Monthly Archives: June 2014

Do the NHBC give Quality Awards only to site managers building high quality new homes?

The NHBC 2014 ‘Pride in the Job’ Quality Awards have recently been announced and it is clear that most of the major house builders have not improved the quality of the homes they build.  See the house builder league tables here for awards in 2014 and previous years.

OLYMPUS DIGITAL CAMERALast year Barratt made history with 102 of their site managers winning awards for quality. This year, despite building more homes on more sites, Barratt won 13 fewer awards – 89 in total, followed by Taylor Wimpey with 70 – just two more than last year!

The remainder of the largest house builders won just a handful of quality awards, much as they did last year – Linden 5, Bellway 29, Redrow 13, Crest 12, Bovis 4 and Berkeley 12. The biggest shock was again Persimmon, the largest house builder by market value, winning a pitiful 8, even less than the meagre 13 their site managers won in 2013!   Clearly this company has problems and appears to be indifferent to the quality of the homes it builds.

It is becoming an increasing concern that the NHBC hand out awards to certain builder’s site managers regardless of their personal management ability or the quality of homes built on their site.  TWPITJ1Last year, the NHBC gave Taylor Wimpey’s Richard Crawford a Quality Award for his site at The Chariots in Andover.  Since then, many unlucky homebuyers have discovered  their homes were not only poor quality, but in some cases also potentially dangerous, with various electrical faults despite passing an “inspection” and incorrectly wired boilers.  Taylor Wimpey 9 months small sizeOne buyer (full story here) has taken over 35 days off work to allow various trades access to his home to fix and repair the defective workmanship. So far (8 months on) CEO Peter Redfern has failed to get personally involved and has not even replied to the owner’s many detailed letters.   Yet this site manager won an NHBC Award for “Quality” for this site!

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How to live more economically in your home

Live Greener and Save Money Doing It

Buying a house is one of the most exciting and expensive investments you could hope to achieve in your lifetime.  Exciting, because you have the freedom to put your own special brand of style and design on a fresh canvas; or the opportunity to fix up and improve on features that caught your eye.  Expensive, because the costs both known, unknown, hidden in paperwork and of course those to come, will take a sizeable chunk of your budget and salary.  One cost which many people tend to overlook is the lack of economic implementation.  “Going green” has been a tag line for many energy saving groups and the property market is no exception. As prices have risen over the last few years, energy consumption has been taken more seriously. 

Nowadays when browsing many leading property search websites you will see the Energy Performance Certificate (EPC) for each listing.  This is a good start to get you on the green awareness path but there are more ways to use less energy, which will save more money in future. The infographic below by Baines & Ernst entitled  “How to Live More Economically and Save the Planet” breaks down where households use [waste] the most energy, how to prevent this and how to cut costs by living a little greener. 

Ways to cut wastage in your home and save money

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Desirable Edinburgh lock-ups come complete with hefty price tags

Buyers looking for a property in Edinburgh, Scotland’s famous capital city, are likely thinking of a flat or maybe two or three-bed home in which to raise a family. Most are certainly not looking to spend to buy a £50,000 lock-up garage.

Incredibly, that seems to be the going price for a mere lock-up these days, at least according to an article in the Edinburgh Evening News.   The paper, first published in 1873 and should therefore know a thing or two about Edinburgh, reports no less than three garages with mind-boggling price tags have recently gone on sale.

The garages include a double-garage with an electric door in Inverleith Terrace Lane and another with electricity and running water in Portland Row, Leith, both priced at £50,000.    The good news, however, is the third garage, a West End lock-up, is being offered at a much more reasonable and affordable price, a mere £40,000 – the same price as a two-bed house in Muirhouse, according to the Evening News article.

Current strength

But readers will no doubt have been gladdened when the paper explained the rash of interest in the single garage on Palmerston Place is nothing more than a reflection of the current strength of the city’s property market. At least that’s the view of city property experts.

Meanwhile, back on earth, a record number of affordable homes are being built in Edinburgh with more quality housing than ever before available to rent or buy.

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Another Government gift for the housebuilders!

Chancellor George Osborne announced an “urban planning revolution” to protect the greenbelt and promote house-building on brownfield sites in his annual Mansion House speech to the Corporation of the City of London.

Even more taxpayer cash used to help housebuilders!

George Osborne said that £500m had been earmarked to accelerate urban house building through the planning system. The initiative will deliver 200,000 new homes by 2020 while also protecting the greenbelt.  He said:        “We need to see a lot more homes being built in Britain. The growing demand for housing has to be met by growing supply.      We’ve got the biggest programme of new social housing in a generation; we’re regenerating the worst of our housing estates; and we’ve got the first garden city for almost a century underway in Ebbsfleet. Now we need to do more, much more.”

