New Home Blog

Housebuilders could be forced to design and build homes with larger rooms under proposals to end the current trend of “rabbit-hutch” cramped estates. On Tuesday communities minister Don Foster, is launching the space consultation, which in a trade-off for larger homes, will also reduce certain requirements imposed on house builders with up to 90 housing standards being scrapped and 1500 pages of guidance reduced to less than 80.

Mr Foster confirmed to the Financial Times that there were no regulations regarding minimum space standards in the UK, outside London. 

A typical British new home is now nearly 50% smaller than a similar home built 80 years ago. In a relentless drive for ever higher profits, builders are reducing plot sizes and increasing densities, which has resulted in UK new homes being the smallest in Western Europe. Small dark UK new homes not only making us unhappy but can also make us ill. 

As the RIBA Case for Space notes the average UK one bedroom flat is about the same size as an a London tube carriage. The average UK new home is just 818sq ft. New homes in Ireland have 15% more space and in Denmark, the average new home is 80% bigger than its UK equivalent.

It is well known for years that house builders have used tricks to give the impression the show homes are larger than they really are and developers have been forced to deny the practice. 

It is hoped that the consultation on minimum space standards will be viewed by as pay back for the Help-to-Buy bonanza that is creating record profits for house building industry from the taxpayer-funded subsidies. 

On Monday, Bovis reported first half pre tax profits up 20% year-on-year to £19m. A day later Persimmon reported a rise in pre tax profit of 40% to £135m. No doubt their 1700 Help to Buy reservations since the scheme was launched in April, contributed to the 7% year-on-year increase in legal completions. 

In March, Eric Pickles, the communities secretary, said families had been “trapped in rabbit hutch homes” due to density targets of at least 30 homes per hectare imposed by the previous Labour government. However he failed to acknowledge that it was the Thatcher government that abolished minimum space standards for new homes 1980. Many home buyers are being put off by the small size of new homes. 

According to a survey by the Royal Institution of British Architects (RIBA), in 1920, the average semi-detached new home had four bedrooms and was 1,647 sq ft. Today’s new build semi is a three bedroom house of just 925 sq ft. It is the same picture for terraced new homes which are now typically two bedroom and just 645 sq ft, 37% smaller than the three bedroom 1025 sq ft terraced home built in the 1920’s. 

Harry Rich, chief executive of RIBA, has welcomed the review. “Our public research has repeatedly revealed that space in new homes is a major concern, our surveys have revealed that 60 per cent of people who would not buy a new home said the small size of rooms was the most important reason.” 

The consultations will take place until 22 October 2013. Whether organisations representing the house builders such as the HBF agree and house builders increase the size of new homes, without increasing prices to maintain profit margins, remains to be seen.

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1. New homes can be bad for your health : Despite the RIBA’s campaign, “A case for Space“, UK new homes today are the smallest in Europe. Add in the fact that house builders choose to use small windows reducing the amount of natural daylight. 

A new home is bad for your health and has been linked to depression, immune system suppression and diabetes type 2; as well as adversely affecting internal organs.

2. Social housing : Most new developments require an allocation of social housing. Managed by housing associations for people on low incomes or benefits, these houses are often mixed in among the owner occupied houses.

3. Price : New homes are usually over-priced, much higher than comparable older homes, which nearly always offer better value.

4. No front garden : Most new homes have just a small strip of ground between the back of the estate footpath and the wall of the house, just enough to provide room for the gas meter box. The result is a lack of privacy as anyone walking by can look directly into your rooms. Using net curtains or blinds will make the rooms even darker. A 21st century Coronation Street”

5. Small rear gardens and overlooking : As densities increase year on year, the house builders use ever-imaginative methods to maximise the number of homes they can cram in per acre. This means rear gardens are normally very small, part of which may even be used as a driveway! Cramped developments mean overlooking, noise and potential disputes with neighbours as new homeowners are forced to live on top of each other “by design”.

6. Garages too small for an average family car :

House builders tend to use the presumption that most people only use the garage for storage. Those that try to park their car in a new-build garage find they are too small and  impossible to get out of the car!

 7. Poor build quality and after sales service : Whatever any house builder may claim, the build quality of new homes built in the UK today is poor at best. In the HBF own customer satisfaction survey, 96% of new homes experience several defects in their new home. Despite the Consumer Code for Home builders, after sales customer service has not improved to any degree, builder are still misleading buyers all of which result in many new home buyers living to regret buying a brand new home.

8. Lack of parking : With narrow estate roads and shared driveways favoured by house builders to maximise the number of homes parking is at a premium. Whilst there may well be parking allocation of one car per home, there is often insufficient parking for additional cars and for visitors.

9. More difficult to re sell : Re selling is not something new homebuyers normally give any consideration to but they should! New homes, or at least those built since 2003, are more difficult to sell and take longer to sell than older homes. One reason is that around 3 in every 4 potential house buyers wouldn’t even consider a home built after 2003.

