CHAIRMAN’S UPDATE APRIL 2011 INTRODUCTION The Budget and a subsequent series of announcements included a number of measures HBF has been calling for publicly and working hard to achieve in private discussions. Whilst it has never been my style to claim a lot of public credit for our efforts I believe this year we achieved more than even the most optimistic hoped for and more than any other industry or sector. The Chancellor’s flagship announcement on FirstBuy was something we have been pushing Government hard for since HomeBuy Direct finished last September, and will generate some 10,000 sales. Whilst clearly this will only have a direct benefit to members using shared equity products it will none the less help stimulate the market and create many jobs. For a Government who had repeatedly said no new money would be forthcoming an allocation of £250M is quite an achievement. Announcements on planning reform, including confirmation of a potentially powerful “presumption in favour of sustainable development”, were also made in the Budget and the important Plan for Growth, published alongside the Budget. This was followed by a letter to Local Authorities from Government requiring them to modify planning obligations where needed to allow stalled developments to proceed. Indeed, many of the planning reforms trailed in the Growth Plan reflect HBF thinking and are strongly pro-growth and development. I also believe the Government is starting to recognise the disconnect between its concept for increasing development by incentives etc and the reality of what we as home builders experience all too often at local level where Nimbyism continues to rule in far to many areas. Another area HBF has long been campaigning on is the Burden of Regulation. It was therefore heartening to hear the Government accept that ‘housing supply is constrained by the lack of viable land for development’. In the Plan for Growth, it was also announced that the zero-carbon policy for new homes has been made less costly by limiting house builders’ future obligations to mitigating carbon emissions from heating, lighting, hot water and building services and not emissions from appliances in the home. This policy, whilst still challenging, is now more practical as well as less costly and is a very welcome change to the original thinking. This all follows last year’s extremely important Spending Review commitment to reduce the total burden of regulation on home building by 2015. The Budget was followed by announcements on more public land being made available for development through a ‘buy now pay later scheme’, and proposals to make it easier to convert commercial property to residential use. Whilst clearly we are pleased at the direction of travel signalled by the combination of announcements in recent weeks it is clear much more needs to be done to solve the problems we currently face as an industry or redress the housing supply shortage. But what they do show is that Government now appreciates the scale of the problems, and appreciates the need to address them, from a social and an economic perspective. It also shows that it is listening to what we are saying and working with us to find solutions. This important series of announcements was followed by the release of the latest annual HBF Customer Satisfaction Survey results that again demonstrate the extremely high levels of customer satisfaction now being achieved by house builders. This year’s results maintained last year’s outstanding levels, with nearly 9 out of 10 buyers saying they were very or fairly satisfied with the overall quality of their new home and the same proportion of buyers saying they would recommend their builder to a friend. These are levels of customer satisfaction that are ahead of those in any other industry or sector I could find and we should all be rightly proud. Until now our survey has only been open to members building more than 300 units per annum but I am delighted to report that, subject to sufficient interest, we are shortly planning to launch a second survey to members who build more than 25 homes per year thanks to the help and financial support of our partners at NHBC We launched this year’s results on the day of our annual Policy Conference – an event I found absolutely fascinating to Chair. In his keynote speech, Secretary of State for Communities and Local Government Eric Pickles explained why his Government had introduced measures to support housing in the Budget and talked about the need, and determination of his Government to increase housing supply. I think his presence, and what he said in his presentation, does demonstrate the eagerness of Government to work with us as an industry. Pickles was followed by CBI Director General John Cridland and Monetary Policy Committee member Professor David Miles in the first session alone. All the presentations from the day (click here to view) and a video of the highlights (click here to view) can now found online. KEY ISSUES Government announcements The Budget and Plan for Growth contained a series of important announcements for home builders, and we have subsequently had a number of announcements on a wide range of issues - almost all of which demonstrate the success of HBF’s representations to Government on behalf of member companies. FirstBuy FirstBuy is something HBF has been pushing hard for since Homebuy Direct (HBD) closed in September last year to address the FTB deposit gap. At a time when Government is making significant cuts across the economy, to get such an allocation of new money is a major success. The scheme commits £250m (£210m for England, the remainder for Scotland, Wales and Northern Ireland should the devolved administrations wish to introduce schemes) of new money to fund around 10,000 new home sales to first-time buyers in financial years 2011-12 and 2012-13 on the basis of a 5% purchaser deposit and 20% second-charge equity loans, split equally between the HCA and home builder, for buyers on household incomes up to £60,000. During the HBD programme, HBF held regular meetings (approximately monthly) between the HCA and member companies. These were enormously valuable both for the HCA and for members. They were practical, working meetings, looking at problems in the operation of HBD and learning from best practice. They also allowed members to exchange views and experiences. Lots of practical improvements were made as a result of these discussions. In the last couple of days we have seen evidence of our constructive relationship with the HCA. As a result of member feedback, the HCA amended its FirstBuy submission documentation. We plan to hold regular meetings with the HCA on FirstBuy. If you decide to bid for FirstBuy funds, and if your company is not already represented on the HBF informal HBD group (or you are not sure), please contact Rosie.hinchliffe@hbf.co.uk. The HCA, which will implement the scheme, has subsequently published a FirstBuy Prospectus Inviting home builders and others to bid for the scheme (click here to view) Plan for Growth Published alongside the Budget statement was the outcome of the Government’s Growth Review, the Plan for Growth. This important document is an update to the Government’s ambitious proposals to ensure the planning system does everything possible to support economic growth and sustainable development. The Review was accompanied by a Written Ministerial Statement entitled “Planning for Growth” from Decentralisation Minister Greg Clark. (click here to view) Although it is less than 2 pages long, I wholeheartedly commend it to all members as essential reading and even as a reference document for meetings with Local Authorities, Councillors and communities. It contains some very welcome and positive statements, including saying ‘The Government’s top priority in reforming the planning system is to promote sustainable economic growth and jobs”. Many of the positive statements in the “Plan for Growth” are not new to us. The preparation of the National Planning Policy Framework (NPPF), including a strong presumption in favour of sustainable development and the need to maintain a flexible and responsive supply of land for housing, are all issues we have worked hard on with both Government and other third parties for some time and will continue to do so. However, we have been asking Ministers to be more positive about their plans for Localism and to be clear that local decision making must include a responsibility to address local issues – such as the requirement for more dwellings. We are, therefore, very pleased with the Government’s response through this latest statement which should, as it clearly states, “take immediate effect”. The statement also encourages Local Authorities to reconsider, at developers’ requests, existing section 106 agreements that currently render schemes unviable and further guidance to authorities on the scaling back of S106 requirements was set out in a letter to all English Chief Planning Officers by DCLG Chief Planner, Steve Quartermain. One of the other key messages we have been asking Ministers to stress is that the Localism Bill does not substantially change the development plan process and they have done so by urging Local Authorities to “press ahead without delay in preparing up-to-date development plans”. Localism Bill Meanwhile the progress of the Localism Bill through Parliament continues apace. The committee sessions in the House of Commons finished on schedule on 10th March and the Bill will now proceed to Report stage and 3rd Reading in May before passing to the House of Lords. The Bill could, theoretically, still be granted Royal Assent before the summer recess in July. However, there is some likelihood that its consideration in the House of Lords will carry over into the early autumn. Of course, the provisions of the new Act would not necessarily come into force immediately it is passed. We are expecting a pause of a couple of months before commencement of most of the clauses, hopefully to be synchronised with the adoption of the National Planning Policy Framework so that the two can work together to guide development. As part of the “Planning for Growth” announcements (above) the Government also promised to consult on a draft wording of the proposed presumption in favour of sustainable development in May. This presumption will be included within the NPPF rather than on the face of the Bill itself. A full consultation on the whole NPPF is expected to be launched in July. On balance this seems to be the most pragmatic proposal avoiding a long, drawn out debate in both the houses of Parliament with last minute changes potentially resulting in an unworkable or meaningless provision. We continue to work with Government on the proposed NPPF (including the presumption in favour of sustainable development) and we are sitting on a number of working groups and sounding boards examining the detailed workings of proposals such as neighbourhood planning, the community right to buy and challenge and other changes to the planning system through the Localism Bill. We have also had further direct discussions with Ministers on provisions of the Bill of concern to us and I am pleased that