In an attempt to appease the heartland of Conservative voters who are not keen on development of the countryside, Osborne added:   “We have beautiful landscapes, and they too are part of the inheritance of the next generation. To preserve them, we must make other compromises. If we want to limit development on important green spaces, we have to remove all the obstacles that remain to development on brownfield sites. Today we do that with these radical steps. Councils will be required to put local development orders on over 90% of brownfield sites that are suitable for housing. This urban planning revolution will mean that in effect development on these sites will be pre-approved – local authorities will be able to specify the type of housing, not whether there is housing.  And it will mean planning permission for up to 200,000 new homes – while at the same time protecting our green spaces.”

Mr Osborne has entered into discussions with Boris Johnson Mayor of London, to work out plans for 20 new housing zones on brownfield land across London, promoting the building of thousands of new homes in the capital.  He said:    “And we’ll take the same approach in the rest of the country; with half a billion pounds of financial assistance in total set aside to make it work.”     The new housing zones on brownfield land in London will benefit from £400 million funding from the Government [taxpayers] and the Greater London Authority.  There will be £200 million of additional Government funding available for 10 zones outside of London.

He used his speech to distance himself from the overheating housing market and is giving the Bank of England powers to intervene if it fears mortgage lenders are being too cavalier.

“If the Bank of England thinks some borrowers are being offered excessive amounts of debt, they can limit the proportion of high loan to income mortgages each bank can lend, or even ban all new lending above a specific loan to income ratio. And if they really think a dangerous housing bubble is developing, they will be able to impose similar caps on loan to value ratios – as they do in places like Hong Kong”

The news of Osborne’s annoucement imposing a requirement on local authorities to put local development orders on over 90% of brownfield sites that are suitable for housing was unsurprisingly, welcomed by the house building fraternity.

Stewart Baseley, executive chairman of the Home Builders Federation, said the announcement will allow house builders to start new sites much more quickly. “Two of the biggest barriers to brownfield housing development are the costs of bringing sites into production, and the long delays, sometimes years, house builders can face obtaining an implementable planning permission.”.

The House Builders Association (HBA), a division of the National Federation of Builders said that the focus on funding for brownfield remediation across the country would support the viability of previously hard to develop sites.

So yet  another coalition Government gift for house builders  –  this time using taxpayer’s money to clean up and make viable contaminated brownfield land so house builders can profit more quickly!   When will it end Mr Osborne?

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Housing minister Kris Hopkins, looking after house builder’s interests regarding Help to Buy

Following our articles on New Home Blog regarding house builders profiteering from the Help to Buy equity loan scheme and the government wasting taxpayer’s money advertising it on television, this letter was received from Housing Minister, Kris Hopkins, (on behalf of George Osborne) in response to the points raised.

It was 11 weeks before Mr Hopkins even responded. His statements are misleading and do not answer the arguments in our articles.

He says: “We are advertising [Help to Buy] to make as many people as possible aware of the opportunity”    

Help To Buy jpgIn response, there cannot be a single person in the UK who has not heard of Help to Buy.  In fact anyone considering buying a new home would have the scheme rammed home by house builder’s sales advisors and mortgage brokers.  There was absolutely no need to advertise Help to Buy on television,  wasting taxpayers money at a time of so-called “austerity.”  It is actually advertsing new build homes.

As for Help to Buy being an “opportunity” this is questionable, as the market is overheating.  Those buying 80% of a new home could well find that in a few years time, they have over-stretched themselves and may even suffer negative equity, especially when the scheme has enabled house builders to increase their average selling prices by around 20%!

He says:  “The Help to Buy scheme is enabling hard working families to access finance to buy a home”

What exactly is the “hard working” family that we are hearing so much about? People who work two jobs?  People who work long hours?  People who work physically hard like scaffolders and miners?  Or are they, as is probably the case, the vast majority of people who do a days work but do not actually get paid a fair wage in return  struggling in the face of higher taxation and rising  grocery, energy and fuel bills – all caused by government policy diluting the real value of our currency.  If the government truly wanted to “help” struggling “hard working” first-time buyers, why not abolish stamp duty land tax rather than subsidise house builders and hand taxpayer’s money to their shareholders?

Surprisingly,  “hard working” new home buyers from overseas can also take advantage of the UK government’s “generosity”.   There are no explicit rules or a requirement of citizenship or residency of those benefiting from loans under Help to Buy, although the schemes cannot be used for the purchase of second homes or for buy-to-let purposes. But how would anyone find out if an overseas buyer also owned a home in their own country and using the Help to Buy scheme as a way to reduce property speculation an investment costs?

He says: it gives “Certainty to house builders”

This is the same line trotted out by various plc house builder CEOs and their lobby group the  Home Builders Federation (HBF) whenever the Help to Buy scheme is called into question.  They still believe that Help to Buy can do no wrong – we’ll see!

