Monthly Archives: September 2013

Affordable housing is being axed as house builders maximise profits. New legislation that came into force in April, is allowing house builders to fast track challenges to councils against section 106 agreements, provided they can show the provision of low-cost housing would affect the financial viability of their projects, making them uneconomical.

Many councils across the UK are giving in to house builders who are refusing to start building projects unless they deliver a healthy profit. In some of Britain’s biggest cities house builders and councils have torn up previously binding legal agreements to build affordable housing; which includes social, rented and shared ownership for specified eligible households that cannot afford to buy or rent on the open market.

A three-month investigation by Society Guardian has discovered that 60% of the largest housing developments currently in the planning system are falling short of affordable housing targets, meaning thousands of cheaper homes may never be built. The study revealed that not one of Birminghams’s largest housing developments meet its 35% affordable housing target.

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It started with house builders using shared driveways, a way to cram even more homes onto a development. Now there is a growing trend towards privately owned estate roads on new home developments. House builders are claiming this move is being driven by the local authority’s refusal at the planning stage, to adopt estate roads under a section 38 agreement, presumably to avoid future maintenance costs to the council taxpayer.

However, the move to privately owned road access means that many new home owners are unwittingly signing up to years of ongoing management charges and contributions to a sinking fund to cover future maintenance and repairs.

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The Home Builders Federation, the body that says it is “the voice of the home building industry, representing member interests on a national and regional level” is moaning yet again, about the planning system ‘delaying’ the delivery of new homes.

Surely house builders should put their begging bowls away!

The latest whinge is regarding the conditions that are attached to planning approvals. The HBF claim, that Local Authorities are threatening to choke of the recovery in house building with red tape, with the more onerous conditions causing costly delays, sometimes of a year or more. 

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Galliford report record profits and Crest report sales up 92% thanks to Help to Buy.

It is clear that the ‘Help to Buy’ scheme continues to help house builders as both Galliford Try and Crest Nicholson are clearly benefiting, judging by their recently released company statements. 

Record profits at Galliford Try:

In their year-end results to 30 June 2013,  CEO Greg Fitzgerald reported a record group profits of £74.1million up 17% on last year “were driven primarily by an improved margin in housebuilding reflecting the strong performance of our house building division”. This was despite 107 fewer homes being built in the year and a modest £3million rise in revenues from house building. 

Andrew Richards, appointed in July 2013 as Managing Director of Housebuilding (Linden Homes) acknowledged the contribution that Help to Buy has made saying “we had previously only promoted shared-equity schemes for sites where houses were harder to sell, so as not to tie up our capital. Help to Buy requires no capital from us, making it suitable for all our developments. We have seen a marked uplift in reservations since 1 April, with around 31% of buyers using Help to Buy.”   As a result the average selling price is up 5% to £262,000. 

Crest Nicholson report forward sales up 92% 

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Bricklayers’ pay has surged 20% in the past six months as housebuilders struggle to keep up with a surge in demand for homes created by the Government’s ‘Help to Buy’ scheme. Greg Fitzgerald, chief executive of house builder Galliford Try said, “I have evidence of us paying bricklayers 20% more than six to nine months ago. Pretty much, since Help to Buy on April 1, we have gone from an environment where if you made a mistake on a job and needed twice as many brickies you would just go and pick them up to a completely different ball game. We can see build inflation starting to come through for the first time in four or five years.”

The current trade shortfall comes after many workers left the building industry during the recession as fewer homes were being built. House builders also slashed prices they paid to building workers by a third, virtually overnight, as the financial crisis hit.

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