there has been a general recognition of the issues we have raised and a willingness to consider them positively as the Bill proceeds. Some of you may be aware of the publication of various amendments to the Bill proposed by opposition MPs (and backbench Lib Dem MPs) on issues such as 3rd party rights of appeal. These are obviously of concern, but the Government has so far held to its line and we will of course continue to encourage and support them in doing so. The official, Government-backed, amendments will be published when the Bill shortly reaches its Report stage in the House of Commons. I will issue a separate briefing on the proposed changes to the Bill and its final form as it passes to the House of Lords in due course. Finally, in advance of the Bill passing to the upper house, we are seeking meetings with a wide range of peers to brief them on the industry’s position and seek support for ensuring that the Bill and NPPF can be brought into force together to ensure as smooth a transition as possible to the new regime. Neighbourhood Planning Pilots We were pleased to see the Government announce grant funding for vanguard authorities seeking to pilot local development orders and neighbourhood plans. We were asked by DCLG officials and Greg Clark himself for developers to get involved where appropriate and we recently circulated details of the authorities involved in order that those of you with interests in the pilot areas might approach the authority with a view of being part of the process. Although somewhat constrained by the new legislation not yet being in place and thus unlikely to be a real embodiment of neighbourhood planning, on the face of it the 50 authorities all appear to be planning positively for at least something to happen. If you do happen to get involved then good luck and please provide feedback to HBF so that we can take account of your experiences in our ongoing dialogue with DCLG Burden of regulation and zero carbon The Government now accepts “housing supply is constrained by the lack of viable land for development” – a message HBF has been communicating now for a good few years. The Plan for Growth contained a broad drive to reduce regulation, while the home building industry has its own specific Spending Review commitment to reduce the burden of regulation on home building. On zero carbon, the Plan for Growth said: “To ensure that it remains viable to build new houses, the Government will hold house builders accountable only for those carbon dioxide emissions that are covered by Building Regulations, and will provide cost-effective means through which they can do this.” The practical implication of this very important commitment is that the 2016 zero-carbon target will be broadly in line with the energy component of Code 5 (i.e. 100% saving on 2006 Part L, covering ‘regulated emissions’: heating, fixed lighting, hot water and building services) instead of the previous Code 6 energy requirement (i.e. 150%, which includes ‘regulated emissions’ plus ‘unregulated’: cooking and plug-in electrical appliances which are beyond the influence of house builders). The Government has confirmed its support for the Zero Carbon Hub’s recent recommendations for Carbon Compliance (i.e. on-site reductions) as the starting point for its forthcoming consultation, along with their advice to move to an approach based on the carbon reductions that are achieved in real life, rather than those predicted by models (design vs built performance). The Government will consult on “cost-effective” options for off-site carbon reductions, and the price of carbon is expected to be significantly lower than the prices assumed by the Hub in its Carbon Compliance study. The Government states its approach “will deliver zero-carbon homes on a practical basis for 2016, with significantly reduced costs to industry, compared to previous proposals.” We have worked very hard to persuade the Government that the proposed Local Standards Framework would not constrain Local Authority demands on home building. Indeed we believe it could well increase these demands. I am optimistic that we have won the argument and that we will be able to make positive progress on reducing the regulatory burden at the local level. Public sector land disposal Our submissions to the 2010 Spending Review and the 2011 Budget called for an accelerated programme of public sector land disposal, something that has now seemingly become a key policy objective The Government announced it will work with Local Authorities to expedite planning decisions for surplus defence land and other public sector land, also testing ‘build now, pay later’ techniques to quicken delivery. It is understood the MOD has surplus land which could support as many as 20,000 homes. The HCA and government departments will be required to publish disposal targets. We understand that the HCA will publish a document in May with more details of its disposal plan. However, the minister and officials have confirmed to us in meetings since the Budget that, as well as the MOD, other Government departments will be set targets on land disposal for housing. The HCA will be involved alongside the Cabinet Office’s Government Property Unit in the drive to increase surplus public land disposal. A subsequent announcement on a ‘Build Now Pay Later’ scheme was made in April. The HCA published a list of the first sites that are to be made available under the initiative whereby developers pay for the land after they have started work on the construction of new homes. The six sites that were announced by HCA could lead to as many