HBF Weekly News Summary Friday 9 November 2007

Top stories this week Queen's Speech underlines Government's ambition to build more homes... read Bank of England Maintains Bank Rate at 5.75%... read Costs of entering buy-to-let market now at elevated levels... read

On Tuesday, the Queen's Speech reinforced the Government's commitment to build more homes, to higher environmental standards, with improved infrastructure.

Announcing the Government's plans, the Queen outlined the proposed provisions of the Housing and Regeneration Bill. The Bill will create the Homes and Communities Agency, by merging English Partnerships and the Housing Corporation, to support the delivery of social and affordable housing and assist the Government in implementing its pledge of three million new homes by 2020, as stated in the housing green paper. The Bill will also reform social housing and social housing regulation to promote better services for tenants. It will provide the opportunity to modernise powers on establishing new settlements like eco-towns.

The Queen also spoke of the Government's intention to implement the proposals of the Planning White Paper to streamline and improve the planning regime. It includes provisions to introduce a single consents regime for major infrastructure projects and improve the town and country planning system. The Bill will also include provisions to establish a new statutory planning charge following the Government's decision in response to HBF lobbying not to proceed with the Planning-gain Supplement.

HBF Comment: A key HBF priority will be to develop on understanding with Government on the details of the proposed planning charge so that the Planning Bill can establish an effective regime for the future.

In response to the Queen's speech Housing Minister Yvette Cooper said:

"Today's announcements show we are serious about delivering the new homes, backed up with new infrastructure, we desperately need.

This Government is putting unprecedented investment into new and affordable housing, to give first-time buyers and young families a foot onto the ladder.

New homes will be greener to tackle the challenge of climate change, with world-beating environmental standards. We're building the first new towns for several generations, with ten new eco-towns across the country.

"But this must be a shared endeavour - between Government, councils, developers and local communities. If we don't act now, we're letting down future first-time buyers."

In welcoming the measures in the Queen's Speech to increase the supply of housing, HBF Executive Chairman Stewart Baseley said:

"This is long-overdue recognition of the scale of the challenge we face to build the 3m additional homes we need by 2020 while further improving environmental standards.

The housing and planning measures in the Queen's Speech are good news for homebuilding.

The Government has listened to the housing industry on the case for a planning charge for essential investment in infrastructure. This should help create greater acceptance of well-planned development. We also welcome the opportunities to develop greener homes for the future through the expansion of the eco-towns programme.

Above all, we now need to unlock the land needed to build the homes on the scale required across the country."

On Tuesday evening, HBF Executive Chairman Stewart Baseley appeared on the 6 o'clock news to talk about the consequences of the housing proposals, outlined in the Queen's speech.

Reacting to the Queen's Speech, Ben Stafford, Head of Campaigns at CPRE commented:

"This Queen's Speech is a lot of Brown and not much Green. Some measures, such as the Climate Change Bill, are welcome, but others suggest that protection of the environment is slipping rapidly down the Government's "to do" list.

The Planning Reform Bill looks like being a developers' charter - a dismantling rather than an evolution of the planning system introduced by the 1945 Labour Government. Ministers must listen to the concerns of the public who responded to their planning reform consultation in the summer. They should scrap plans that will reduce the public's say on major development and be damaging to the environment.

In relation to the Housing and Regeneration Bill, policy needs to be driven by quality design, affordability and location. The new Homes and Communities Agency must meet these objectives, and resist greenfield sprawl - there also need to be appropriate checks and balances on its sweeping powers. The agency should be a vehicle for delivering the right housing in the right place, not a sausage-machine churning out new housing regardless of need and local concerns."

The Trade press have reported this week that English Partnerships, the government's regeneration agency, will enforce size minimums for housing on its land.

It has been reported that English Partnerships said the standards - set at a minimum of 51sq m for a one-bedroom flat - had been prompted by a report by the Policy Exchange showing the UK had the smallest new homes and room sizes in Europe, and by the success of the agency's Design for Manufacture competition.

Trevor Beattie is reported to have said. "This marks a new era for housebuilding in Britain where sustainability, quality and space are considered together. It's exactly when you are planning a big expansion in housing stock that you must be most careful over the quality and sustainability of homes."

