Wed 19 April, 2023
In this Parliamentary Newsletter, we update you on work to progress the many ongoing and new challenges affecting the home building industry.
We hope you find it a useful update on the home building industry’s activities and priorities but if you have any questions or would like to discuss to an issue in more detail, please get in touch.
The Home Builders Federation (HBF) is the representative body of the home building industry in England and Wales. Our members are responsible for providing around 80% of all new private homes built in England and Wales and the membership are mostly small or medium-sized enterprises.
HBF report – Planning for Economic Failure
In February, HBF published a report – Planning for Economic Failure – which laid bare the implications of current policies limiting housing supply, warning that delivery could halve and fall to the lowest level since World War Two.
Building on analysis by Lichfields of the impact that the proposed changes to the National Planning Policy Framework (NPPF) will have on land availability and housing supply, HBF’s research also considers the likely ongoing impact that the moratorium on development caused by Natural England interventions will have. By estimating the ongoing annual impacts of nutrient neutrality, water neutrality and recreational impact zones, the findings suggest that net supply could halve during the coming years as builders struggle to find land available to build on. Housing supply could drop by up to 122,000 homes per year due to:
- Proposed changes to the NPPF – 77,000 homes a year
- Nutrient neutrality requirements – 37,000 to 41,000 homes a year
- Water neutrality – 1,500 to 1,900 homes a year
- Recreational Impact Zones – 1,200 to 2,100 homes a year
Housing delivery increased rapidly between 2013 and 2019 but this progress came off the back of a prolonged period of under-delivery. In the years following the financial crisis, net additions to the housing stock fell to 124,000 new homes per annum. From that low, output by the home building industry had doubled by 2019 as developers continued to demonstrate an appetite to invest and deliver more. In 2021/22, net housing supply stood at 233,000. A fall of the size that the research suggests is possible would have significant social and economic implications for the country and would deepen the housing crisis and intergenerational inequalities and cost;
- nearly 400k jobs – including 4000 apprentices
- Over £20 billion less economic activity being generated
- Over £3 billion less investment in affordable housing
The report can be read here.
Housing Pipeline Report
The latest Housing Pipeline Report from the Home Builders Federation (HBF) and Glenigan finds that the number of planning approvals continues to fall as the Government’s anti-development policies start to bite.
The report shows;
- The number of housing projects granted a planning permission in Q4 fell below 3,000 for the first time since the data set was started in 2006, with the number of projects in the whole of 2022 falling well below the 21,000 project permissioned in 2017 to under 12,500; and.
- The north has been particularly hard hit with a 22% year-on-year drop (across North East and North West combined), undermining any attempts to use housebuilding, a known economic driver, to support the Government’s levelling up agenda
As was predicted, the implications of the Government’s anti-development approach and its watering down of the requirements placed on Local Authorities, have already seen a growing number of them temper their approach to planning and housing supply. So far, 55 Local Authorities have withdrawn or paused their housing delivery plans. This is expected to have a significant impact on planning permissions – and so housing supply – moving forward.
Those 55 authorities are only those Local Planning Authorities with a public position. Many others are simply biding their time, and not progressing with their plans. For the first time since the introduction of a plan-led system of housing delivery in the early 1990s the NPPF saw councils adequately incentivised to prepare and maintain local plans. Government’s proposals weaken these incentives means fewer planning authorities are seeking to abide by their responsibilities to plan for the number of new homes communities need.
More on this can be read here.
New Homes Week
HBF’s annual consumer campaign, New Homes Week took place from 27 February to 3 March. The theme was ‘Make your move – and get on with living’ and centred around the great financial benefits that new build homes offer purchasers.
During the week, HBF published two reports. The first report – Watt a Save - found that buyers of new build houses in England will save an average of £3,100 in energy bills compared with typical older properties when the Government’s Energy Price Guarantee (EPG) cap increases in July. The research uses Government Energy Performance Certificate (EPC) data on new builds and existing properties to compare likely costs of running older houses and flats as well as new homes.
The report also found that:
- New build properties require significantly less energy use, at approximately 95 kWh per m2 each year, as compared to older properties which require an average of 252kWh per square metre of floorspace.
- 85% of new build houses had an A or B Energy Performance rating (EPC); while less than 4% of existing dwellings reached the same energy efficiency standard.
- Average new build properties emit 2.2 tonnes of carbon less than older properties each year, with the newer homes in this dataset reducing overall carbon emissions by over 500,000 tonnes a year.
