HBF Wales Weekly News Summary Friday 27 February 2009

Friday, 27 February 2008Top stories this weekHBF briefs Beckett, CLG and Treasury.....read more  Conservative’s localism proposals.....read more

CBI calls for planning permission extensions.....read moreCLG: Housing and the Credit Crunch Report.....read moreNationwide house price index: Improving affordability helps buyers.....read moreOFT launches market study into home buying and selling.....read moreQuick LinksWales newsHBF newsIndustry newsGovernment and political newsHousing market newsEconomic newsEventsWales news£5.75m to prevent flooding in Conwy Valley

Flood defence funding worth £5.75m to protect homes and businesses in the Conwy Valley was announced by Environment, Sustainability and Housing Minister Jane Davidson.

The funding will be used by the Environment Agency Wales (EAW) to build flood defences.

Since the repeat flooding of the Conwy Valley, which affected the people and businesses of Llanwrst and Trefriw in 2004 and 2005, the Assembly Government has been working with EAW, the local authority and landowners to respond to calls by local people for new defences.

The Conwy Valley flood scheme will see:

Read more

A new plan to lessen Wales' reliance on fossil fuels and increase the use of renewable, low-carbon energy sources was published by Welsh Environment Minister Jane Davidson.

The Bioenergy Action Plan for Wales aims to generate at least 5 terawatt hours of electricity, about 20% of the County's current needs, from renewable biomass by 2020. It also aims to have biomass provide 2.5 terawatt hours of usable heat energy, about 3% of our current needs.

Ms Davidson said biomass had a key role to play in meeting our future energy needs:

"Climate change is a reality we have to face and exploiting a mix of available energy resources is vital. Biomass has the potential to reduce our dependence on fossil fuels, whilst at the same time cutting our carbon emissions.

"Low carbon technologies that use biomass are recognised all over the world as an important element in our fight to limit climate change. For example, President Obama's recently agreed economic stimulus package contains provisions for renewables. Biomass is an energy source the Welsh Assembly Government wants to see being used across Wales. It will bring economic as well as environmental benefits. We estimate that the increased use of bioenergy will create 1,000 direct jobs.

"We will help both the public and private sectors increase their use of different technologies for the efficient generation of heat and electricity from biomass, and to increase the supply of biomass from Wales. The Assembly Government is practising what it preaches. Our new offices in Aberystwyth and Llandudno Junction will use biomass heating."

Read more

This week John Stewart, HBF's Director of Economic Affairs, attended a roundtable discussion chaired by Housing Minister, Margaret Beckett. He began the discussion with a presentation looking at short-term measures required to assist house building, and a range of longer-term issues that would need to be addressed to boost the rate of growth of home building in the recovery. The discussion, attended by a small group of housing experts, covered a wide range of housing issues, short and long-term.
Stewart Baseley and John Stewart met Richard McCarthy, Director General, Housing and Planning, at CLG for a regular update meeting. The discussion covered issues such as HomeBuy Direct, market conditions and Government support, potential barriers to recovery (skills, finance, supply chain) and mortgage lending.

HBF staff also met officials from HM Treasury to discuss Affordable Housing supply, a key issue for home builders through S106 planning obligations, and a key aspect of industry concerns about the cumulative impact of regulation on land values and development viability.

The HBF has produced a member briefing on the Conservative Party's policy green paper "Control Shift: Returning Power to Local Communities" published on 17th February 2009. HBF will be submitting views on these proposals to the Conservatives' front bench team as part of our wider dialogue with them on housing issues.

We would also be interested to know member's views on the green paper and - given the potentially wide-ranging implications of the policy proposals - would encourage them to submit their thoughts on it to the Party.

We will of course be able to discuss the green paper at forthcoming HBF member meetings

Please click here to view the Green Paper

Click here to view the HBF briefing document

Following an article in the Financial Times earlier this week regarding the call to spend £6bn on social rented accommodation, John Stewart, Director of Economic Affairs, wrote to the FT letters page:

"Sir, Your editorial "Barker's wrong tree" (24th February) is spot on in its recognition that the call to spend £6bn on social rented accommodation is a short-sighted and naive solution to a much wider problem.