Yvette Cooper issued new guidance to Councils for establishing new Local Housing Companies (LHCs) which will be able to offer their own deals for key workers and first-time buyers through new homes built on their land.

Local Housing Companies will take the form of a new partnership between councils and the private sector being tested as one of a range of models to help local authorities to bring forward land for housing development, in particular to help increase the supply of affordable housing.

Under the proposals to be piloted, councils would provide their surplus public sector land to the Local Housing Company. The local authority would play a full part in agreeing the development plan, including being able to directly offer low cost housing deals to meet local needs.

In return for taking the land cost out of the equation, partners including house builders and Registered Social Landords would provide equivalent investment and the construction expertise needed to build the homes.

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Figures from the Department for Business, Enterprise & Regulatory Reform have shown a decrease in housing orders in recent months. Private housing orders in the twelve months to September 2007 fell by one per cent compared to those in the previous twelve months. Orders in the third quarter 2007 fell by 13 per cent compared with the previous quarter, and by nine per cent compared with the same quarter a year earlier.

More online

The Bank of England's Monetary Policy Committee yesterday voted to maintain the official Bank Rate paid on commercial bank reserves at 5.75%.

Halifax has released its House Price Index for October showing the following: -

View full press release

The UK economy and housing market will become direct casualties of the current world-wide credit crunch, according to the latest Regional Planning report by Experian. They say that much of the expected slowdown is as a direct result of the five interest rate hikes that we have had since mid-2006 and this was bound to hit consumer demand even without the potential impact of the credit crunch.

Commenting on the housing market, Andrew Burrell of Experian's Business Strategies division said:

"We expect the UK housing market to suffer over the next two years, with some regions experiencing falls. Although national house prices have continued to soar against a background of higher interest rates, the current boom has been uneven regionally. The latest figures show an exceptionally buoyant market in Northern Ireland and continued strength in Scotland and London, but elsewhere there are already signs of deceleration.

Over the next two years, house prices are forecast to record the lowest annual increase since the mid-1990s. Modest declines in house prices are predicted in the South East and the East of England, while values fall much more sharply in the South West. By contrast, Greater London, where overvaluation is less severe than in the rest of the south, has the UK's strongest short-term outlook after Scotland."

The East and West Midlands are expected to see the UK's most significant falls in house prices over the next two years, with property values down about four per cent by 2009.

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Consumer confidence dropped by one point in October to 98, remaining at the same level as a year ago, according to the latest Nationwide Consumer Confidence Index. The index also reports improved confidence in the labour market and the economy.

The Spending Index fell by eight points, continuing a downward trend and the consumer confidence about spending on major items, such as a house or car, saw a noticeable fall.

Consumer expectations of house price growth slumped to more realistic levels in October and consumers expect house prices to increase by 1.9% over the coming six months - down from 3.2% in September.

View the full report from Nationwide

Barriers to entry to the buy-to-let sector are now reaching unattractive levels, according to a RICS report published this week.

The report states, that in the current climate, would-be-investors need to lay down a deposit of £65,600 (30 percent of a property's value) for the average UK house in order to get a foothold on the buy-to-let ladder. This compares dramatically with the £10,100 (only eight percent of a property's value) required in Q1 2002 - a deterioration of over 500 percent in 5 years.

For the future, with evidence that rents are rising strongly and house prices predicted to remain flat in 2008, the yields on residential property could increase slightly in coming quarters. With interest rates also likely to fall, the deposit required to meet the rental cover ratios could be reduced somewhat, making buy-to-let a more attractive proposition for many.

Commenting, David Stubbs, RICS senior economist said:

"It takes more capital than ever to set up a buy-to-let investment. Would-be investors who have missed out on the impressive returns of previous years are now finding the hurdles to property investment are higher than they imagined. However, existing landlords should be able to use the equity in their past investment properties to fund the deposit needed for new ones, and this should ensure that demand from the buy-to-let sector does not dry up entirely."

New research by Halifax Estate Agents has investigated the movement of house prices in the 66 official cities in the UK.

Armagh has recorded the biggest increase in house prices of any UK city over the past five years with a rise of 188%. All four cities with the highest house price growth in the last five years are in Northern Ireland, reflecting the phenomenal rise in prices across Northern Ireland in the past few years.