We also published a report looking at the savings for new build purchases in Wales. Due to an older housing stock, the financial benefits of buying a new build home in Wales are even greater:
- Buyers of new build properties in Wales will save an average of £2,800 a year on energy bills from 1 April 2023.
- These savings increase further for new build homes, as opposed to flats or bungalows, reaching over £3,300 a year.
- New build properties in Wales are reducing annual carbon emissions by over 20,000 tonnes.
The second report – Get on with living – looked at the costs new build buyers save by not having to upgrade their home as compared to purchasers of older properties. The report also included a consumer survey, detail important insights from those looking to purchase a home.
The report details costs totalling £73,271.80 to bring an average 3-bed semi-detached house to new build standards. That’s despite 71% of the population expecting to set aside no more than £30k, and almost a quarter (23%) forecasting a spend between £10k and £20k.
With 85% of new homes now achieving an A or B EPC rating, vs just 4% of older homes, loft and cavity wall insulation are among the list of potential upgrades and a priority for many homebuyers. In fact, more than half of survey respondents (53%) said lower utility bills and running costs due to increased energy efficiency would encourage them to buy a new home. Low maintenance was also identified as a key consideration for homebuyers, with 41% claiming that would encourage them to buy new.
Parliamentary Reception on mental health awareness in the homebuilding industry
On 22 February, HBF’s Mental Awareness Parliamentary Reception, sponsored by Dean Russell MP, took place and was attended by around 40 industry colleagues and almost 20 MPs. The event was intended to raise awareness of the work the home building industry is doing to improve the mental health of its workforce and to inform MPs about the support that’s available to construction workers in their constituencies.
People working in construction, including house building, are among those worst affected by mental health issues. Construction workers are nearly four times more likely to take their own lives compared to other sectors, and two do so every single working day of the year. The event saw the publication of a new report, highlighting the huge amount of work going on within the industry to help address these shocking statistics.
HBF’s Executive Chairman, Stewart Baseley, gave a short speech at the event to highlight the fantastic efforts our members are making to tackle the problem of poor mental health. Attendees also heard from Bill Hill, CEO of the Construction Industry Charity, Lighthouse Club about the wide range of support available to construction workers and their families. Attendees also heard from the Chair of HBF’s Mental Health Group, Jo Mann and Dean Russell MP.
During the course of the afternoon, MPs were given the opportunity to meet some of the industry’s Mental Health First Aiders (MHFAs) and were provided with a short report containing information on HBF’s Campaign, case studies from seven member companies and details of the services the Lighthouse Club charity provides.
If you would like further information on HBF’s mental health awareness campaign, please contact Emma Ramell.
Report from HBF finds that planning delays and rising costs are crippling the UK’s SME housebuilders
A new report, published by HBF in partnership with Close Brothers Property Finance and Travis Perkins, on the barriers facing SME housebuilders, has found that:
- Securing and processing planning permission to the point where construction work can start is the major barrier to growth according to 93% of SME developers
- The availability of land is a major issue for 52% of SME builders
- 76% believe local authority staffing shortages are the main cause of delays in the process
- Rising materials (99%) and energy (88%) costs are a major concern for companies
- Over two-thirds are impacted by the ‘nutrients’ issue that is restricting development in more than a quarter of England’s local authority areas
- 92% of SMEs are unhappy with the Government’s current approach on housing
The report, informed through a comprehensive annual survey of SME builders, takes a deeper look at the delays and escalating costs associated with the planning system which are putting businesses at risk and preventing SMEs playing their part in building the homes the country needs.
The findings come as the industry faces a range of acute challenges that threaten to reverse the big increases in housing supply delivered over the past decade. Delays to the processing of planning applications; a moratorium on housing delivery in a quarter of local authority areas due to pollution of rivers caused by agricultural practices; a growing regulatory burden and increasing cost base; and an economic environment within which consumers are struggling to buy are all increasingly threatening the delivery of new homes.
SME builders are particularly struggling to overcome the growing number of constraints on development. 92% of small builders polled say they did not feel the government’s approach to planning or housing was positive, and call on Ministers to take action if it is to avoid seeing supply levels fall.
Some of the recommendations to Government outlined in the report include:
- Ensure planning departments are adequately resourced and funded.
- Bring forward a greater number of small sites in Local Development Plans.
- Simplify the planning process for small sites.
- Make Local Planning Authorities more accountable for poor service/delays.
- Resolve the nutrient and water neutrality issues.
- Depoliticise the planning process.
- Increase the affordable housing threshold.
- Make development finance easier to access on terms that allow builders to recycle their equity more quickly.
