Ministers have caved in to pressure from the large house builders and their trade body The Home Builders Federation (HBF) to lower standards, meaning councils will have no longer have power to require and impose stricter standards. This will result in many more small, insecure and unsustainable new homes being built in Britain.
Instead of learning from construction best practice, the government has caved in, yet again, to pressure from “big housebuilding.”
The government’s main aim of the technical housing standards review was to strip out standards, rules and regulations that complicate the house building process. The RIBA had lobbied to force house builders to build bigger new homes via their ‘Case for Space’ campaign. Other initiatives included reducing carbon footprints, improving security, on-site renewable energy sources, and rainwater harvesting to reduce water consumption. Despite this, the brief has been used as an opportunity of further reducing the cost of building new homes and stop local authorities from demanding certain conditions as part of the planning process.
This was a lost opportunity to examine how the nation can build great homes for the next generation and beyond, requiring new homes to have proper security features, sustainability, access standards, and a reasonable and decent amount of space to live in. Instead we will now have the same cramped, over-developed housing estates with standardised small new homes being built up and down the country, lowering house builder’s operational costs and increasing, their profit margins even further.
Is the size, design and more importantly, build quality of new homes getting any better? Judging by the number of complaints they receive and various online comments the answer is a resounding NO! Only this week a Bellway Homes buyer was forced to move out of his house because it was declared structurally unsound after an incorrect (weak) mortar had been used. A Taylor Wimpey buyer could not move into his new home for TWO MONTHS because of the extent of snagging defects included potentially dangerous electrical installation. According to the unfortunate new home buyer, a Taylor Wimpey regional director even told him that “we’re here to deliver profit for our shareholders” adding: “we don’t build perfect houses”.
Whilst planning and building regulations stipulate minimum standards, it would appear that no house builder is prepared to go beyond the absolute minimum quality standards. When a new home buyer complains they are often referred to the NHBC’s booklet “A Consistent Approach To Finishes” and told that it is “within tolerance” The author has written to Persimmon’s Jeff Fairburn, and Taylor Wimpey’s Pete Redfern to ask what measures they are personally going implement improve the quality of their product. Neither has replied!
So with CEOs apparently only driven by profit and share prices, we thought it would be worth a look at examining whether those who are in charge of Britain’s largest plc house builders are in fact, fit for purpose. It can be seen that with one exception, they have not had a University education. In addition, only three have any experience of actually managing a building site, two of these actually started their own companies!
Unsurprisingly, Mark Clare is a big fan of Help to Buy. In an interview with the Mail on Sunday he said: “The ability to buy homes with a 5% deposit is creating confidence in the housing market after years of uncertainty going back to the financial crisis in 2008. We are seeing queues outside our showhomes”
Clare 56, believes the market was already picking up, even before Help to Buy with demand being boosted by signs of a general economic recovery. Barratt recorded a record 73.7% rise in underlying pre tax profit to £192.3 million in the year to the end June 2013. The average price for a Barratt (privately-sold) home also increased to £213,900. In their Interim Statement last week, Barratt confirmed sales are up by 47%.
Mark Clare, a graduate from Portsmouth Polytechnic, has a background in accountancy. After 12 years at British Gas he joined Barratt as CEO in October 2006. In April 2007 he oversaw the £2.7bn acquisition of Wilson Bowden, which included the David Wilson Homes brand – just a year ahead of the global financial meltdown and the total collapse of the housing market created by the ‘credit crunch’. The company’s share price collapsed from 954p in August 2007 to just 39.5 in less than a year. A Rights Issue was required to raise additional funds from shareholders to keep the company afloat. Not a great start in a new job was it?
The coalition’s Help to Buy scheme is nothing short of taxpayer-funded electioneering. The only people who openly have a good word to say for it are politicians, house builders and estate agents. Everyone else can see it for the cynical disaster in waiting it is. With an election in 17 months time, the government is hell bent on helping house prices rise until then. Any economic growth will be based on debt, as home owners feel better off due to rising property prices and start spending again – it is the same old story. But this time, it will be the British taxpayer left without a chair to sit on when the (low interest rate) music stops.
Help to Buy (1) Equity Share, subsidises the cost of new homes by up to 20% and has even boosted the prices of older homes as it gave the market a psychological shot in the arm. It is said that Help to Buy is only supposed to be a temporary measure, designed to help people buy a home until the banks start lending again, but the evidence is that they already are! Help to Buy (2) Mortgage Indemnity, is not really needed, it will make very little difference to mortgage availability and does nothing except give the lenders an additional 15% comfort zone for potential losses on loans they would have given anyway, all at the expense of the taxpayer.