"If we are to tackle the current undersupply of housing resulting from the wider economic downturn, a balanced range of initiatives aimed at kick-starting the construction of housing of all types is required, resulting in long term solutions, not a one-dimensional, short-term fix.

"The Home Builders Federation reluctantly withdrew support for last week's initiative launch by the 2020 Group, chaired by Kate Barker, when it became clear its attention was being diverted away from a longer-term, comprehensive approach to the housing crisis in favour of a narrow, short-term focus on one tenure"

Read more

John Slaughter was interviewed this week (24th February) on BBC Radio 4's Today programme by business correspondent Nick Cosgrove and also on Radio 4's You and Yours programme, regarding the state of the housing market and the zero carbon homes policy respectively.

Listen again Today programme (piece starts at 00:23:00)

Listen again You and Yours (piece starts at 00:30:00)

HBF's London Chairman Simon Wright and members of the HBF policy team met the Mayor of London's housing adviser, Richard Blakeway, this week to discuss ways to assist housing delivery in the capital. In a constructive meeting, we discussed how we could best work with the GLA on the provision of shared equity and intermediate homes via London's First Steps programme, and means to help kick start housing projects that were currently stalled. It was agreed to meet regularly to build on this dialogue and to ensure the Mayor's team could seek views from the industry on its thinking as this further develops.

The CBI has urged the Government to allow the extension of planning permissions that are due to expire to help struggling firms who have been forced to postpone projects during the recession.

Planning permission is often given with a time limit of three years. Firms that have gained planning permission but have been forced to delay projects because of the recession, risk losing the permission after this period has lapsed.

The CBI has written to Government ministers calling for measures to allow applicants to extend planning permission, arguing that forcing firms to reapply would prove costly (the fee alone to submit a new application can be as high as £250k) and places an extra financial pressure on firms by reducing the recorded value of property assets.

Firms were previously allowed to apply to extend planning permission until planning laws in England and Wales were changed in 2004. Such flexibility has, however, remained a part of the Scottish planning system.

CBI Director for Business Environment, Dr Neil Bentley said:

"We want to make sure builders and developers can get to work quickly when firms are in a position to build again and not hold back the prospects of recovery by forcing them to jump through costly and uncertain planning hoops because their consent has lapsed.

"Introducing flexibility at this critical time by allowing firms to apply for a time-extension on planning permission would help them survive the recession, protect jobs and leave them better-positioned to take advantage of the economic recovery when it comes.

"Current planning laws need to recognise the exceptional economic environment that we face at the moment."

HBF comment; HBF has already held discussions with CLG over this issue and despite the obvious benefits of such a move, the required changes to primary legislation are highly unlikely to be made on the back of another Act.

Read more

The proposal for an eco-town at Middle Quinton is unviable to the tune of £373m, according to an independent assessment. The appraisal by CB Richard Ellis, commissioned by the six local authorities affected by the proposal, includes a detailed estimate of the construction costs and a review of the property market.

It concludes that the development is unlikely to support the level of contributions which the authorities would expect to secure to deliver essential infrastructure and services. Alternative ways of funding public transport, highway infrastructure and education would have to be found as the development itself could not fund them.

Charles Gillams, chair of the councils' Eco-Town Joint Working Group commented:

"The independent assessment confirms our long held doubts about the viability of an Eco-town in this location.

"It would appear that the development could not proceed without massive public subsidy. Such public expenditure would be better directed to sustainable urban locations where needs can be matched with opportunities and existing infrastructure can be utilised more effectively.

The findings will be forwarded to the DCLG and will inform the authorities' responses to the government's current consultation on Eco-towns. The authorities are Cotswold Stratford-on-Avon and Wychavon District Councils and Gloucestershire, Warwickshire and Worcestershire County Councils.

HBF comment; the results of the appraisal support the case HBF has been making to Government about the cumulative impact of policy and regulation on the viability of housing land supply.

