the trade press was: “If true [as the letter was not copied to us by the Conservatives], the letter gives rise to real concern. There is no recognition of the desperate need in all parts of the country for more homes of all kinds and tenures or of the responsibility of local authorities to make provision for these. Rather local authorities are being encouraged to put such considerations aside if they want to. Hard-pressed first-time buyers and those on the growing waiting list for social housing would suffer in particular. The timing is unfortunate: housing providers have been through the worst downturn in living memory and the letter would lead to a hiatus in planning for housing that could only exacerbate the supply crisis we already face.” You may wish to draw on this in any discussions you are involved in that touch on Conservative policy or Caroline Spelman’s letter. Party Conferences As preparations for the General Election step up, we will be attending the main Party Conferences again to maintain and broaden political contacts with key figures and explore the likely weight and approach of the Party manifestoes on housing. The meetings and discussions we hold will serve two purposes. They will help build understanding among the politicians of the main challenges facing the industry and the importance of meeting or resolving these. On the other hand, the intelligence we pick up by meeting politicians and tapping into the debate on the fringe circuit will better enable us to focus our preparations for the General Election campaign period – including our own policy manifesto. I will of course update you on the development of the election climate and our plans in forthcoming reports. Government proposals on tax rules for self-employment in construction Just before the summer recess, the Treasury and HM Revenue & Customs published a consultation document setting out proposals for tackling what the Government believes to be a significant problem of “false self-employment” in construction. The consultation proposes new tax rules that would entail a radical change to the current position by deeming workers in construction to be employed for tax purposes unless they fall under one of three proposed categories of exemption. The Government’s main objective is to ensure that it obtains all the tax revenue it believes it is due (it estimates that it is currently falling short of this objective by some £350m a year), but the proposals clearly have potentially significant implications for companies both financially and operationally. We are therefore using our current round of member meetings to gather your views so that we can submit a suitable response to the consultation which closes on 12th October. If you wish to contribute to our response on the consultation, please contact John Slaughter – john.slaughter@hbf.co.uk Definition of zero carbon homes Following this year’s consultation, John Healey made a parliamentary statement on 16th July about the definition of zero carbon homes. The statement was high level and much important detail remains to be resolved. The statement was nevertheless significant in a number of respects. It confirmed the Government’s wish to adopt a definition based on an energy hierarchy that first prioritises reductions in carbon emissions achievable through improved fabric efficiency, followed by the provision of on-site renewable energy and allowable off-site measures. Notably, it also indicated in the context of the cumulative impact of regulation that zero carbon should be the first call on land value. The Minister said that he wishes to set the mandatory level of improvement achieved through fabric efficiency and on-site renewables collectively at 70% on Part L 2006 requirements. This is a very stretching target and we will continue to work hard to ensure that industry issues on the cost and other implications are fully taken into account in finalising future regulations. Energy Efficiency Specification Task Group An important immediate action arising from the Minister’s statement is that he has set up an Energy Efficiency Specification Task Group to advise him this autumn on the metrics and standards to be used for capping future building regulations requirements for fabric efficiency. This is an important task the premise of which is that neither the Passiv haus nor the Energy Saving Trust’s Advanced Best Practice standards are necessarily suitable as a regulatory minimum standard for all dwelling types. The Task Group is being asked to report to the Minister by early November with the aim of a decision being announced by the end of this year. We are actively participating in the group which is being organised by the Zero Carbon Hub and seeking to maximise opportunities for members to make an industry input to the work to ensure that the future technical standard is both practicable and viable. Feed-in tariffs for renewable electricity The Government has published a consultation on proposals for the introduction of a Feed-in Tariff (FIT) – a financial incentive to promote smaller scale renewable electricity installations (below 5 MW) from next April. Following representations made by the HBF, John Healey has confirmed that the FIT – which would offer guaranteed payments for eligible generation for an extended period - will be applicable to zero carbon homes. We are therefore currently discussing with members how the operation of the new incentive might best assist them and help offset the capital costs involved in order to make a response to the consultation. Please contact John Slaughter if you would like to contribute to this work. Revision of the Energy Performance of Buildings Directive The current Swedish Presidency of the EU is already upping the pace on these important negotiations. Following the lobbying we and others have undertaken, the signs are that Member States will probably not support the European Parliament’s proposals for new buildings to meet a “net zero energy” standard from 2019. There is nevertheless considerable political pressure to agree a positive revision of the Directive this autumn ahead of the major world climate change conference being held in Copenhagen at the end of the year. We will continue to lobby in both Brussels and London on this measure and keep you informed of