Friday, 28th January 2011
Top stories this week
Treasury announces transfer of second charge mortgage regulation responsibilities to the FSA.....read more
GDP falls along with construction output.....read more
Sir Richard Lambert hits out at localism agenda.....read more
Hometrack: House price index.....read more
Skills Council urges construction industry to prepare for growth - but warns that 2011 will be a tough year.....read more
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Economic news
Treasury announces transfer of second charge mortgage regulation responsibilities to the FSA
The Financial Secretary to the Treasury, Mark Hoban, has announced a package of measures intended to enhance consumer protection in the mortgage market.
These measures will:
Transfer the regulation of new and existing second charge residential mortgages from the Office of Fair Trading (OFT) to the Financial Services Authority (FSA), to ensure consistent standards of consumer protection and simplify the regulatory environment for lenders and borrowers;
Ensure consumer protections are maintained when a mortgage book is sold by a mortgage lender to an unregulated firm; and
Extend the current regulation of the sale and rent back market to all providers, to ensure appropriate protection for consumers.
Mark Hoban, Financial Secretary to the Treasury, said:
“The Government believes that this package of measures will enhance protection for consumers in the mortgage market. Giving the FSA responsibility for the whole residential mortgage market will simplify the mortgage regulation landscape for consumers and lenders. This will ensure that existing second charge mortgage borrowers who fall into arrears or face repossession on both first and second charge mortgages benefit from being regulated by a single organisation, maximising consumer protection and ensuring a more coordinated approach between lenders.
“The measures on mortgage books and sale and rent back have been introduced to address a genuine gap in the regulatory architecture, and will ensure consumers will be better protected in the mortgage market.”
The statutory instruments will be published later in 2011. In advance of this, the Government expects the FSA to begin work immediately to implement these measures.
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CML welcomes extension of FSA’s regulatory scope
The Council of Mortgage Lenders broadly welcomed the Treasury's announcement about the regulation of second charge lending.
CML Director General Michael Coogan said:
"With yet more mortgage activities to become regulated, as well as the Mortgage Market Review to finalise, it is more important than ever to focus on the key outcomes that regulation needs to deliver, otherwise implementation could become unmanageable for both firms and the regulator. We are working closely with the FSA to try to construct an effective regulatory system that brings the right results for consumers, firms and the financial system."
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The BSA comments on the Government package of measures to enhance consumer protection in the mortgage market
Commenting on the measures for the Building Societies Association, Paul Broadhead, Head of Mortgage Policy, said;
“In principle the measures announced by the Government today are sensible. Any tightening of the underwriting criteria of first charge mortgages, through rules imposed by the FSA, has the potential to drive customers to other forms of credit, such as second charge mortgages. These loans are often more expensive and are subject to a different regulatory structure.
“Bringing second charges mortgages under the FSA remit will help ensure that there is consistency in regulation and could make it simpler for consumers.
“The BSA is also supportive of the proposed regulation of firms that purchase mortgage books and the expansion of sale and rent back criteria, to prevent consumer detriment in this market.
“However, the HM Treasury announcement today adds to the weight of regulatory proposals the FSA needs to consider.
“As we have consistently stated, it remains vital that the FSA assess in detail the cumulative impact of all the proposals prior to pressing ahead with implementation, particularly to ensure that the revised regulations facilitate the desired outcomes for UK consumers.”
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GDP falls along with construction output
Official figures released this week showed that GDP fell by 0.5 per cent whilst construction output fell by 3.3 per cent in the final quarter of 2010.
The Office for National Statistics preliminary estimates showed construction output was 6.9 per cent higher in Q4 2010 than in the same quarter a year earlier, but had decreased on the previous quarter.
Construction Products Association chief executive Michael Ankers said the figures were evidence that any recovery in the sector had now “petered out”.
The CPA’s most recent forecast predicted construction output will fall a further 2 per cent in 2011.
Mr Ankers called on the government to do more to encourage a private sector recovery.