Read more

Construction workloads continued to fall sharply in the final three months of last year according to the RICS' UK Construction Market Survey published this week.

Private housing workloads fell at the same pace as in Q3, which was the fastest in the survey's history (1994).However, the national figure masks considerable regional variation; the pace of decline slowed in Northern Ireland and Wales, while in London/South East and the South West, it picked up. Public housing workloads fell at around the same relatively modest pace as in Q3 (the net balance improved fractionally). Again, the national figure masks considerable regional variation; public housing workloads picked up in London/South East, while in Wales, the Midlands and the North, workloads fell sharply.

RICS Chief Economist Simon Rubinsohn said:

"The pressure on the construction sector shows no signs of abating at the moment. Indeed, if anything it appears to be intensifying as the weakness in the housing sector spreads to both commercial and industrial workloads. With profits being squeezed, significant job cuts are likely to result. The danger is that this will lead to a permanent loss of skilled labour which will leave the construction sector ill-equipped to play a meaningful role when the economy does begin to emerge from the current recession.''

Download a copy of RICS' UK Construction Market Survey

The two organisations charged with championing tenants rights and delivering affordable housing have identified building sustainable communities as being at the top of their joint agendas.

The Tenant Services Authority (TSA) and the Homes and Communities Agency (HCA) agreed their first Memorandum of Understanding (MoU) to further strengthen joint working, setting out how the two organisations will work together to ensure sufficient good quality and well-managed affordable housing in sustainable communities. Both organisations were launched on 1 December 2008.

The MoU, which sets out the broad principles and processes to guide the two agencies, covers open exchange of information, consultation on matters of common interest, coordinated decision making and joint responses to imminent threats and breaking crises.

Read more

In its latest report - on "Housing and the Credit Crunch" - the CLG Select Committee this week argued that the Government must stick to its long term house building targets, despite the credit crunch, but that at least in the short term a greater proportion of the homes should be social housing.

However, the Committee is concerned that since the £975m borrowed by the Government from its 2010-11 budgets to build social rented housing now is not new money, there will potentially be a hole in future public investment in housing.

In their report the MPs also urge the Government to do more to help those at risk of repossession by considering sanctions against lenders who repossess too quickly and by doing more to protect tenants and homeowners from unscrupulous landlords.

Commenting on the report, Chair of the Communities and Local Government Select Committee Dr Phyllis Starkey MP said:

"The credit crunch has not reduced the numbers of households needing new housing, nor does it affect the need to address years of undersupply.

"The message which we received from witnesses during our inquiry was clear: the steps the Government is taking are welcome, but further action is needed if the Government is to have a chance of meeting its targets for home building and achieving the goal of a decent home for all.

"We are particularly concerned that the Government is borrowing from future budgets now with apparently no idea how it is going to restore that money at a later date."

HBF made a written submission to the Committee and John Stewart also gave verbal evidence at a session in December.

Read more

Download a copy of the report

View a copy of HBFs submission

Nationwide's house price index, published this week, reported that:

Commenting on the figures Fionnuala Earley, Nationwide's Chief Economist, said:

"The price of a typical house fell by 1.8% in February, bringing the annual rate of change to -17.6% and the price of a typical house down to £147,746, from £179,358 this time last year. Sharp cuts in interest rates have helped affordability, but have not yet affected housing market confidence sufficiently to boost the levels of new transaction activity or slow the pace of house price falls. Early signs of increased interest in housing, as reported by the pick up in new buyer enquiries, have yet to filter into sales, but do suggest that falling prices and interest rates are raising curiosity now, which could flow through quickly once confidence returns.

"...While existing variable rate borrowers have benefitted from the cut in rates almost immediately, those buyers wanting to enter the market for the first time will have seen both lower mortgage rates and lower house prices. A typical first-time buyer at the end of 2007 would have paid about £150,000 for a property, borrowed about 90% of the value and paid an interest rate of around 6%, depending on the type of loan chosen. The monthly outgoing would be about £915. However today, the reduction in house prices and mortgage rates means that the outgoing would be around £530, if the buyer qualified for one of the best tracker deals of 3.99%. But this would require raising a deposit of over £25,000. Alternatively, if such a large deposit was not available, a fixed rate at a 90% loan to value ratio would still cost £167 less than at the end of 2007..."

