CHAIRMAN’S UPDATE JUNE 2011 INTRODUCTION It seems hard to believe that it is only just over 12 months since the new Coalition Government was elected. In that time the level of change has been remarkable and we have seen significant developments on all the main policy areas which influence our businesses. The past few weeks have been no exception and progress has continued apace both from a policy perspective and also HBF’s. The announcement this week on the disposal of public land was very positive. It is something HBF has been calling on successive Governments to implement for nigh on a decade now and must be welcomed. But it must be put in context. Since the election last May we have seen the planning system as we knew it all but disappear. And as we move into Summer, progress on its replacement is only now gathering momentum. The Localism Bill is now well on its way through the Lords; whilst we have also seen the National Planning Policy Framework Practitioners Advisory Group recommendations to Government, a vital step before a final version is unveiled in July. Both of these are absolutely vital documents and it is imperative Government gets them right. Our latest Housing Pipeline report showed yet another year on year drop in Local Authority permission granted in the first quarter of this year, and emphasised why sorting out the planning system is so critical to housing supply and our industry’s future success. If we do not get it right and find a way of increasing the volume and speed of permissions granted, we will waste the opportunity afforded to us of public land releases. We are pressing hard on both the Bill and the NPPF – more on them below. I think the acceleration of planning reform and the announcement on public land disposals shows that Government fully appreciates the need to increase house building. The drivers for this are two fold. For very important social reasons we need more homes built to address the shortfall and tackle the housing crisis. But there is also, finally, a recognition of the economic stimuli increasing house building brings. Both factors were referred to by Housing Minister Grant Shapps when he addressed our annual lunch last month and again stressed his Government’s belief that their policies would increase supply. As ever Shapps went down well with the assembled audience. He made a number of very welcome promises, including a pledge to scrap the Local Standards Framework, a repeated commitment to tear up red tape and a 12 month planning application length limit. After speaking, he also readily agreed to answer questions from the floor and then made a very good impression by staying on after the lunch to mingle and discuss issues with members. This revealed a Minister at ease with his brief who now has a firm and confident understanding of his issues – demonstrating why it is so important that ministers remain in post for a sufficient length of time. In conversations throughout the day what became very clear to me was that the issue clearly dominating people’s thoughts continues to be the lack of mortgage availability. Of all the commitments made by Shapps, I think the once that resonated most was the one to assist first time buyers. He reiterated the Government’s commitment to implement FirstBuy quickly and went on to say that he would hold another First Time Buyers Summit, to follow the one I attended back in February. What he must now ensure is that the summit is not just a PR stunt or a talking shop. It needs to deliver. As you will read below, HBF too is working hard in this area. These are critical times. If we can continue to make progress with Government, on the planning system and vitally on lending, we may just start to be able to do what everyone seems to agree needs to be done - build more homes. ECONOMIC AFFAIRS Mortgages and Mortgage Regulation HBF has initiated discussions with lenders, insurers and CML about ways to bridge the deposit gap caused by the current lack of availability of high LTV products. I think there is a growing recognition of the scale of the issue and it will clearly be the subject of further discussion at the next Shapps FTB summit. The CML has also been working with HBF and lenders to make a number of amendments to the Disclosure of Incentives Form (DiF). However introduction of the revised DiF has been postponed. We will keep you informed about the timescale for the revised form and will ensure that home builders are given sufficient advance warning. I understand the FSA will shortly published a further consultation on its Mortgage Market Review, we will of course be making strong representations on behalf of the industry. The Treasury has announced that the proposed transfer of responsibility for regulating second-charge mortgages to the FSA has been deferred until at least 2014. This is a very welcome decision. I understand one consideration was the potential impact on FirstBuy which is scheduled to run until March 2013. HCA and FirstBuy The deadline for FirstBuy bids has passed. Building on the success of our regular HomeBuy Direct meetings with the HCA, we have set up a series of member meetings with the HCA to discuss the operation of FirstBuy. If you are not already on our list and would like to be