developments. Wales We are continuing to work with the Assembly Government to ensure that it takes any measures it can to assist the industry to recover from the downturn. The Assembly is holding regular Economic Summit meetings chaired by the First Minister to which HBF is invited. We have been able to use these to update the Government on the industry’s position, to press for further action with the lenders and for the Government to consider support measures in fields such as shared equity and for kick-starting mothballed projects. Discussions on possible new support measures continue with officials and we will report on progress as soon as we can. The start of this month saw the commencement of the new Ministerial planning policy requiring developments to meet Code Level 3 plus six credits under ENE1 for new applications of 10 or more units – equivalent to a 31% improvement on the requirements of Part L 2006. This is clearly stretching given current circumstances, but prior to the policy being announced we worked hard in dialogue with Ministers and officials to explain the industry’s issues in moving fast to higher standards and I firmly believe that the new policy is a better outcome than we originally thought might be possible. This will of course remain an important area for us. Finally, I was pleased to hear recently that Richard Price has been asked to join the steering group for a six month research project to review the planning application process in Wales with the aim of ensuring it is able to support economic recovery. The project will look at good practice and the barriers to achieving timely, quality planning decisions. New Homes Week New Homes Week take place next week and it’s great to see such industry support for what should be a really positive initiative. Nearly 2000 sites signed up, representing every major member of HBF and I am hopeful is should generate some real interest and attract visitors to sites. Whatever you have got going on – have a great week. PLANNING AFFAIRS Community Infrastructure Levy At the end of July the Government finally published the long awaited draft regulations for the application of Community Infrastructure Levy (CIL). These were accompanied by 164 pages of associated guidance seeking to explain, in clear English, the principles of the setting, collecting, paying and spending of CIL. It has to be said that we are somewhat disappointed with the consultation package. Firstly, the Government chose to launch the consultation under the headline that CIL would be “discretionary” – meaning that there was a flood of local authorities who immediately stated they had no intention of introducing it in their areas and thus withdrawing from any debate. However the paper is clear that CIL will be required in almost all local authority areas who are currently seeking contributions towards most types of community infrastructure. Secondly, the guidance paper fails to address a number of key issues regarding CIL, preferring instead to merely state the problem rather than propose a solution. While I appreciate that this is inherently the point of consultation and that such decisions are going to be difficult, we have spent the last two years seeking to clarify many of these points with CLG officials and Ministers and thus their indecision at this critical stage of the process is both worrying and disheartening. It is leading to a great deal of mis-reporting, misunderstanding and considerable confusion in both the private and public sectors. We will, of course, continue to discuss the merits and shortcomings of the draft regulations and explanatory guidance with both CLG and our members. HBF has a special working group to do just that and we will be discussing more of the details of the proposals at our regular regional meetings around the country. I hope you will all continue to support us with your views and input of what is becoming a rather more arduous journey than we had ever imagined. Government’s response to Killian Pretty Review It is good to see the Government responding positively to the 17 recommendations of the Killian Pretty Review. Over the summer CLG published a full progress report of their response and this was accompanied by a number of formal consultation papers for proposed changes to the planning application system. Perhaps the most relevant to us as an industry is the consultation on streamlining information requirements for planning applications. With the introduction in April 2008 of local lists of information required to validate a planning application, planning application submissions are frequently almost physically larger than the proposed development itself. The consultation proposes allowing local authorities to produce their own local lists of requirements rather than prescribe them from a national list. Unfortunately, while this might appear, on the face of it, to be a positive move by CLG it runs the risk of the requirements for information being even greater rather than less. While the introduction of principles against which all requirements should be tested is welcome it is still the local authority that is proposed to be judge and jury of the necessity of the information required. Having to lodge an appeal against the requirement after a period of non determination (the only recourse for such a dispute) would seem to be using a sledgehammer to crack a nut. It certainly doesn’t seem as if the CLG proposals have cracked this particular problem. Other proposed changes do, however, seem a bit more helpful. The removal of the need for minor applications to submit new design and access statements, for example, will remove some of the burden of small amendments to permissions Similarly the opening of the debate over revising performance indicators for handling planning applications is long overdue. We will be working hard to contribute constructively to the ongoing discussions on this issue in order to ensure that we do not end up with similar perverse outcomes to the 8/13 week “refuse now – negotiate later” approach of the current performance measures. Other proposals such as changes to the requirements for local authorities advertising applications received in local newspapers and the extension of permitted development rights for commercial buildings might not directly