He said: “After two quarters of relatively strong growth in the middle of 2010, these latest figures show that the economic recovery has stalled even before the full impact of the public sector spending cuts is felt.”
“Although the poor weather in the last few weeks of the year undoubtedly had an impact on the construction industry, as it did in 2009, it is clear that the recovery in the industry has already petered out and that private sector growth is not coming through strongly enough.”
He said government should “accelerate the measures it is taking to reduce the burdens on business, encourage the banks to make more money available for viable business investment and implement the measures it is committed to for improvement to the infrastructure of this country”.
For the Government, Chancellor George Osborne said: “These are obviously disappointing numbers, but the ONS has made it very clear that the fall in GDP was driven by the terrible weather in December. We have had the coldest weather since records began in 1910 and this has clearly had a much bigger impact on the economy than anyone expected.”
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BoE: Agents’ summary of business conditions January 2011
The Bank of England’s summary of business conditions stated that contacts in the housing market had reported that the number of transactions continued to fall, beyond what might have been expected on the basis of typical seasonal patterns. Underlying that decline were rising concerns about the outlook for incomes. And there was also thought to be increased cautiousness due to fears about further falls in prices, with some vendors now waiting until their own property had sold before buying another. Access to credit, particularly for first-time buyers, continued to weigh on demand. On the supply side, despite the low level of new house building, and some vendors’ decisions to remove properties from the secondary market, stock to sales ratios were rising. House prices were falling as a result, and were expected to fall further.
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BoE: Minutes of the Monetary Policy Committee meeting 12th and 13th January 2011
The Bank of England this week published the minutes of the MPC meeting held on 12th and 13th January, at which it was decided to maintain the Bank Rate at 0.5% and the size of the asset purchase programme at £200bn. The minutes state that:
“Inflation had generally exceeded the Committee’s expectations in recent months. But the key consideration for monetary policy was the likely rate of inflation, and the balance of risks around it, in the medium term. The Committee discussed how the balance between the opposing key risks had altered over the past few months…
“For most members, recent developments implied that the risks to inflation in the medium term had probably shifted upwards. For some of those members, the decision this month was finely balanced. The analysis that fed into the forthcoming February “Inflation Report” projections would provide an opportunity to assess fully the developments since the previous “Report”, and to evaluate more thoroughly the risks to inflation in the medium term. The publication of the “Report” would also give the Committee the opportunity to explain fully its assessment of the outlook and its policy decisions.”
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Government and political news
Sir Richard Lambert hits out at localism agenda
The outgoing director general of the CBI, Sir Richard Lambert, has hit out at the coalition government’s localist planning policies in a speech saying the Government has failed to set out sufficient policies for achieving private sector led economic growth.
Sir Richard listed a range of “micro” policy decisions taken by the coalition which he said were having a damaging impact upon economic growth, including localism, the move to Local Enterprise Partnerships, and the Financial Services Authority’s mortgage market review.
He said: “If growth is necessary to restore our public finances, and business investment and trade are what will make that growth possible, then this needs to become the guiding priority for domestic policymaking.
“And the coalition Government is by no means firing on all cylinders in this important respect.”
Detailing his concerns, he said: “There’s the localism agenda, which has thrown an extra level of uncertainty into the planning system and led to the poorly-handled introduction of the new Local Enterprise Partnerships.”
He also said: “The Mortgage Market Review is being driven by the Financial Services Authority rather than the Government, but this is not the right time in the housebuilding cycle to be making mortgages harder to obtain.”
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Prime Minister backs “Employer’s Charter”
The Government has announced new plans to improve the way in which workplace disputes are resolved alongside an “Employer’s Charter” designed to give businesses more confidence to take on workers and support growth.
The Employer’s Charter aims to dispel many of the myths about what an employer can and can’t do in managing their staff reasonably, fairly and lawfully. It will provide clarity for employers on what steps they can take when handling workplace issues with staff.