involved or kept informed, please let John Stewart know (john.stewart@hbf.co.uk). Following its recent consultation, the HCA has accepted that it should not introduce a single National HomeBuy Agent during the FirstBuy period. In our submission, HBF argued strongly that such a change midway through FirstBuy would be potentially very disruptive. Contracts for the existing Local HomeBuy Agents have been extended until the end of March 2013. HBF staff and two members met officials from the Welsh Government to explore whether a Welsh FirstBuy can be established. The Treasury allocated around £12m of its £250m FirstBuy package to Wales, although we understand the money does not in fact have to be used for housing. Shared Equity Earlier this year, HBF collected information from members on their investment in shared-equity schemes. The immediate objective was to support our case to Treasury and DCLG for a successor to HomeBuy Direct by showing the enormous investment the industry had already made to help mitigate the impact of the mortgage famine on new home sales. Our headline findings, based on returns from 23 larger members, were that between January 2008 and early February 2011, companies had achieved more than 28,000 new home sales through shared equity, at an equity share value (before write downs) of £835m. One third of these sales were through HomeBuy Direct, with the remaining two thirds through companies’ own shared equity schemes. We released these headline results to the press to demonstrate how much investment the industry has made to maintain housing supply and they have been used in a number of articles across the media. Burden of Regulation While the Coalition Government has put robust measures in place to control the burden of regulation originating from central government, ensuring local authority demands are not excessive is a much tougher challenge. Grant Shapps announced at HBF’s Annual Lunch (click here to view speech) that the proposed Local Standards Framework (LSF) will not be progressed. Having consulted members and discussed the concept with other housing organisations, we were convinced this was not the right way to reduce the regulatory burden imposed by local authorities. I made our conclusion very clear in a letter to Grant Shapps. We are now working with officials from DCLG and the Local Government Group (previously the Local Government Association) to establish an alternative approach. We will set up a time-limited high-level Steering Group, with representation from HBF, the LG Group and officials from DCLG and HM Treasury, as well as NHBC and the HCA who have offered to provide resources for the Group. Its objectives will be: to examine viability testing of local plans to ensure local housing numbers are deliverable (which will of course require local authorities to curb the local burden of regulation), and identify the most common standards imposed by local authorities on housing development, to seek ways to harmonise, simplify and improve these standards, and to prepare guidance on their costs and benefits. These two objectives will be met by establishing specialist working groups. We are only just finalising details of the Steering Group’s membership and terms of reference. I will keep you informed as its work develops. PLANNING NEWS Localism Bill The Bill passed from the House of Commons to the House of Lords with a number of amendments. The two of most significant interest to our industry concerned the duty to cooperate and financial considerations as a material consideration in decision making. We had worked with a number of other groups to ensure that the duty to cooperate between authorities was strengthened in the Bill in order that strategic, cross boundary planning could continue. The amendments agreed by the Commons go a considerable way towards ensuring that issues such as housing requirements MUST be discussed on a cross boundary basis where appropriate. They also state that the requirement to demonstrate such consideration should be part of the test for soundness when examining development plans. The new clause to allow local financial considerations to be material in deciding planning applications has caused a considerable amount of debate in the technical press. It was CPRE who raised the concern over the lawfulness of authorities taking into account incentives such as New Homes Bonus and Community Infrastructure Levy to influence their decision on whether or not to grant planning permission. It is also CPRE who are leading the criticism of the Government’s introduction of the new clause specifically allowing such incentives to be a material consideration. The proposed clause is, however, very tightly worded and does not, as some have suggested, threaten the long held mantra that planning permission should not be bought or sold. Obviously it is just as important to note what has not been changed by the Bill despite various amendments debated and voted upon. The most significant of these is that there are currently no proposed changes to the right to appeal, either restricting the rights of appellants or introducing third party rights of appeal, both ideas we have argued strongly against. The Bill has been received into the House of Lords where