Tag Archives: planning

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! 

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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.
Money

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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Despite builder’s profits, not enough new homes are being built.

Despite housebuilder’s results  last week reporting an average  16% increase in the number of homes they had built during 2013, house building output is actually 11.3% below pre financial crisis levels. The number of new homes started in 2013 was 122,590, the highest since 2007. But this is still HALF the number experts say are needed each year to meet housing demand, let alone addressing the shortages from previous years. 

P1000442However, the number of new homes completed last year actually fell by 5% to 109,370. The Government’s schemes have not helped either, creating easier access to borrowed money  resulting in boosted demand rather than increased supply,  sending house prices soaring,  especially in the south. 

Home ownership has now fallen to its lowest level in 25 years. The number of people sleeping rough in England has increased by over 30% since 2010. The proportion of working households claiming housing benefit is now higher than 2010.  Hardly a success story Mr Cameron!  At the same time, the large plc housebuilder’s are returning cash piles generated from the record profit increases, to their shareholders.

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Local Authorities approve building of new homes on flood plains

Against expert advice and clear objections from the Environment Agency, local authorities across the country are giving developers planning permission to build new homes on flood plains. In England alone, around 197 developments have been approved on flood plains since 2002 against the advice of the Environment Agency.  Around 200,000 homes built on flood plains in the UK, with 38,000 new homes having been built are in areas regarded as high-risk – in other words likely to be flooded.

Flood PlainsEven if new homes being built on flood plains are raised above anticipated flood levels, the floodwater will just be channelled elsewhere, perhaps to areas that would have otherwise escaped flooding.

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House builders react as Ed Miliband re ignites his land grab mandate

Ed MilibandIn a speech to the party’s national policy forum, Mr Miliband is set to confirm that increasing the number of new homes built each year will be a key priority for an incoming Labour government. He will confirm measures to force house builders to stop hoarding land with his “use it or lose it” proposal. 

Other options also being considered include giving councils the power to fine companies that own large areas of undeveloped land or to require them to pay council tax or a special “land tax” on the undeveloped land in question. As a last resort house builders who refuse to build could find themselves facing a compulsory purchase order.

Mr Miliband will say: “We have to be willing to confront some of the obstacles to house-building. Across our country there are firms sitting on land waiting for it to accumulate in value and not building on it – landowners with planning permission who simply do not build. We have to change that… permission to build should mean landowners build.” 

Mr Miliband recognises that the profits of the biggest four developers by volume – Barratt, Berkeley, Persimmon and Taylor Wimpey – have risen by 557% since the coalition took office. The number of homes completed by these firms increased by just 4,067 in 2012, and the number of affordable homes built last year actually fell by 26%. 

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Christmas comes early for house builders as government caves in

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.” 

OLYMPUS DIGITAL CAMERAThe 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. 

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Redrow are whinging about planning conditions – again!

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.”

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House builders to be forced to build new homes or lose planning permission

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.” 

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