as 3,000 new homes being built. Swap commercial to residential In a further proposed change to the planning system, Communities Secretary Eric Pickles has launched a consultation on proposals to scrap the requirement for a planning application to be made for changing use from a commercial property to a residential property Whilst I think suggestions that it could lead to 250,000 new homes over the next 10 years are wildly optimistic, I think it’s fair to say, dependent upon the detail, that it could be a useful development for some specific areas. HBF will be submitting a response once we have assessed all the implications, including how Section 106 requirements will apply. SDLT treatment of bulk purchases The Chancellor announced in the Budget that if a buyer chooses, the rate of stamp duty land tax on purchases of multiple residential properties will be determined by the mean value of the dwellings purchased (subject to a minimum rate of 1 per cent), rather than their aggregate value as is currently the case. This is something long overdue and which was also included in our Budget submission. The previous system acted as a deterrent to the establishment of a large-scale, professional, institutionally-funded private rented sector as multiple purchases are liable for 4% stamp duty (now 5%) as they are treated as a single transaction, whereas a private buy-to-let landlord would usually pay the lowest rate, or avoid stamp duty altogether, when buying one or two properties independently. This change should not mean any significant reduction in revenue for the Treasury because such transactions are currently not likely to be very common. Land remediation relief In March the Office of Tax Simplification (“OTS”) published its report aimed at reducing the burden on business arising from a tax code that very recently acquired the dubious distinction of being the longest in the world. One of the more surprising recommendations, particularly as there had been no prior indication or consultation was that Land Remediation Relief should be abolished. In the course a meeting with a contact within the Treasury, we learned that Treasury options to deal with each of the OTS recommendations ranged from rejection to immediate implementation. We then learned from the Budget that Land Remediation Relief falls somewhere in the middle, with the relief scheduled to be abolished at some time after 2012, but following a period of consultation. The HBF is disappointed that this decision has been taken without proper consultation, but we are pro-actively seeking to influence the consultation process announced in the Budget to ensure that transitional arrangements limit the impact on members. Strategy for Social Mobility Deputy Prime Minister Nick Clegg last week launched ‘A Strategy for Social Mobility’ which included a commitment to produce a Housing Strategy in the Summer “setting out the overall approach to housing policy, including how we are supporting an increase in the supply and quality of new private and social housing, helping those seeking a home of their own, whether to rent or buy.” DCLG will be preparing the strategy, which will have a focus on housing demand and supply. HBF has already submitted some initial thoughts and will be looking to be involved as it develops. Customer Satisfaction survey The results of HBF’s 2011 Customer Satisfaction Survey were published at the end of March and were again outstanding. There were some concerns that after last year’s leap in satisfaction levels, that the industry would not be able to maintain the extremely high standards set. So it was extremely pleasing to be able to announce at our policy conference that we had indeed done that. All the results are available on our web site, Click here for full results. It’s fair to say that significant progress has been made in recent years and our satisfaction levels now rival or exceed any other industry or sector. I remember when I first proposed a survey that understandably there was a certain amount of reluctance in some parts of our industry. However, the part it has played in ensuring participating developers prioritise customer relations has justified why we initially undertook it. Indeed, it has been so successful that, in response to requests from a number of medium and smaller sized HBF members to be included in the survey and HBF Star Rating results we are widening it out to include any company completing more than 25 open-market sales per year. We hope to produce the first results for the new members who decide to join in the Autumn of 2012. If you have not received an email about this and are interested in being included in the Survey, please contact us. EXTERNAL AFFAIRS Local media campaign Over the past few months, we have continued to issue press releases to the local and regional media in various areas across the country. These releases have concentrated on housing need and the positive effects of increasing house building. Using a groups of official statistics each area has had a housing crisis report created and comparisons have been possible between the current situation and the potential from increased house-building e.g. more jobs, greater investment though New Homes Bonus. They have resulted in significant local media coverage in a number of areas including Bath, St.Albans, Devon, Cornwall, Birmingham, and Nottingham, following on from earlier successes in places like Leeds and Bristol. This campaign will continue in the coming months Political relations Since the start of the year HBF has held meetings with key ministers and MPs from all sides