Tag Archives: help to buy

Annual Report 2015/16 – Consumer Code for Home Builders

The first  Annual Report by the Consumer Code for Home Builders since April 2014, was finally published this month.

In May 2014, I asked the question, Is the Consumer Code for Home Builders (CCHB) fit for purpose? In March this year I wrote that the Consumer Code for Home Builders is failing new homebuyers. This voluntary code was launched in April 2010 and has been inadequate and failing new homebuyers ever since.

In July, a report published by the APPG Inquiry Into Quality of New Homes found that:

  • “The Code [Consumer Code for Home Builders] does not appear to give homebuyers the safeguards we think they should expect.
  • It does not appear to us objectively to offer consumers a wholly satisfactory form of redress.
  • The Consumer Code for Homebuilders is limited in its scope.”
APPG Inquiry Report Publication 13 July 2016

APPG Inquiry recognises a government-appointed New Homes Ombudsman should be set up.

The APPG Inquiry “Key recommendation” is the setting up of a government-appointed New Homes Ombudsman.  It said that the Ombudsman:  would need to be completely independent and replace the dispute resolution service offered as part of the Consumer Code for Home Builders.”

Continue reading

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Plans To Axe Red Tape – Another Gift From Government To Housebuilders

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.Sitework BlogNotwithstanding 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.

George Osborne Hi vis 1In 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.

Continue reading

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Help To Buy Helps Trigger Large Bonus Windfalls

Help to Buy helps trigger large bonus windfalls for housebuilder CEOs and senior directors.
Help To Buy jpgOn 17 March 2014 shares in the housebuilders surged up to 6% as George Osborne announced he was extending the Help to Buy Equity Share on new homes, until 2020. The announcement came less than a year after Help to Buy first became available. It had originally been due to end next year! However the second part of Help to Buy, the UK-wide mortgage guarantee scheme, is still due to finish at the end of December 2016.

At the time the chancellor announced that an extra £6bn would be put into the English scheme, allowing a further 120,000 new homes to be built. However there is little evidence that the housebuilders are responding by building more homes despite Help to Buy “helping” them to around 35% of their sales last year.

Continue reading

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Summary Of Proposals To Ensure Better Quality New Homes.

Well it was about time something was done regarding the dire quality of new homes built  in the UK and the total indifference shown by the housebuilders to even begin address the thousands of defective new homes handed over to their misty-eyed customers every year. Something they have all been aware of for many years. This APPG Inquiry is a start.

Whether this latest inquiry by the All Party Parliamentary Group for Excellence in the Built Environment actually forces through the changes so badly required remains to be seen. At the outset, it is only an inquiry and we have had many previously including The Barker Review of Housing Supply in 2004 and the Office of Fair Trading (OFT) ‘Home Building Consumer Survey’ of 2007. Yet as any UK new homebuyer will tell you, the quality of new homes has not improved. In the 2015 results of the HBF New Homes Customer Satisfaction Survey, some 93% of respondents had problems with their new home. Indeed the industry has done such a good job of normalising defective new homes that all of those surveyed actually expected to have some problems after they moved in.

The inquiry will look at the quality of UK new home building and the potential for improving every aspect of the product handed over to new home-owners.

Continue reading

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Blame the rich and housebuilders for rising house prices

The highest paid 1% receives around 8% of the national income. The wealthiest 1% owns 23% of the national wealth. It is in property where greatest inequalities lie, not income.

Most people are in favour of higher wages and benefits for the poor, higher taxes on the rich 1% and the provision of food, clothing, shelter and health care for all. Who are against this?  The rich.   Even though the vast majority of our population is in favour of progressive and fairer policies, the rich are better placed to influence politics. Why else do wealthy individuals give so generously to political parties? The rich have always prioritised their own self-interests above the needs of the many.

The UK residential market is a prime example. The rich have squeezed out any resemblance of affordability for the many, through ever-higher house prices and declining real term wages. Demand from private buy-to let landlords, who have the benefit of generous tax breaks that homebuyers do not, have helped force house prices ever higher at the expense of working first-time buyers.

Policies such as ‘Right to Buy’ have reduced the amount of affordable, state-owned homes for rent by people on low wages or benefits. The result, those that need to rent are being forced into the private rental sector, with higher demand from those receiving housing benefit resulting in the rich landlords increasing rents ever higher, when rents can be covered by taxpayers to the tune of up to £15,000 a year, irrespective of what is considered a ‘reasonable’ or ‘affordable’ rent.

