Planning Permissions and Buyer Reservations Up As House Building Constraints Begin To Ease – But Threats Remain

12 March, 2013

NEW Housing Pipeline report - ‘permissions granted highest level for 5 years’Improved mortgage rates see NewBuy reservations double since New Year

HBF’s latest Housing Pipeline report, released today, reveals that local authorities granted approvals for 45,041 new homes across England in Q4 of last year, up 62% year on year and 33% up on the previous quarter.

It is the highest quarterly number granted since Q1 2008 and - whilst still short of the 60,000 required - is significant as it points to potential improvement emerging since the introduction of the National Planning Policy Framework last March.

While the lack of viable developable land with planning permission has been the most serious long-term barrier to housing delivery, in the short term mortgage lending has been more significant.

In this area too, 2013 has brought progress. The Government-backed NewBuy scheme has gained considerable traction, with a weekly average of 130 reservations, almost double last year’s average, resulting in a current cumulative total of more than 3700 reservations. The doubling of reservations under NewBuy this year has come in partnership with a general lowering of mortgage rates - triggered by the Funding for Lending Scheme - making home ownership more affordable.

Signs of easing in both constraints have raised hopes that developers will be able to increase production from the current very low levels, giving the country a social and economic boost. But significant threats to any potential recovery being sustained remain and more needs to be done to ensure these positive indicators are sustained. At today’s HBF Policy Conference and in its Budget Submission HBF is warning that;

The Government’s Planning Inspectorate must continue to robustly monitor Local Plans and throw out unsatisfactory ones. Half of local authorities still don’t have Local Plans in place, despite it being a requirement since 2004. This cannot be allowed to thwart development.Government must maintain its support and it is vital that schemes such as NewBuy are extended to give certainty and security to home builders.Regulatory costs are now a huge threat to site viability. Government must act to meet its commitment to reduce costs and cut red tapeMedium and small businesses are still struggling to secure business finance and need support

Speaking today at the industry’s annual conference, Stewart Baseley, Executive Chairman of HBF will say;

“It has been a very positive start to the new year, with signs of an easing of the two main blockages that have greatly hindered our industry. But significant threats to any sustainable recovery remain.

“The increase in residential permissions is hopefully a reflection of the positive planning principles of the new system. It is still very early days though and the increases must be sustained. Government must ensure the system continues to be underpinned by a robust appeals process where local authorities are not meeting the responsibilities they have to their communities.

“The lack of affordable mortgage lending has strangled the industry’s activity for several years and any glimmer of increased lending or lower rates is positive. NewBuy is playing a big part and gaining substantial momentum, boosted by recent reductions in mortgage rates in response to the Funding for Lending Scheme. House building is a long process so it is vital Government maintains this support.

“As Government looks for ways to maintain this improvement it must also focus on its commitment to reduce red tape costs. Direct and indirect taxation, coupled with regulation, is making many building sites unviable and has got to be addressed.

“Building the homes we need would take millions of people off social housing waiting lists and enable beleaguered young families to get a foot on the housing ladder. It could also create half a million new jobs and give the country a massive and much-needed economic boost. We are seeing progress – we now need to maintain it.”

Allan Wilén, Economics Director at Glenigan, that complies the Housing Pipeline report for HBF commented, “The marked increase in the number of units approved during 2012 suggests that the recent changes to the National Planning Policy Framework, combined with expectations of improved market conditions, may be enabling house builders to bring more sites forward for development. However the number of units approved still remains some 39% down on the levels seen during 2006 and 2007. 

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Notes to editors

1.     The Home Builders Federation (HBF) is the representative body of the home building industry in England and Wales. The HBF’s member firms account for some 80% of all new homes built in England and Wales in any one year, and include companies of all sizes, ranging from multi-national, household names through regionally based businesses to small local companies:

2.     With over 30 years experience, Glenigan is the genuine market leading provider of UK construction and civil engineering project, company and market information.

Part of the Insight Division of Emap Limited, one of the UK’s largest media businesses providing must-have information, magazines and events, Glenigan users enjoy small business intimacy combined with business security.

3.      The Housing Pipeline report for Q1 2013 will be published in June.

4.     Planning permissions granted now will, in the main, be built over the next three or four years. Around 110,000 homes a year in England are currently being built, against a requirement for 240,000, so the need to see a continued and steady increase on the number of permissions granted is quite clear.

5.     Housing need figures based on DCLG Household Formation Projections. The number of households in England is projected to grow from 21.7m in 2008 to 27.5m in 2033, a rise of 5.8m (27%), or 232,000 per year. The latest projections have reduced household growth by approximately 20,000 per year[1] compared with the previous, 2006-based projections.