The Government is also proposing reforms to address recent concerns raised by businesses that Employment Tribunals have become too costly and take too much time, placing unnecessary strains on small businesses.
Welcoming the announcement, the Prime Minister said:
“A critical element of the Government’s growth strategy is to create the conditions which allow businesses, especially smaller businesses, to flourish and expand, by reducing regulation and maintaining a flexible and dynamic labour market.
“Today’s announcements on reforms to employment law are among the first conclusions of our Government-wide growth review, and highlight our determination to ensure that employment law is no longer seen as a barrier to growth, while making sure that employees and employers are treated fairly.
“Giving businesses the confidence to take on somebody new will be a real boost to the economy, and help generate the sustainable growth we need.”
Key changes being proposed include an increase in the qualifying period before workers can bring a claim for unfair dismissal from one to two years. This reflects concerns raised by businesses that existing legislation weighed against them when making employment decisions.
The Government will also consult on introducing fees for bringing a tribunal claim following concerns that the current system leads to a large number of unmerited or vexatious applications.
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Eric Pickles starts final countdown for full council transparency
Communities Secretary Eric Pickles Councils has put councils on a week's notice to get their books open for public scrutiny.
Last June, Mr Pickles set a deadline for councils to become more transparent by publishing all of their spending data over £500 online in accessible formats, at the end of January 2011.
To date over 210 councils across the country have put some information online, but this leaves almost 150 still to act. A timeline on the Department's website shows who has put their data online while making it crystal clear which councils are leaving it to the eleventh hour.
A draft code of practice will be published shortly to help councils get on track.
Councils are expected to put details of senior pay, councillor expenses, tenders and contracts, meetings, and frontline service data into the open so that 'armchair auditors' can clearly see the decisions being made on their behalf by the council in due course.
Eric Pickles said:
"I've called for every council to become more open and accountable about every aspect of their work, starting with getting all expenditure over £500 online by the end of this month. Transparency can help save money in tough times protecting frontline services, by cutting waste and unnecessary costs.
"The final countdown for councils has begun. In the last six months more than half of all councils have got their house in order. Today I'm putting those councils still to open up on one week's notice.
"The public have a right to know how their tax pounds are spent, and those yet to deliver are running out of excuses and time before they have to face their electorate - I hope every council chooses to do so openly, transparently and democratically."
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Housing market news
Hometrack: House price index
2011 began with a sluggish start according to the latest Hometrack survey of over 5,000 agents and surveyors. The survey results showed a slowdown in both supply (-5.4%) - the largest monthly fall for 4 years - and demand (-9.5%). Falling demand in particular is likely to impact on pricing levels over the first half of 2011. Other key findings include:
In January 2010 demand stood at -2.7%, a sharp contrast to today’s figure of -9.5%. This suggests that the housing market is facing more fundamental underlying issues than the usual post-Christmas slowdown;
With recent rises in the cost of living, household budgets will only come under further strain if concerns over rising inflation translate into higher interest rates. Mounting concern over a possible interest rate rise will act as a further dampener on demand;
A considerable number of households will not be directly affected by interest rate rises. Two-fifths of house sales are driven by cash buyers and Hometrack estimate that over 45% of households who own their home do not have a mortgage. This said all owner occupiers will feel the impact of weaker consumer sentiment;
The supply of homes for sale is likely to dwindle further over the next two quarters. In the short term this will not be enough to offset the downward pressure on prices, but over the course of the year it will begin to act as a support to pricing;
Nationally, house prices fell by -0.5%;
Price falls were recorded across 37% of the country, compared to 36% in December;
Wide variations in the relative health of the housing market can be explained by different underlying dynamics between supply and demand. The average time on the market in the North and Midlands is now close to 3 months, compared to just over 2 months in the South;
The percentage of the asking price being achieved is falling off a higher base in Southern England although the weakness in pricing is most pronounced in Northern regions.
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House building industry looks to build on recovery in 2011
The severe December weather didn't dampen house builders' spirits, as the last quarter of the year saw an increase in new home registrations, according to NHBC.