it will now be debated through committee sessions similar to those in the House of Commons. We have set up a programme of engagement with various Lords in order to represent the position of the industry on both the clauses in the Bill which we support and those which we would wish to see changed. Perhaps the most important of these is still the lack of any clear transitional arrangements regarding the intended abolition of regional strategies and the potential policy hiatus that would ensue. (See CALA Court of Appeal Decision below). National Planning Policy Framework The proposed draft National Planning Policy Framework (NPPF) produced by the Practitioners Group has been published. Although it is not officially branded as a Government consultation, it is a clear indication of the stage that various advisory and discussion groups have reached in seeking to devise the holy grail of a single planning policy document set to replace all the 25 existing Planning Policy Statements and Planning Policy Guidance. The “official” Government consultation NPPF will not be published until July when it will be subject to full public consultation. Of course, the Government will be able to take account of reactions and responses to the Practitioners Advisory Group draft and it is, therefore, important that members comment on the current draft – either to the group, through the HBF or directly to DCLG officials, as soon as possible. The draft document is very pro-growth and very pro-development, setting out not just the presumption in favour of sustainable development but requiring local planning authorities to focus on delivery rather than control of development and to adopt a positive “can-do” approach towards planning for future development requirements. Increasing housing supply is at the very heart of the document as is a continued requirement for strategic housing market and housing land assessments and five year trajectory plans (including a suggested 20% non-implementation allowance). Viability considerations and reducing the burden on developers also feature very clearly in the draft as does the need for local authorities to work together across boundaries where necessary. We have now responded officially to this important stage of the emerging NPPF and I would encourage as many of you as possible to both read and support the direction in which this particular debate is currently heading. CALA Court of Appeal Ruling Although the Court of Appeal dismissed CALA's claim that the Government's intention to revoke Regional Strategies (RS) could never be a lawful material consideration in planning decisions it is not, as claimed by the official DCLG press release, a clear victory for the Government’s approach towards the abolition of regional strategies. The court stated that two indeterminate legal obstacles - the need for Parliament’s acceptance of the proposal and the requirement to undertake strategic environmental assessments for the revocation of each strategy - would generally make it inappropriate for decision-makers to at this stage give significant weight to the Government's intention on RS. This means that, in practical terms the Government's intention may only be worthy of being given weight in "very few" cases. For all practical purposes this means that the adopted regional strategy housing numbers will be the starting point for all considerations of housing requirement whether on development plans or individual planning applications. This is, of course, an excellent result, not just for CALA but for the entire industry. It will certainly assist in our lobbying of the House of Lords over the need for clear transitional provisions in the Localism Bill. It should also help anyone currently running an appeal or negotiating with a local planning authority where the issue of which housing figure to assess land availability against should be made. Planning Trends Local planning authorities in England granted detailed permission for 33,450 dwellings in the first quarter, according to data provided to HBF by Glenigan, 17% down on the first quarter of last year and little more than half the peak quarterly levels reached in 2006. We should be building around 60,000 homes per quarter to meet projected household growth, and nearly 70,000 per quarter to meet the needs of new households as well as catch up with existing unmet demand. A copy of the full ‘Housing Pipeline’ report is available on the HBF web site and it was widely reported in the media. Public Sector Land Disposal The Government has announced plans to release public sector land for house building. Housing minister Grant Shapps said that by autumn, every Government department with significant land banks will publish plans to release enough land on which to build 100,000 homes. This is something we have been pushing ministers hard for since before the election, indeed we have urged previous Governments to make similar moves. The feedback we have had from officials is that the most recent papers we submitted and our representations played a significant part in convincing Ministers of the benefits of the scheme. At the same time as the central Government announcement from CLG, the HCA published its own strategy that sets out plans to