Help to Buy (1) has resulted in house builders building more homes. Why wouldn’t they? They have a ready supply of subsidised buyers, they are reporting record reservations and profits whilst increasing average selling prices, some by as much as 11% in the last 6 months, without any loss of demand.
Earlier this week Redrow reported that the company is making “good progress” as a result of the Government’s Help to Buy scheme. Private reservations for the financial year to date are up 52% at 1,400 homes, with Help to Buy reservations representing 35% of total private sales over the period. The average selling price of private reservations is 11% up on the same period last year, at £271,000.
Redrow reported that they have increased their current land bank, (land with a planning permission) both owned and contracted, by 2,000 plots to just over 15,000 plots in total – well over five years supply, based on their 2012 total completions.
Despite this, Redrow used the interim management statement as yet another opportunity to lobby for a further relaxation in planning regulations and conditions. Whilst acknowledging that the growth in the company’s land bank over the last two years had been helped by the changes in the planning system, brought about by the NPPF, Redrow stated that over 5,000 plots are,
“in the planning system awaiting reserved matters approval or clearance of pre-start conditions. The regulatory burden involved in obtaining detailed permission and clearing conditions is the biggest constraint to the industry increasing production.”
The planning minister, Nick Boles has announced plans to change regulations as part of a Coalition drive to accelerate construction of new homes. The move to force developers to start building homes or lose planning permission is designed to prevent land banking, where house builders hoard plots whilst they wait for house prices to rise.
This is the government’s response to Ed Miliband’s “use it or lose it” speech during the Labour Party conference in September, when he said that developers would have land seized if they failed to build on it. Under the proposals, if building work is not commenced within the time scale set by local councils, three years in most cases, house builders will be required to reapply for planning permission.
The new rules will give local people another opportunity to object, especially to controversial developments. Currently house builders are able to “roll over” approvals granted on undeveloped land indefinitely. There are over 500,000 sites with planning permission, with work yet to start on over half of them.
Mr Boles confirmed that the Coalition had scrapped a temporary measure introduced by the previous Labour government “which allowed developers to roll forward their planning permissions. This ending of the measure will increase the incentive for developers to start on site before permission expires.”
Persimmon has confirmed it has sold over 3,000 new homes under the government’s Help to Buy Equity Loan scheme launched in April. This equating to approximately a third of the group’s total completions in 2012.
The second, and more controversial, part of Help to Buy was brought forward and launched in October, offering indemnity guarantees to lenders for their 95% mortgages for new and existing homes. Many are saying the scheme risks causing a housing bubble.
Persimmon confirmed that the impact of Help to Buy (2) mortgage indemnity, had “been muted due to the higher level of interest rates being charged with only a limited number of lenders involved in this second phase so far.” They anticipate that sales supported by these guaranteed mortgages will increase as interest rates begin to reduce as more lenders enter the market over the next few months.
In a statement Persimmon said: “We believe mortgages associated with the Help to Buy equity loan scheme will remain the preferred choice for the majority of customers of the house building industry given that interest rates for this product are significantly more competitive than those available with the Government guarantee.”
The National House Building Council’s (NHBC) Annual Review 2012/13 announced survey results showing of 29,330 new home buyer’s, 91% are ‘very’ or ‘fairly satisfied’ with the quality of their new home and the same number would recommend their house builder to a friend. The NHBC claim “with another year-on-year increase, these levels of customer satisfaction still match or exceed those in almost any other industry or sector and are testament to the industry’s commitment to deliver quality new homes that meet the expectations of their homebuyers.”
However, the “increase” is just 1% more than the HBF 2013 survey results from a sample size of just 20,313. The HBF survey represents barely a fifth of the total number (109,730) of privately sold new homes built in the survey year, which is hardly representative.
The NHBC claim to send out over 100,000 questionnaires annually with a response rate was between 50 and 75%. They have now also launched a new online platform enabling participating house builders to easily review their feedback in much more detail than before and they can also compare their customer satisfaction scores with those of their competitors. The platform also gives builders opportunity to add a number of bespoke questions to the surveys, allowing them to change the questionnaire to meet their own specific requirements.