- Introduce Level 2 T-Level style qualifications for routes into home building.
- Ensure existing apprenticeship schemes and FE courses have a greater emphasis on practical skills.
- Work with CITB and the Department for Education (DfE) to ensure CITB’s remit covers all skills necessary to the home building industry, particularly in the transition period towards the Future Homes Standard when green skills are ever more important.
- Change the rules for the Apprenticeship Levy to pass the responsibility of administration for hired apprentices to the company that “receives” the levy transfer, rather than leaving it with the “gifting” company.
- Provide sufficient support on an ongoing basis through CITB and otherwise to help SMEs manage apprenticeships and so optimise apprenticeship recruitment.
The report can be read in full here.
Customer Satisfaction Survey results 2023
HBF recently published the 2023 results of its annual national new home Customer Satisfaction Survey.
The Survey, administered by warranty provider NHBC, was launched almost 20 years ago to provide a barometer for both industry and individual builders to gauge performance and drive improvements. It is a self-completion census of new home purchasers and is one of the most comprehensive, large-sale surveys of its type carried out in the country.
The 2023 Customer Satisfaction Survey results show that 90% of new build home buyers would ‘recommend their builder to a friend’, the third successive year that the industry has collectively achieved a score of 90% or above.
Other notable scores include:
- 88% of respondents said they were satisfied with the quality of their home. 78% also said they were satisfied with the standard of finish in their home.
- 90% of those surveyed also said they would buy a new build home again, with 85% saying they would buy from their same builder again in the future.
- 77% said they were satisfied that their home was completed on time. This is despite the severe supply chain issues that the industry has faced, due to the hangover from the pandemic coupled with the war in Ukraine.
- On the design of new build homes, 92% of respondents were satisfied by the internal design of their home, and 84% with the external design.
- 81% said they were satisfied with the service provided by the builder after move in.
- 95% of respondents said they had reported snags to their builder since move in, and 71% said the number of snags was in line with or less than what they had expected. Most snags will have been minor problems and new build buyers are encouraged to report these to their builder.
Despite the high score, homebuilders remain focused on driving improvements in this area and the creation of an independent New Homes Ombudsman and a more robust Consumer Code will support this drive and should lead to even higher levels of customer satisfaction moving forward.
Further information about the survey can be found here.
New report calls for Natural England to review the science behind its nutrient neutrality occupancy assumptions
A new report published by Lichfields on behalf of HBF was published in March, examining the potential for house builders to achieve nutrient neutrality via the Government’s preferred approach of nature-based solutions.
Nutrient neutrality is currently one of the home building industry’s most significant concern with 74 local authority areas affected by development delays owing to a 2018 EU Court of Justice ruling. While we welcomed the Government’s acknowledgement of the seriousness of the issue through its recent Budget announcement regarding a locally led nutrient neutrality scheme, the success of the proposed solution will depend on how quickly this scheme can be established and the abilities of local authorities to develop and operationalise their individual schemes. Given that the Government has provided water companies with seven to eight years to address the problems that are increasing phosphate and nitrate loads in waterways, the need for short-term relief is critical. The first step in the proposal put forward at the Budget on 17 March was for a DLUHC Call for Evidence which is still yet to emerge.
With the timescales for this work uncertain at best,, the new report sets out changes which if made, could help deliver many of the estimated 120,000 homes that are delayed achieve nutrient neutrality quickly and more easily through the Government’s preferred route of nature-based solutions. Furthermore, not only would it allow for some housebuilding to resume but it would also reduce the amount of farmland that would otherwise need to be taken out of food-production to make way for nature-based solutions.
The report examines how the Government could assist the industry by reviewing the science underpinning Natural England’s approach to assessing the volume of nutrients produced by the future occupants of homes. The report argues that Natural England should revise its occupancy assumptions to reflect more accurate local data and only require house builders to mitigate at the current permit level for those people who will be inhabiting new homes prior to 2030 when the wastewater treatment works (WWTW) improvements are hoped to take effect.
Based on a number of scenarios, the report shows that the volume of land required for mitigation through nature-based solutions should reduce significantly, making the achievement of nutrient neutrality more feasible especially for medium and larger sized developments.
If these changes are made by Natural England this would help to reduce significantly the burden on house builders to resolve the nutrient problem. These changes would be both proportionate and appropriately precautionary given the tiny contribution that new housing makes to the problem of river pollution. Lastly, it would enable Natural England’s limited resources to be targeted far more effectively, including providing assistance to SMEs in areas that will lose-out on the planned improvements to WWTW in 2030.
The report can be read here.