accelerate its land disposal. It includes plans to increase that disposal so that over the next four years an additional 3000 homes can be built, increasing the total to 11,000. At the request of the HCA, HBF is setting up a special working group to liaise with the HCA, along the lines of our successful HomeBuy Direct/FirstBuy and Kickstart working groups. These are both very welcome and positive announcements. Though, as I stated above, the need to deliver an efficient planning system remains. This land, along with land purchased from the private sector all requires planning permission and without an efficient system in place, we will still not be able to increase output. POLITICAL / EXTERNAL AFFAIRS Political Contacts Political contacts are currently largely focused on the progress of the Localism Bill and the National Planning Policy Framework. We are, however, maintaining dialogue on the full range of housing issues at the same time. We will shortly be holding a further breakfast briefing meeting with Conservative MPs following the success of our first briefing meeting in March. In addition, we are now planning our contact programmes at this autumn’s party conferences, including dinner with front bench and other MPs at both the Conservative and Labour conferences. Given a sustained level of public and media interest in housing we will continue to invest in building relationships with politicians and an understanding of the main issues. Labour Party Housing Policy Review The Labour Party’s policy review on housing is now getting properly underway. Shadow Communities Secretary Caroline Flint’s office has recently issued a call for submissions and evidence on a wide series of questions relating to housing aspirations, investment, supply, barriers to delivery and quality and environmental goals. It is encouraging that the Party is taking a broad approach and not simply focusing on the provision of social and affordable housing. There seems to be a clear recognition that the housing crisis is across the board, affecting all types of tenure and all parts of society. We shall be making a detailed submission setting out our vision of why housing matters to all and the need to create business conditions that enable the primary supplier – the private sector – to respond to peoples’ requirements and wishes. Consumer Code for Home Builders Feedback from the Code Management Board’s second mystery shopper survey is now available at: http://www.consumercodeforhomebuilders.com/Consumer_Code_Feedback.html Design Council CABE The merger of the surviving part of CABE with the Design Council has now taken effect. The new body – to be known, perhaps unsurprisingly, as the Design Council CABE – is currently conducting a review of what its role might be in helping to support urban design assessment for built environment projects given the significantly reduced level of funding now being made available by central Government. We are represented on the advisory body for the review and will also shortly be holding a member meeting with the review team to provide industry input. The review is due to conclude later in the summer. Renewal of the CITB Levy Order The CITB has begun the process of consulting trade associations on the renewal of the Parliamentary Order that governs the operation of the CITB Levy, which raises funding for industry training grants from construction companies. We are discussing the Order renewal and how we can ensure HBF companies obtain their fair share of the Grant funding available via the HBF Careers, Skills & Training Committee and other member groups. If anybody not involved through these routes already wishes to contribute to our response to CITB please let us know. TECHNICAL NEWS Zero carbon Following the Zero Carbon Hub’s important report on Building Regulation requirements for on-site carbon reductions (“Carbon Compliance”) – whose recommendations have been accepted by Government – the Hub has turned its attention to the third element of the zero carbon policy, Allowable Solutions for off-site carbon mitigation measures. Working more informally than before with HBF, HBF members and other key parties, the Hub has been exploring the basis for a workable Allowable Solution mechanism that can be simple, predictable and as affordable as possible in view of the need to increase housing supply and reduce the overall cost of regulation for the industry. From what I have seen, supported at high level by Grant Shapps’ most recent Ministerial Statement on the policy, I am encouraged that the industry’s wish for a workable approach can be accommodated. There appears to be general support for a mechanism under which developers who wish to, or who have no practical alternative options, could make a suitable payment into a fund that will grant them a certificate for regulatory purposes of having delivered the necessary level of carbon mitigation they cannot achieve through on-site measures. An interim report is due to be submitted shortly to DCLG and the 2016 Task Force and I will keep you up to date with progress on this last main part of the zero carbon policy to be clarified and settled. Green Deal for new build As part of this recent Ministerial Statement on zero carbon, Grant Shapps