Figures from NHBC for new home registrations in December 2010 show an increase on 2009 figures, with just over 7,385 registrations during the month (compared to 7,149 in 2009). These, added to the previous 11 months, mean year end numbers look set to end approximately 30% higher than overall registrations reported in 2009 (115,458 in 2010 compared with 88,083 in 2009).
Month on month, December 2010 figures were down on November 2010 - a traditional trend for the industry, reflecting a shorter month over the festive season.
Imtiaz Farookhi, Chief Executive of NHBC, said:
"No one is popping champagne corks but there is a growing belief that the worst is now behind us and we're on the road to recovery.
"The pace and extent of that recovery really depends on factors out of the hands of the industry, such as mortgage availability and monetary pressures on consumers. These are the biggest obstacles that the house building sector now faces for the coming year."
NHBC statistics for the rolling quarter October - December 2010 show that:
Private sector registrations were up 1 per cent (to 18,551) when compared with the same period last year (18,393);
Public sector registrations were 8,711 - 13 per cent higher than the same period a year ago (7,685);
Registrations in the combined private and public sectors were 5 per cent up on the same period in 2009 (27,262, up from 26,078).
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Industry news
Skills Council urges construction industry to prepare for growth - but warns that 2011 will be a tough year
ConstructionSkills has outlined a Five Point Skills Plan to promote growth after releasing its latest Construction Skills Network forecasts for the 2011-15 period. But, the Sector Skills Council warned that the industry still faces a tough year in 2011 with employment levels likely to drop by up to 76,000 before the sector returns to growth.
The Construction Skills Network (CSN) report shows that, despite the industry performing better than expected in 2010, the sector is expected to contract by 1% during 2011 which could have a detrimental impact on an industry which is already struggling to deal with the effects of a prolonged downturn.
Responding to the forecasts, the ConstructionSkills has issued a Five-Point Skills plan for Government and industry, which looks at productivity, low carbon, increased engagement, recruitment and education and training as a means of working to help protect and grow the sector’s skills base.
Judy Lowe, Deputy Chairman of CITB-ConstructionSkills, said:
“The next couple of years will be really tough for the industry. But as the CSN forecasts show, there are signs of longer-term confidence returning to the market. Major infrastructure investment has been announced, particularly in rail and water, and work is starting on the Cheese Grater, the Walkie-Talkie and Darth Vader’s Helmet – exotic names, but proof investment is being made.
“As the SSC for the industry, we have a real role to play in supporting construction through these difficult times. Our objective is to help the industry maintain existing abilities, develop low carbon skills and meet the demand for new talent. Government support will help to ensure that we all have the right foundations in place, ahead of the recovery.”
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Federation of Master Builders: Construction workloads enter fourth year of decline
The SME (Small to Medium-sized Enterprise) construction sector is to set to begin a fourth year of falling workloads and a third of such companies are expecting to cut their staffing levels this year, according to the latest State of Trade Survey from the Federation of Master Builders (FMB).
Richard Diment, FMB Director-General said:
“The construction sector has still not reached the bottom of the most savage recession for the industry in living memory. Cuts in government expenditure are making matters worse with more than half of building companies reporting falling levels of work in public repair and maintenance work. Our survey shows a sharp increase in those expecting workloads to contract once again in the first quarter of 2011.”
“The Government is pinning its hopes of economic recovery on the creation of new jobs in the private sector but its policies are having exactly the opposite effect in the building sector. The increase in the rate of VAT earlier this month will cost the construction sector nearly 7,500 jobs this year alone. Cuts in public sector spending on social housing are having a particularly adverse impact with nearly half of building companies reporting that work in this sector had fallen.
“The construction sector has the potential to build Britain out of recession and we know that for every £1 spent on construction output generates a total of £2.84 in total economic activity. If this could be coupled with expenditure on infrastructure projects as well as tackling the growing housing crisis the Government would be building the real foundations for a sustained economic recovery.”
