A Conservative Government – the gift that keeps on giving!
Champagne corks must be popping in the boardrooms of housebuilders across the country as this Conservative Government announces yet more plans to help the industry with a “Cutting Red Tape” review.
Notwithstanding the unprecedented boost that the housebuilders have already received from this Government – plc housebuilders were the biggest winners from the recent Autumn Statement after George “we are the builders” Osborne announced a raft of new changes that further support the sector in the relentless headline grabbing political pressure to ramp up UK homebuilding.
In his Autumn Statement, Osborne announced a number of measures which include plans for a £7bn house building programme, a boost to the Help to Buy scheme, with Londoners a 40% loan rather than the previously-announced 20% loan and more freedom for Local Authorities to sell off land. The main benefit being from the shared ownership scheme and the extension of Help to Buy. The big seven: Barratt, Taylor Wimpey, Persimmon, Berkeley, Bellway, Redrow and Bovis will benefit the most from the moves.
Now builder’s ‘red tape’ is to be axed
The Government is now consulting house-builders and developers to see how their life could be made even better by the removal or relaxation of legal duties and regulations. The new ‘Cutting Red Tape’ review will give builders a say on ineffective rules and heavy-handed enforcement that stop them building homes. It will be music to their ears, in particular to those of serial whinger, Redrow’s CEO Steve Morgan.
The evidence gathering phase of review will be eight weeks (including the Christmas and New Year holiday period) and closes on 13th January 2016. The review will explore issues that have the biggest effect on house-builders ability to build. It is hoped that everyone associated with building new homes, including housebuilders, developers, planners and trade associations, especially smaller building firms will get involved.
The key starting points for the review will concern:
- Environmental requirements, particularly EU rules such as the Habitats Directive and wider EU environmental permit requirements
- Roads and infrastructure rules for new housing developments
- Rules affecting utilities (electricity, gas, water and broadband infrastructure).
- Even Health and Safety rules are up for discussion with the government keen to look at the changes made to the Construction Design & Management (CDM) regulations and examples of EU rules that are being implemented ‘too strictly’.
Housing minister Brandon Lewis said:
“We are determined to remove barriers faced by housebuilders to ensure we continue to keep Britain building as quickly and safely as possible. We want to hear the views of firms big and small so we can remove unnecessary red tape and help housebuilders do what they do best, building the homes we need.”
Business secretary Sajid Javid said:
“This review will give housebuilders and smaller construction businesses a powerful voice as part of our £10bn deregulation drive. Where rules are too complicated, ineffective or poorly enforced, I want to hear about it and the government will take action. Together we can cut red tape and get Britain building.”
Home Builders Federation chairman Stewart Baseley said:
“As the industry looks to drive further increases in housing supply we welcome moves to reduce unnecessary regulation and the associated costs. Aside from the planning system, there are significant other regulatory processes and charges levied on the industry that can adversely affect viability, but also, critically, delay the ability of home builders to get on site and start building. Reducing red tape will bring more sites into play more quickly and so help the industry deliver more desperately needed homes in the coming years.”
Talk is cheap Mr Baseley. Your industry failing to build anywhere near the number of new homes that are apparently needed – around 200,000 a year. This isn’t due to the planning system! In the year to 30 September 2015, UK housebuilders completed just 4% more homes than were built in 2001! The current 135,050 completions in the 12 months to 30 September 2015 is way below the 175,000 high in 2008. Even this high falls short of the Government’s own aspiration of 1 million new homes by 2020 – 200,000 new homes a year.
Only Bellway (up 77%) and Redrow (up 90%) have dramatically increased the number of new homes they now build increasing their output by 14% each year, compared to their 2009 figures. Persimmon (up 32% since 2008) Taylor Wimpey (22%) Barratt (24%) have barely increased their output at all, together increasing their output by an average of just 4% a year from their 2009 levels. These three large housebuilders, accounted for around 31% of the total number of new homes built in 2014/15. At the current rate, it would take them another ten years before their output increased sufficiently to provide their 31% contribution to the 200,000 new homes a year target.
Perhaps the best way to encourage the large housebuilders to increase their output and build more new homes is to give them LESS if, or more likely when, they fail. Withdraw Help to Buy and a windfall tax on the excessive year-on-year increases in profits that the Government’s gifts to the industry are facilitating.
More stick and less carrot is required.