reiterated the Government’s willingness to consider the possible basis for a Green Deal mechanism for new build homes. He sees this as a means of further reducing the initial capital cost of zero carbon. We have begun discussions with members of other trade bodies to consider the scope for such an initiative and will be holding another meeting soon to assess the scale of any opportunity for involving third party finance in a scheme. It is too easy to say what such a scheme might look like, but the important thing is that we have the opportunity to come up with something that works for the industry and seek Government agreement to it. Building Regulations Part L 2013 Review HBF has in the last month been attending working group meetings surrounding the part L 2013 review which is expected to lead to a consultation in December 2011. The groups are the Domestic Standards and Calculation Methods group (DSCM) and the compliance and performance group (CP). These groups will look at the 2013 requirement and how this can be most economically achieved, and at the calculation methodology currently employed (ie SAP). In addition, changes to the building control system will be looked at with a view to improving compliance and finding ways to reduce burdens of compliance. The findings from these groups will be fed back to DCLG and BRAC Technical Working Party who will be looking at the technical analysis and policy development ahead of the consultation. The Government has said that any minister who wants to bring in a new piece of regulation must first find an existing one to scrap. In the 2010 spending review they also committed to reducing reduce the total regulatory burden on the house building industry. We will keep members updated as this work progresses. Other Building Regulations In addition, work is starting on reviewing other parts of the Building Regulations. This will cover issues like 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. In comparison to the Part L review, all of this is expected to be a very light touch. It is anticipated that any Consultations required by the above work will take place around December 2011. Flood and Water Management Act (FWMA) The three areas of work surrounding this Act 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 It is expected that the transfer of existing private sewers (connected to more than one house) that are in the ground by the 1st July 2011 will take place on the 1st October 2011. We await to hear what if any transitional arrangements will be in place. One of the proposals which came out of the consultation surrounding the automatic transfer was the potential requirement for a bond with a value equal to 100% of the construction costs to be required (the current requirement is 10%). HBF has been working with NHBC in conjunction with Lloyds Register to develop an alternative and pragmatic solution to this in the form of an Accredited Contractor’s Scheme. A joint letter from HBF/NHBC has been sent to the CEOs of all the Water Supply Companies seeking their support. The next step will be a meeting with all the Water Supply Companies to pursue this further. We still have many concerns surrounding the Floods and Water Management Act and have written to the Housing Minister seeking his assistance. As yet, we are still awaiting a date for the proposed consultations surrounding the mandatory build standards (MBS) and the Sustainable Urban Drainage (SUDs) Standards. HBF will be holding member workshops and meetings for these consultations once they are released to formulate an industry response. We urge members to attend these meetings and also to submit your own company responses. HBF SAP Forum HBF has set up a SAP forum to look at all aspects of the SAP calculation tools available to SAP assessors and any other house builder related SAP issues. It is intended that the work from this group will go forward to DCLG in order to help produce a more accurate measuring tool for the 2013 Part L. Ministerial meeting on ‘Fire Risks from Timber Frame Buildings’ The first meeting with CLG Minister Bob Neill to discuss ‘Fire Risks from Timber Frame Buildings’ took place back in late November 2010. In response to actions that came out of this meeting HBF’s Health and Safety timber frame sub group have subsequently met with various parties and made proposals to take back to Ministers. The most important of these being that the UK Timber Frame Association be asked to check their publication (16 Steps to Fire Safety on Timber Frame Construction Sites) and where necessary bring it into line with the HSE HSG168 document. At the second Ministerial meeting with both Bob Neil and fellow Minister Andrew Stunell on 9th May, HBF and the other organisations present detailed the work done since the last meeting. The Minister appeared to be happy with the efforts made by everyone and there are no plans currently for any further meetings. AND FINALLY… As you can see, there is a lot going on and as ever should you have any questions on any of the issues raised in this report, please do not hesitate to contact me or a member of the HBF team on 0207 960 1600. I will report to you again before the Summer break. Stewart Baseley Executive Chairman E-mail: info@hbf.co.uk