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Centre for Cities: Cities Outlook 2011
In its annual look ahead, the Centre for Cities has stated this week that over the next few years cities will need to grapple with the challenges and opportunities of managing very tight budgets and the increased responsibilities associated with localism. At the same time cities will need to respond to on-going processes of economic change, and find ways to effectively support growth and job creation in the private sector.
The Cities Outlook 2011 report highlights the strengths and vulnerabilities of different city economies in this context. It identifies those cities that are better placed to recover and grow over the next year, and those that will continue to struggle.
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Please click here to download the full report
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CITB-ConstructionSkills encourages employers to help young people ‘Experience Construction’
A new initiative being piloted by CITB-ConstructionSkills is set to give young people between the ages of 16-18 the opportunity to enrol on a two to four week work experience placement, as part of its new scheme called ‘Experience Construction’.
The scheme is part of CITB-ConstructionSkills’ commitment to helping industry meet its recruitment challenge by inspiring young people to consider careers in the construction and built environment sector. Experience Construction will enable a generation of young people to sample what the industry has to offer before deciding on their future, particularly those who are not employed or in education and training.
From an employers’ perspective the scheme provides companies with the opportunity to assess potential apprentices in a live working environment, helping to ensure that a flow of talented young people continue to enter the industry and help meet the future skills needs of the local area. The scheme also offers employers the added benefit of engaging and building relationships with the local community.
Mark Farrar, Chief Executive of CITB-ConstructionSkills said:
“This is a great opportunity for construction companies to make a crucial contribution to the industry by engaging with young people. While the sector still faces challenges, it is important that we are still making sure that quality new entrants continue to enter the workforce to prevent a skills gap in the future. I now urge construction companies to come forward and offer young people in their area this vital chance to experience just what our industry has to offer.”
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Colin Walsh takes up role as CML Chairman
Colin Walsh, Managing Director of Lloyds Banking Group Mortgages, has become Chairman of the Council of Mortgage Lenders. He succeeds Matthew Wyles of Nationwide Building Society, who has held the post for the previous two years.
Colin Walsh commented:
"This year, the CML will do its utmost to help regulators and the government to embed the right regulation to achieve the sustainable market they seek for the future. UK mortgage lenders have been helping people to buy their own homes for more than 150 years: there is no question that we are "socially useful". The mortgage market really affects people's lives, probably more than any other area of retail financial services, and I am determined to help ensure that as an industry we deliver to the best of our ability, whatever the underlying economic conditions.
"I commend my predecessor Matthew Wyles, who steered the CML well through the past couple of difficult years for lenders. One of my key objectives as CML chairman will be to try to harness the variety of expertise that exists among my colleagues from all kinds of mortgage lenders - banks, building societies, and specialists, large and small."
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HBF News
HBF and members give evidence to Localism Bill Committee
HBF Planning Director Andrew Whitaker and senior HBF members gave oral evidence to the Localism Bill Committee in adjoining sessions on Tuesday.
Points made to the Committee included the potential for delay during transition to the new planning system, the need for housing delivery to be facilitated by including the proposed presumption in favour of sustainable development within the Bill, the necessity of robust assessment of housing requirements, the importance of the new National Planning Policy Framework clearly stating the Government’s objectives and the required outputs from the planning system, and forward planning for infrastructure.
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Events
HBF Policy Conference 2011
‘The Coalition one year on – putting Localism into action’
The new Director General of the CBI, John Cridland, will speak at this year’s HBF Policy Conference in one of his first appearances in his new role. Cridland will give his view on the current business environment and the outlook for UK plc.
The conference is entitled “The Coalition one year on – putting Localism into action” and will tackle the big issues affecting the house building industry in 2011. Chief among these will be the Localism Bill and the new National Planning Framework, as well as affordable housing, the mortgage challenge and the path to zero carbon.