Bradford experienced the highest price increase on the British mainland with a 131% rise over the past five years. Two Scottish cities - Dundee and Aberdeen - and two Welsh cities - Swansea and St David's - also feature amongst the ten top performing cities over the period.

Smaller cities have generally performed better than larger cities. Nine out of the top ten performing cities over the past five years have populations of less than 300,000.

House prices in the UK's cities exceed those in their region by an average £11,000. Thirteen cities have an average house price that is at least £50,000 above their region's average. Thirty-one cities have an average house price above the average in their region.

Westminster is the UK's most expensive city with an average property price of £601,821. Winchester (£379,643) is the most expensive city outside Greater London.

Hull (£128,863) and Stoke-on-Trent (£134,978) are the two least expensive cities in the UK.

Places that have been conferred city status since 2000 have generally recorded higher house price rises since becoming cities.

Most people claimed that being ‘green' is now the socially acceptable norm, a Defra survey into public attitudes and behaviours found, rather being an alternative lifestyle. And the main motivation for an environmentally friendly lifestyle is guilt about harming the environment.

The 2007 Survey of Public Attitudes and Behaviour toward the Environment is the sixth in a series of surveys that Defra and its predecessors have conducted since 1986.

Of the 3,600 people in England polled, when asked about waste 87% said they give away things they no longer want to charity shops or friends and family, and 78% said they sometimes reuse empty bottles, jars, envelopes and paper.

Many respondents agreed they do try to influence others to be more environmentally friendly, with a third saying they talk to friends and family about things they can do to change their behaviour.

Major energy companies have launched a new programme this week to boost action by UK cities to tackle climate change and support the Government's new Low Carbon Cities Programme.

The UK Business Council for Sustainable Energy's programme, supported initially by Shell and RWE npower, is designed to drive forward the wider deployment of sustainable energy technologies and energy services by creating a new partnership between major cities and towns, and the UK's leading energy companies.

David Green, Chief Executive of the UK Business Council for Sustainable Energy says:

"We are delighted to be able to work alongside the Government's new Low Carbon Cities Programme to create the sustainable partnerships between central and local government and the private sector that will be essential to transform our Cities into the low-carbon communities of the future."

A key element of the work is a targeted programme in major UK cities to secure practical action on climate change by stimulating investment in sustainable energy and the development of the next generation of energy services activities. The Council will build on this experience to develop policy recommendations designed to further enhance the scope for local action.

From Monday of this week, HMRC have been posting, in stages, 86,400 penalty notices to 36,000 companies. Companies may get more than one penalty notice, each costing £100 initially - if the missing return shows more than 50 subcontractors when HMRC receive it, the penalty will go up (£100 for each block of 50 subcontractors).

Penalty notices can be appealed against.

If you receive a penalty notice, please can you inform Stanley Jackson, Finance Director at HBF by email and supply the following information:

Stanley Jackson will be collating HBF member feedback on this issue so that we can lobby HMRC if we feel unreasonable penalty notices are being issued.

Contact: Stanley Jackson - stanley.jackson@hbf.co.uk  

Stewart Baseley, HBF Executive Chairman's Monthly Report for October is available to view on the website (members only).

View Chairman's Report for October

Wednesday 30 January - One Birdcage Walk, London

The Government has called on the UK house building industry to increase house building levels to 240,000 homes per year and to build homes to zero carbon standards by 2016. This full day conference is perfectly timed at the start of next year to give delegates a detailed and comprehensive overview of the issues facing the industry.

For further details, please contact the Events Team on 020 7960 1646 or events@hbmedia.co.uk

The HBF Technical Conference entitled ‘the road to zero carbon is paved with building regulations' will be taking place at York Racecourse on Wednesday 14th November 2007.

View the full agenda for the day and book online

Or contact the Events Team 020 7960 1646

The HBF North West Social Dinner will be held at the Midland Hotel, Peter St, Manchester M60 2DS.

The evening commences at 7.30pm for 8.00pm with a three-course dinner and wine, followed by a live band and disco.

Cost £70 + VAT. Tables of 10 and 12 can be booked - if you require a larger table please contact the events team.

To book please download the booking form

Or contact the Events Team 020 7960 1646

Jo Weston