10. Low grade land : Many new homes are built on low grade, brownfield land, or previously contaminated land. Some new homes are even built on land that is at risk of flooding.

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In June, The Daily Telegraph asked Zoopla to find out: “How much would mortgage interest rates have to rise before it would be cheaper for the average homeowner, to rent a comparable property than to pay their mortgage?” Zoopla suggest that the average mortgage rate would have to rise by just 0.69%, an £80 increase, bringing the total cost to £668 a month, beyond this, renting is cheaper than buying a comparable property.

Most people realise that future house price, especially over the medium term, are not an upward one-way bet. But many people regard paying rent as dead money and the British have strong desire to own their own home.

Already there are signs that the Funding for Lending and Help to Buy schemes are inflating the property market. Demand is outstripping supply as would be buyers are concerned that they may lose out if they wait. But buyers will be paying prices that have not corrected since the last credit-fuelled boom because BoE policy has kept interest rates artificially low for four years.

So despite Mark Carney’s ‘forward guidance’ assurances that interest rates will remain at the current low 0.5% base rate for the next three years, this cannot, and was not, guaranteed. Earlier this year the Bank of England had forecast that millions of households would be plunged into crisis by even a small rise in interest rates. According to the BoE, even if rates increased by only 1% to 1.5%, 9% of mortgage borrowers would feel the pinch. If interest rates rose by 2%, one in five households would have to cut spending or work more hours, as repayments on the average £160,000 home loan would rise by £2,200 a year (£183 a month).

With 2-year fixed rates as low as 1.5%, savers have little choice but to hand over their money virtually interest-free, to subsidise borrowers buying homes they cannot really afford at inflated prices you would think the government could see what is coming. Higher interest rates, falling prices, mortgage arrears, widespread negative equity and homes being repossessed and recession. But this will probably be after the 2015 election so that’s all right then!

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Britain’s housing boom is well underway thanks to the generosity of the British taxpayer! Not only is the Help-To-Buy scheme enabling house builders to help themselves to record profits, the Funding for Lending scheme is already cutting mortgage costs and increasing availability.

When you also consider Mark Carney’s recent ‘forward guidance’ statement regarding the intention to keep interest rates at the present record low levels until 2016, the UK housing market could be about to experience a house price boom ‘perfect storm’ – followed by a disastrous bust.

Historically, house prices are already high with price-to-earnings ratios close to levels that preceded the sub prime crash in the US. Recently, credit reference agency Fitch joined the increasing numbers of financial observers expressing concern. The International Monetary Fund, former BoE governor Mervyn King, his deputy Paul Tucker, Graeme Leach Chief Economist at the Institute of Directors and even the government’s own Business Secretary, Vince Cable said that he believes the ‘Help-to-Buy’ scheme could inflate the housing market and is worried the scheme “might backfire”.

Recently released official data shows house prices have risen 3.1% in the year to June, a rise on the 2.9% increase in the year to May; reflecting strong growth in house prices in England and Wales although prices in Northern Ireland and Scotland had fallen. According to the Halifax, one of the UK’s biggest mortgage lenders, house prices are rising at their fastest annual rate for nearly three years. Halifax says the average UK home now costs £167,984.

So surely when house prices are already rising and mortgage approvals are increasing month on month there is no need at all for Help-to-Buy (2) -the taxpayer backed mortgage indemnity scheme which will become available from 1^st January 2014.

If mortgages are underwritten by the state, it has the potential to encourage reckless lending, which will drive up prices even further. By artificially inflating the housing market, the government is producing a national feel good factor, which is closely linked to positive moves in the polls, just in time for the 2015 election! Pushing up house prices and nationalising the lender’s risk for politically motivated reasons will saddle the nation with an extra £130bn of unnecessary and preventable debt.

Public Policy and the Past blogger says the Help to Buy scheme is “stupid, ridiculous, absurd, half-baked, disgusting, laughable, wrong-headed, and actually downright destructive.”

I would have to agree.

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Everyone is aware that the UK needs hundreds of thousands of new homes in the next decade but little thought seems to have been given to the size and quality. Indeed, there is no national minimum standard for the size of a new home in England. This is worrying, according to the Royal Institute of British Architects (RIBA), which points out that the UK has the smallest homes in Western Europe.

Imagine living in a Jubilee Line tube carriage. It may sound far fetched, but 46 square meters, the size of a Jubilee Line carriage, is the size of the average one bedroom new build home being built in Britain, RIBA reveals in a new study; The Case for Space, the Size of England’s New Homes.

This kind of cramped, environment is a day to day reality for those living in many new build homes yet research also shows that space and light are the top things people care about when looking for new homes.

People are concerned about the space and natural light when they are looking for homes but these are not luxuries, they are basic needs which are proven to impact on our health, happiness and wellbeing.

In a few weeks’ time UK government will be making crucial decisions about the future of homes including minimum standards for space, energy, security and natural light. The Government’s Review of Housing Standards in England could result in the current meagre housing standards being reduced or even abolished, according to RIBA.

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