Download a copy of the Nationwide house price index

The OFT has formally launched its market study into home buying and selling, following two months of discussion with interested parties on its scope.

The study will take a comprehensive look at the market for home buying and selling services. It will consider:

The study will cover the whole of the UK, while recognizing the significant differences in how the market works in Scotland.

Heather Clayton, Senior Director of Infrastructure, said:

"With the economic downturn, we need to ensure that consumers receive a good service when buying or selling a home, from a market that is competitive, innovative and well-functioning.

"We have had constructive discussions on the scope of this study with interested parties from across central and devolved government, consumer groups and the industry.  This means we are starting the study with a clear understanding of the key issues."

Read more

Northern Rock will increase mortgage lending by up to £14bn over the next two years in plans announced this week.

A new business strategy has been agreed that will see around £5bn of new mortgage lending for 2009 and between £3bn and £9bn from 2010 onwards, subject to market demand.

The new lending will be made on commercial terms to ensure that it represents good value for money for the taxpayer. It will allow Northern Rock to return to the mortgage market with a wide product range. To enable Northern Rock to focus on new lending, the company will be restructured so that the back book of mortgages is managed separately to its other business. The restructuring will be implemented subsequent to state aid approval.

The Government has made clear that it wants to see a well-functioning mortgage market where lenders lend responsibly and borrowers have access to a wide range of mortgages that they can afford to repay. Government policy towards Northern Rock is a part of meeting these aims.

Read more

The Council of Mortgage Lenders has stated that the resumption of new mortgage lending by Northern Rock will be another factor that may help to ease the continuing lack of supply of mortgage lending to the market. CML Director General Michael Coogan commented:

"While other lenders will no doubt be watching carefully to assess the competitive impacts of Northern Rock returning to the market as an active mortgage lender, in overall market terms anything that improves the supply of lending is a positive.

"Mortgage redemptions funded nearly all the £18bn of the loan that Northern Rock repaid to the government. This was £18bn that had to be absorbed by the rest of the other mortgage lenders. By removing this market pressure, other lenders as well as Northern Rock should experience an increased capacity to lend to other borrowers."
On the question of 100%+ mortgages in the wake of the Prime Minister's article in Sunday's Observer, the CML said that there were side issues to consider that should not get lost, despite the inherent appeal of a simple policy such as this to mitigate risk and encourage responsible borrowing.

Read more

Tuesday 17th March 2009, Central London

Conservative shadow housing minister Grant Shapps heads a heavyweight list of speakers for this year's HBF Policy Conference that includes HCA chief executive Sir Bob Kerslake, CML director general Michael Coogan, housing expert John Callcutt, Zero Carbon Hub chief executive Neil Jefferson and, fresh from completing the Killian Pretty review David Pretty. Other speakers include economic experts Richard Donnell and Christopher Hill who will be joining HBF's John Stewart to further develop issues raised in a highly successful session at last year's Housing Market Intelligence conference.

The conference will be chaired by HBF executive chairman Stewart Baseley and will look at a range of issues and challenges currently facing the industry.

For more information and details of the full agenda please click here or contact the events team on 020 7960 1646 or events@hbmedia.co.uk

HBF's nominated charity, Habitat for Humanity, which builds safe, decent homes for families living in poverty, is organising a fundraising event to take place next summer. Hope Challenge 2009 is a challenge event for teams of 3-6 people and will test your initiative, your teamwork and your fitness. And by sleeping in your very own shelter you will experience some of the challenges faced by those who live in poverty housing. The event involves:

We are looking for teams of people who want to rise to the challenge of raising funds in support of the 2 billion people living in poverty housing around the world.

Click here for more information and entry requirements. 

For other HBF events visit the website http://www.hbf.co.uk/index.php?id=eventsandmeetings

For HBM events visit http://www.hbmedia.co.uk/ 

Rosie Hinchliffe

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