of the house. These meetings have included our inaugural House of Commons’ breakfast for Government backbench MPs which was well attended and we shall be repeating in the coming months. We have also, for the first time, sent out a local election manifesto to councillors across the country – recognition of the importance of localism in the current political climate. In addition, HBF has produced a Welsh election manifesto in advance of the Welsh Assembly Government elections in May. This will be sent to all prospective Parliamentary Candidates in advance of the election to highlight the importance of housing issues in Wales. TECHNICAL AFFAIRS Building Regulations Part L 2013 Review CLG held a meeting in March to explain the context for the 2013 review of Part L and the drivers for change. The discussion centred on the Government’s priorities surrounding the Climate Change Act, the Carbon Plan, the Budget and Zero Carbon. It was stressed that all of this needed to be balanced against the Growth agenda and deregulation as well as the exercise launched by the Minister responsible for Building Regulations Andrew Stunell back in July 2010 to identify what changes are needed to ensure that regs continue to operate effectively in the future. Officials explained that the aim of this exercise is to not only establish where it is absolutely necessary for regulation to be changed or updated, but also to look for where it can be stripped away, either because it is unnecessary or because there are other ways to achieve the same outcomes. This exercise will also look at the current levels of compliance and how if necessary better levels of compliance might be provided. Surrounding Part L, four working groups have been set up. These will cover Domestic Standards and Calculation Methods, Non-domestic Standards and Calculation Methods, Compliance and Performance (domestic and non domestic) and Retrofit and the Green Deal. The findings from these groups will go to DCLG and BRAC Technical Working Party for consideration around July time. Technical modelling and the finalisation of consultation proposals will take place between July and September 2011. Agreement on the consultation proposals will take place between September and December 2011 for the consultation to be launched in December 2011. Other Building Regulations Work on review of other technical parts of the Building Regulations is also now underway. As well as Part L there will be consideration given to other specific issues such as security, changing places and structural Eurocodes. An evaluation of Part P (Electrical safety) will take place along with a rationalisation of Parts M (Access), Part K (Protection from falling) and Part N (Glazing) to address overlap and look at the issue of Access Statements. It is expected that any consultations required surrounding the above will take place around December 2011. Flood and Water Management Act (FWMA) As mentioned in my last update HBF had been tracking the progress of the FWMA before it became an Act last April and has had many informal meetings/discussions with Defra, Ofwat and Water UK on the subject. There are three strands of the FWMA 2010 that continue to cause HBF great concern. These are; The transfer arrangements for existing private sewers The Mandatory Build Standards (MBS) for adoptable foul sewers Sustainable Urban Drainage (SUDs) Standards and the related statutory guidance. The HBF technical group put together to look at this have prepared a set of alternative proposals which have been submitted to DEFRA. Such is HBF’s concern that we have now written on two separate occasions to DEFRA minister Richard Benyon asking for clarification on a number of points. We still await the two consultations which are due out. These are surrounding the mandatory build standards and the Sustainable Urban Drainage (SUDs) Standards. As stated in previous updates these are two important consultations and HBF will be holding workshop/consultations meetings once they are released to formulate an industry response. As ever, we urge members to attend these meetings and also to submit your own company responses. HBF 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 Gas flues in ceiling voids – update. As you will be aware from previous updates the revised TB008 document came into force on 1st January 2011. The Communications Group part of the TB008 Working Group is to hold an update meeting in the second week of May. This is in order to bring the wider TB008 Working Group together to update on actions and developments to date, and to receive feedback from each sector. The revised TB008 (edition 2) document entitled ‘Room-sealed fanned-draught/flue systems concealed within voids’ along with the TB008 (edition2) CIP-RACL document entitled ‘consumer information pack and risk assessment checklist’ can still be found on the HBF membership side of the web site under a gas safe logo in the Technical Section. AND FINALLY… As you can see, there is plenty going on. The Parliamentary Easter recess should give us time to reflect on the numerous announcements and proposed changes and assess their implications for our industry. Needless to say we will continue to represent you on all of these issues and more and will keep you up to date on developments through the usual channels. In the meantime, should you have any questions on any of the above, please do not hesitate to contact me or any of the HBF team. I wish you all a happy and peaceful Easter break and hope you enjoy all the forthcoming bank holidays. Stewart Baseley Executive Chairman E-mail: info@hbf.co.uk