Continue reading

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Help to Buy ISA for first-time buyers in 2015 Budget

Budget2015Designed as a cynical piece of electioneering, the Chancellor announces the Help to Buy ISA in his Budget speech. Like most knee-jerk policies, this was intended to attract the maximum amount of media coverage whilst the benefits to first-time buyers will be minimal. As Merryn Somerset-Webb sees it in MoneyWeek: “Handing over free money to compensate for rising house prices” in an “attempt to buy the votes of the young rather than actually help them”  – I could not have put it better.

The new Help to Buy ISA accounts (‘Bisa’) are expected to be available from Autumn 2015 until 2019, but once an account is opened there is no limit on how you long you can save for. Under the rules, buyers will be able to pay in an initial £1,000 and then save up to £200 per month. As with existing ISAs, any returns will be free of tax but in addition, for every £200 saved, taxpayers will contribute a further £50, up to a maximum bonus of £3,000 on £12,000 saved. The government 25% contribution bonus only becomes payable when the funds are used to buy a property.

help_to_buy_isa_-_full_size

The ‘Bisa’ accounts will be limited to one per person rather than one per home, meaning first-time buyers saving for a deposit for a home will both receive a bonus. So a couple saving towards a first home together could benefit from a potential bonus of up to £6,000 as both savers would be eligible for a £3,000 bonus. The bonus will apply to both the amount a person saves into their Help to Buy ISA and the interest that has built up during the period the account is open. The bonus will be limited to first-time buyers’ home purchases up to £450,000 in London and up to £250,000 outside London. Help to Buy ISAs will only be available to those aged 16 and over.

Continue reading

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

A personal plea to Construction Minister Nick Boles

Dear Mr Boles,
You recently said that you regard house builders as the “unacceptable face of capitalism” after seeing first hand the shoddy workmanship of two house builders in your own constituency, adding housebuilders   “need to design beautiful places that respect the local environment, and they need to build houses to a high quality which will stand the test of time. If they don’t, I cannot and will not defend them.”

I have been campaigning for 8 years via my website www.brand-newhomes.co.uk and my blog www.new-home.blog.co.uk to make the public more aware of the poor quality and design of new homes and housebuilders’ poor and often non-existent after sales service.

Your government has done more for the house building industry than any other government and continues to be the “gift that keeps on giving”. Only this week, stamp duty was reformed. Whilst this is good news for the majority UK house buyers and very welcome, it is also particularly good news for housebuilders, now able to increase their prices even more now that stamp duty threshold ‘chokes’ have been removed. This follows the 20% discount on new homes for first-time buyers under 40, in addition to: NewBuy, FirstBuy and the biggest taxpayer subsidy of all: “Help to Buy” which has ‘helped’ house builders to record profit rises by increasing average selling prices by 20%. Furthermore, your government has relaxed planning rules, requirements to build affordable housing,  Section 106 obligations, Community Infrastructure Levy and the zero-carbon homes policy. There has never been a better time to be a major British home builder.  Ask, and ye shall receive!

If it was not for the dogged determination of Kirsty Burton and her neighbours, perhaps you would never have witnessed first hand the dire quality standards at a Persimmon estate in your constituency. You personally also discovered the complete contempt housebuilders have for anyone calling them to task over the quality of their homes and their indifference to dealing with defects in their customer’s homes. Quite frankly, if a government minister is unable to get a satisfactory response from Persimmon CEO Jeff Fairburn, what chance have the buyers of this company’s new homes?

But please do not make the mistake that this is a new phenomenon,  restricted to just one or two housebuilders on a handful of developments. It is a national epidemic!

Continue reading

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Taylor Wimpey CEO Peter Redfern suggests there is scope to increase prices of new homes even in a falling market!

The Daily Telegraph recently published a story featuring Taylor Wimpey CEO Peter Redfern claiming that new regulations following the Mortgage Market Review, which have restricted borrowing for second-hand homes, have not adversely impacted the business and Help to Buy is still being used by their first time buyers. The company also announced that it is fully sold for 2014 and has confirmed a profit upgrade.

Pete Redfern

Peter Redfern

Mr Redfern, in a somewhat blatant attempt to talk up the prospect of further  new home price increases, is claiming that housebuilders have more room to adjust prices upward since they were starting from a lower base, having fallen behind valuations for existing homes after the great recession. So are we to interpret that, housebuilders such as Taylor Wimpey have not increased their prices in line with the general local market since 2008?