He says: “House building has increased 23% since last year.”

This is not unexpected, given the low base starting point after the previous, low cost, credit-fuelled property bubble.   House builders are throwing up as many new homes as they can to make the most of the subsidies while they can.  Put food in front of a pig and it will eat more!

He says: given the increase in house building “It is not surprising that house builders profits have also increased.”

But not by a corresponding percentage Mr Hopkins! Most of the plc house builders have already reported increases in profits of around 50% in their most recent annual reports.  This is not even reflected for a full year of Help to Buy.  Redrow profits are up 107%,  Barratt reported profits up 162%.  In addition, house builders are all reporting increases of 14%-17% in their average selling prices, way above increases in the general market, hence the profit.  You charge more when your customers can pay less, with the taxpayer picking up the difference!   Charging more equals more profit!

He says: “Around 1200 builders have signed up to deliver this scheme, and over 90% are small to medium-sized builders.”

Whilst this may indeed be true,   what it does not reflect is the proportion  of   Help to Buy loans taken up by the largest house builders.  These typically represent on  average, around 30% of their total sales.     Based on the latest available figures from the top five house builders by volume, around 25% -30% of their buyers have used Help to Buy.  That is around 12,000 (62%) of the total 19,394 new homes sold using Help to Buy equity share to 31 March 2014, with five of the largest plc house builders accounting for over 62% of the Help to Buy loans thus far.  This could be even higher when they report accounts with the benefit of a full year of Help to Buy.  For the top ten house builders by volume, Help to Buy accounted for around 15,330 of their sales, nearly 80% of the total Help to Buy loans to just 10 house builders!   So it is misleading in the extreme to imply that small to medium sized builders are getting the most benefit.

He says: “We do not agree that help to Buy scheme is creating a bubble”

George Osborne agrees, but has been distancing himself from possible fall-out lately, saying the BoE has all the tools to prevent a house price bubble.  Obviously Mark Carney the Governor of the Bank of England disagrees as does Christine Lagarde at the IMF who urged the UK Government to rethink Help to Buy last Friday.    But hey, what do they know?   Kris says it’s all OK!

He says:  “There is no evidence of widespread land banking of land with planning permission by the major house builders”

Try looking harder!  Taylor Wimpey CEO Peter Redfern stated in a blog on his company’s website that they hve six years’ supply of land with planning permission.  As Taylor Wimpey has a land bank of around 65,400 plots and built 11,696 homes in the year to 31 December 2013, it would imply all of Taylor Wimpey’s land bank has planning permission but not all of it is being built on!  Even allowing for the 10,000 plots with “planning conditions yet to be satisfied”   Redfern alludes to the fact that his company has 30,000 plots ready to be built right now – half Taylor Wimpey’s land bank!   It is to be suspected that a similar situations exist with the other large house builders, why else was their such a outcry of whinging from builder CEO’s over Ed Miliband’s proposed land grab earlier this year?  Despite whatever Hopkin’s data from Glenigan or opinion from estate agent Savills might suggest!

So there we have it, 11 weeks to come up with a misleading response full of government spin  defending house builders profits yet failing to answer or even acknowledge any of the real issues, much as George Osborne’s did at the Treasury Select Committee meeting on 26 March 2013.

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Government caves in to pressure from housebuilders as Zero Carbon Homes policy is dismantled

The Government has compromised its ‘zero carbon home’ standard. Housebuilders will now be able to ‘zero carbon’ their new homes in 2016 using an offsetting scheme, rather than by installing more insulation, or renewable technologies like solar PV or solar water heating.

This must be the most housebuilder-friendly Government of all time.  Taxpayer funded subsidies – Check.   Relaxation of planning rules – Check.   Make lending cheaper and easier – Check.   Keep interest rates permanently low – Check. Making more public land available – Check.   If that was not enough, the coalition government is even watering down one of it’s own policies after caving in to pressure from housebuilders and their lobby groups.

The policy that required all new homes built after 2016 to be zero carbon has now been diluted to such an extent it is virtually pointless. You have to question why the Conservatives ever bothered to change their logo to the current ‘green tree’ if their green policies would never be implemented.

OLYMPUS DIGITAL CAMERASo as the Government announced in the recent Queen’s speech, ‘Zero carbon homes’ will now not actually have to be zero carbon after all, provided the emissions are reduced somewhere else under a carbon offsetting scheme.  No doubt the cost of the house builder’s offset contributions will be passed to all new home buyers, but they will not get any of the benefits from reduced energy bills (savings of around £300 a year) in return.  So much for the industry’s claim that new homes are more energy efficient and more environmentally friendly!

The allowable solutions regime is being set up to give housebuilders an alternative to compensate for CO2 emission reductions that are supposedly difficult to achieve through design and construction. They will now be able to choose to do this by offering payment to alternative green schemes.

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