affect our own industry. However, it clearly shows that CLG have taken the recommendations of the Killian Pretty Report seriously and are keen to bring about change that seeks to simplify the planning application process. Policy statement on Regional Strategies While elsewhere I draw attention to, and comment on, emerging policy changes proposed by the Conservatives it should be remembered that the general election is not a foregone conclusion. It is, therefore, still necessary to keep an eye on changes being proposed by this Government even where the implementation of those changes is beyond June 2010. Thus the recently published policy statement on Regional Strategies and guidance on the establishment of Leaders’ Boards should be taken seriously as it points to significant changes in regional planning regardless of the election result. One of the relative strengths of the regional assemblies who were responsible for the production of draft regional spatial strategies was that 20% of their membership was made up of non local authority representatives. While this might not have tempered the actual output of some of the assemblies’ strategies it certainly meant that private and voluntary sector views were expressed and discussed around the table when such drafting was being done. The proposal to integrate the regional spatial strategy with the regional economic strategy into one single regional strategy sounds obvious with regard to integration of policy directions. However, the loss of the external inputs into the debate at the policy formulation stage of a regional strategy (notwithstanding the presence of the regional development agencies on the partnership boards) is both lamentable and worrying. We will, of course, be making representations on the consultation paper in order to both highlight these concerns and also to ensure that regional strategies clearly address and make provision for housing requirements in these important proposed documents. TECHNICAL AFFAIRS Gas flues in ceiling voids – update The HBF board has met with both the HSE and Gas Safe at a senior level to look at this issue and review the current position. Through these discussions we have sought to give assurances that our members have acted responsibly and taken the appropriate action following the issue of the HBF guidance note sent out in February this year. In order to assist their understanding further we have asked some of our larger members to answer a short questionnaire to substantiate the work being done in connection with this issue. It is becoming clear that HSEs attention and concern is now more fully directed to pre 2007 installations. Our guidance indicated that members undertake risk assessments of potential non compliant installations pre 2007 where appropriate. Gas Safe through its registered installers is better placed to research this area and HBF asked at the last meeting if they would look at this. Code for Sustainable Homes We continue our meetings with CLG and BRE on both the process surrounding the code and the technical manual ahead of the proposed consultation on the code later this year. Building Regulations Future of Building Control – Implementation Plan published This implementation plan follows the consultation back in March 2008.The document sets out how Building Control aims to assist the Government in delivering more and better homes and helps in addressing the challenge of climate change and sustainability. The document introduces a new regular and systematic way of reviewing building regulations called a ‘periodic review’. It is intended that the technical parts of the building regulations will be reviewed in three yearly cycles, with revisions in 2010, 2013 and 2016 onwards. The intention is that none of the parts will be revised between these dates (unless there are exceptional and unavoidable reasons) or be reviewed in subsequent cycles. This means that no part of the building regulations will be revised more frequently than every six years. It should be noted that there are currently two planned exceptions to this, namely Parts F and L which have established three year trajectories towards 2016 – Zero Carbon. Part A (Structural Safety) and Part C (Resistance to moisture and weather) The consultation documents for Parts A and C were due to be released this autumn with a view being implemented in autumn 2009. There have been certain issues identified surrounding these parts (e.g. use of radon barriers) which will not be resolved in time for the proposed schedule. It has therefore been decided that following the principles set out in the ‘Future of Building Control-Implementation Plan’ (see above) Parts A and C will now form part of the 2010 periodic review and as such will revised until 2013. Part F (means of ventilation) and Part L (conservation of fuel and power) As previously reported the consultation on changes to the Building Regulations Parts F (Means of Ventilation) and L (Conservation of Fuel and Power) are proposed to deliver the first step towards zero carbon buildings. This is an important step on the roadmap towards the 2016 zero carbon target which will require dwellings to have a 25% improvement in energy efficiency standards from October 2010. The consultation also proposes a range of measures, including a strategy for training and dissemination, designed to further improve the levels of compliance and performance in buildings. HBF has held three seminars regarding the proposed changes to Part F and Part L of the Building Regulations. They events took place in July/ August in London, the South West and Derby. Our draft response has been circulated to members and the final version will be submitted to CLG. The deadline for responses is 17th September 2009 Part J (Combustion appliances and fuel storage) The consultation document for Part J (combustion appliances and Fuel Storage Systems) has just been released. This is 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 The closing date for responses to this consultation is 26th November 2009. HBF will be setting up a group to look at an industry response to this. If you are interested in being part of this group please contact Dave Mitchell (dave.mitchell@hbf.co.uk) 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 towards the end of October