Richard Hill, Deputy Chief Executive of the Homes and Communities Agency, will be addressing the conference as will Zero Carbon Hub CEO Neil Jefferson.
For more information and to book go to www.house-builder.co.uk
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The Zero Carbon Hub Conference 2011 – Tomorrow's New Homes- Definition and delivery of low and zero carbon
1st February 2011 - Kings Place, London
Housing Minister confirmed to speak!
The Zero Carbon Hub Conference is designed to bring delegates right up to date with the issues surrounding zero carbon, looking specifically at the definition and delivery of the zero carbon homes policy. An exhibition alongside the conference will showcase key products and services to aid delivery.
For more information or a booking form please visit www.house-builder.co.uk/zch or call 020 7960 1646.
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HBF Annual Industry Lunch 2011
Tuesday 10th May – Marriott Grosvenor Square London
Housing Minister invited to speak at this year’s Annual Industry Lunch
HBF can confirm that the HBF AGM & Annual Industry Lunch will take place on Tuesday 10th May at the Marriott Grosvenor Square Hotel, London. The day will begin with the AGM and Open Council meeting and be followed by a drinks reception and the annual lunch. Please visit www.hbf.co.uk for further information.
If you have any queries about any of the above please contact the events team on 020 7960 1646 and events@house-builder.co.uk
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Employers urged to put National Apprenticeship week in the diary
With National Apprenticeship Week (7-11th February) looming, CITB-ConstructionSkills is urging construction companies to visit one of their local events and find out what a ConstructionSkills apprentice could do for their business.
Events will be taking place everywhere from Luton to Liverpool, and experienced Apprenticeships Officers will be on hand to advise employers on how to take on an apprentice, and the grants that are available.
Chief Executive of CITB-ConstructionSkills, Mark Farrar said:
“Taking on an apprentice means that your business not only develops a loyal worker with the skills that your business needs, but also helps to ensure that our industry secures the talent it will need in the upturn. Apprentices are the lifeblood of our industry, and these events we’re holding during National Apprenticeship Week offer local construction companies a chance to find out just how easy and beneficial taking on an apprentice can be.”
To find out what is going on near you visit www.cskills.org/events
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Save the Date! - HMI annual report launch and conference
Wednesday, 12th October 2011, Savoy Place, London
The ninth annual Housing Market Intelligence conference will be held on 12th October 2011 and will include the launch of the annual Housing Market Intelligence Report. Over the best part of the past decade, the Housing Market Intelligence conference has established itself as the leading event for business planning and strategic thinking in the private sector house building industry.
Full details available soon. Keep up to date with events by registering for alerts at www.house-builder.co.uk
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Save the date – The Housebuilder Awards 2011
Thursday 3rd November, Millennium London Mayfair Hotel
The Housebuilder awards, the highlight of the house building calendar, celebrate the very best of industry and the achievements of those leading the way in innovation.
Details of how to enter and to book a place at the awards will be posted shortly. Keep up to date with events by registering for alerts at www.house-builder.co.uk
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Habitat for Humanity – Hope Challenge 2011!
HBF’s nominated charity Habitat for Humanity has announced that its annual fundraiser ‘The Hope Challenge’ will take place next year from 11-13th July. The event involves a weekend in the stunning Peak District national park where participants take part in a series of challenges and have to build their own shelter in which to spend the Saturday night.
Want to know more? Then email hopechallenge@habitatforhumanity.org.uk or call 01295 264240.
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HBM Business Manager to travel to Nepal – can you help?
Housebuilder Media Business Manager Helen Board will next year travel to Nepal with HBF’s nominated charity Habitat for Humanity, to work with homeless people in what is one of the poorest countries in the world.
During her time there she will work with the HFH people on the ground to build a home for a family.
To make the trip possible she has to raise £2600 and is looking for sponsorship.
Please click here to sponsor Helen or to find out more www.habitatforhumanity.org.uk/HeleninNepal
For other HBF events visit the website
For HBM events visit
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Rosie Hinchliffe
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