He said:

“Housebuilders have to keep liquidity in the business and have more room for price adjustment sellers of existing homes by contrast may take their property off the market if they are not getting the right offer. Big houses in the country market are also proving harder to sell, where housebuilders are not that prevalent. This is having a negative impact on the outlook for the market for existing homes.”

Schemes, in particular Help to Buy, continue to give the new home industry a taxpayer-subsidised helping hand.   “………..attractive products that help credit availability and affordability – whereas stricter mortgage rules have started to affect sales in the second-hand market. After the downturn mortgage lenders penalised new build specifically apartments as they felt young buyers posed a greater risk with good incomes but low deposits, but these differences are starting to unwind.”

If new homes were penalised, it was because there is always  a 10-20% price premium. Lenders required higher deposits to give more of a buffer to account for the premium and added risk of steeper falls in valauations should the market turn.

Continue reading

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

First-time buyers under the age of 40 are to be offered 20% discounts on 100,000 new homes.

Ho Ho Ho! –  Christmas comes early for house builders as David Cameron is set to announce another extension of the Help to Buy scheme at his party’s conference in Birmingham this week. 

Help To Buy 3 jpgUnder the latest proposals, David Cameron anticipates that up to 100,000 houses would be built on so-called ‘brownfield’ land and offered for sale only to young people buying their first home in England. The new homes would be offered at discounted prices of 20% less than their market value.  Exactly who will be valuing the new homes and “comparable” homes has yet to be clarified, but it should be expected that the house builders would set the “market prices” and then “discount” them by 20%. So, in theory at least, a new house worth £200,000 could be bought by a first-time buyer under 40 for £160,000 with a potential saving of £40,000. 

To make the discount possible, the Conservatives are proposing to exempt house builders from certain taxes and requirements such as the Section 106 provision of affordable and social housing, the Community Infrastructure Levy and the Zero Carbon Homes Standard on these sites. In addition, brownfield sites – land previously used for commercial or industrial purposes – and surplus public sector land  will be released to house builders at knock-down prices to fund the discounting – savings which house builders will be “obliged” to pass on to buyers. 

OLYMPUS DIGITAL CAMERAHouse builders will be required to demonstrate, before planning approval is given, that the homes they are proposing to build will be at least a 20% cheaper than comparable houses in order to qualify for the discounted land and tax exemptions. That could mean that at the outset, the homes would have a price set before planning and could perhaps discourage house builders from land banking these sites. Brownfield land can be notoriously costly to develop. Previous industrial and commercial sites are often contaminated and the demolition and  clean up of toxins can be as time-consuming as it is expensive. Factor in that it will also be necessary to bring in clean topsoil and that costly foundation designs may also be required, it is not surprising that the house builder’s preference is always going to be Greenfield land. 

Continue reading

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Redrow’s Steve Morgan – always moaning!

Steve MorganHardly a person to let an opportunity slip to gripe about the perceived failings of the planning process and other woes of the house building industry, Redrow’s CEO Steve Morgan, is becoming a regular whinger whenever his company release results or issue interim statements to the City.   His latest tirade this week concerned the release of greenbelt land for house building, capacity issues relating to labour and materials shortages and his perceived restrictive planning policies. 

Reasons to be cheerful?

Morgan’s company Redrow released a record set of results and doubled the dividend paid to its shareholders on the back of a 91% increase in profits to £132.6 million for the year to the end of June.  The average selling price of a Redrow home is also up 13% to £239,500 – the fifth highest of the large house builders.  The number of new homes built was also 27% higher, up 727 to 3,597. All of this thanks to the government’s Help to Buy scheme, acknowledged by Redrow and facilitating over a third of their private sales (35%). 

You would think this would make for a very happy bunny – especially when you consider that Morgan will be £3million richer as he owns 150 million shares in his company – but not apparently so. 

On brick shortages:

According to Morgan, there are just not enough bricks being made to go round. Strange, as his competitors Barratt managed to build 13,663 new homes, nearly four times more than Redrow and Taylor Wimpey also managed to get bricks for the 11,600 new homes they built last year, again over three times the number Redrow built! 

It takes around 10,000 bricks to build the average UK house.  Around 1,560 million bricks were made last year – enough for 156,000 new houses.  Nowhere near that number of houses will be built in 2014;   in fact, it would be a surprise if a total of 156,000 new homes are built this year!  So enough bricks are being made and Redrow’s competitors manage to order sufficient quantities so perhaps Morgan should be looking closer to home! 

Continue reading

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter