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Archive for the ‘Construction industry’ Category
Thursday, September 1st, 2011
The National Housing Federation has stated that it expects home ownership in England to fall to mid-80s levels, slumping to just 63.8% over the next decade (Minister vows to get UK building again as home ownership slumps, 31 August). But to address a critical shortage of homes the government has previously made the rather fanciful announcement that it aims to create 170,000 new affordable homes by 2015. In 2010-11 just 105,000 homes were built in England – the lowest level since the 1920s.
I’ve just had to abandon a major scheme that would have provided over 750 new homes, 25% of which would have been affordable, in an area of Essex that sorely needs them. This was because the amount of money the social landlords were initially able to pay for more than 180 homes was drastically cut as they in turn had their funding cut. This made the development untenable as I simply couldn’t afford to build 180-plus homes at a loss.
If the government is serious about increasing housing provision, it needs to recognise that cutting funding to social landlords is not going to help achieve that aim. Social landlords, in turn, need to start concentrating only on helping the poorest households, not mid-high income earners. Currently the rules are so arbitrary that for some affordable housing schemes you can earn as much as £60,000 and qualify for assistance. Others aren’t even means-tested, so you can earn £100,000 but still qualify for a handsome discount as long as you live or work locally.
Only by ending the inequity of a system that fails to address the needs of the poorest households, and freeing the housing sector from the myriad of red tape, taxes and levies that stifle development, will this country be able to get anywhere near delivering the number of new homes, both private and affordable, that it so urgently needs.
Bob Weston
Chairman and chief executive, Weston Homes
•?A well-aimed piece of PR spin from the National Housing Federation has managed to prompt a series of responses in your paper, mostly supporting the aim of the PR, that is to say support for a rapid increase in housebuilding. However, both the reported “facts” and the response need questioning.
1) The decline in home ownership was a projection based on the premise of higher price rises than is likely, given the need for “readjustment” in the housing market to historic links with earnings.
2) The current high rates of private ownership were only possible due to unsustainable reckless lending and borrowing.
3) One big attraction of home ownership is the free money many people have gained through rising prices. When prices are stagnant or falling, the high costs of home ownership may not be so attractive to young people who want to move around.
4) If enough houses were to be built to substantially reduce prices, many will be bought up by rich people and budding mass landlords, and many existing mortgage holders would experience high degrees of negative equity, exacerbated by the rise in interest rates that must happen sometime in the future.
5) As with other goods, it is not so much how many houses we have but how we share them out that is really important. It is the gross inequality in our society, more than anything, that is creating this problem.
Chris Savory
Bridport, Dorset
•?Allegra Stratton (Inside politics: Coalition fears it is unravelling right-to-buy revolution, 1 September) highlights the government’s unease at the burgeoning housing crisis and the low rate of housebuilding. In London, the affordable housing budget has been cut by two-thirds. Boris Johnson isn’t offering any new ideas to help private tenants suffering from record high rents. Nor has Boris offered anything new to reverse the rise in homelessness he had previously predicted. In 2008, Boris promised “a network of Community Land Trusts”, but not a single trust has been set up in London. The mayor needs to lobby for better protection for private tenants, and a realistic housing budget that can provide the low-cost social homes we need. In the meantime, he needs to put all his money and land into keeping rents as low as possible.
Jenny Jones AM
Green candidate for London mayor
•?The mayor of London, Boris Johnson, has long advocated community-led development and the benefits this can bring for building stronger communities.
Contrary to the suggestion in your article, the mayor has already determined that the community should hold the entire freehold of the St Clement’s site in Tower Hamlets in trust. He has also made clear that a community board should oversee management of the homes. This would make St Clement’s the country’s first urban CLT. The site is currently being procured on this basis, and the decision will be subject to the usual procurement rules. But it is clear that whoever is the successful bidder we intend St Clement’s to be held in trust, with the management overseen by the community.
Richard Blakeway
London mayor’s adviser for housing
•?Given the latest evidence that the UK welfare and housing system is failing to break the association between unemployment, poverty and homelessness (Homelessness could spread to middle class, study warns, 31 August), the time is now ripe for a Great Debate – one as “radical” and imaginative as the 1942 Beveridge report – on how to manage social and economic affairs in ways that meet the wellbeing of the many rather than the few. We could do with a quality broadsheet leading such a debate. Any suggestions?
Charlie Cooper
Lecturer in social policy, University of Hull
•?Not only is the current level of home owership even lower than the official figures indicate, but it is also declining at a much faster rate than forecast.
This is because up to three million homes included in the figure for home ownership are in fact leasehold, and leaseholders do not own their homes but merely have the right to live there until the lease expires. In order to stay in their homes leaseholders will have to pay large sums of money to the freeholder for an extension of the lease.
At the same time around half of all newly built homes are now flats, the majority of which are sold on a leasehold basis, reducing still further the proportion of households who will genuinely own their homes.
Nigel Wilkins
Chair, Campaign for the Abolition of Residential Leasehold
•?The key to the housing “problem” is the number of homes, not the proportion of owner-occupiers. There is inevitably a significant proportion of the population who at any given time would be better suited to renting than buying their homes. There is pressure to “get on to the housing ladder” for financial reasons; pressure that if you do not start early enough you will lose out financially. As a result the economy is driven by the housing market to an unfortunate extent. The key issue should be adequate housing to buy or rent. One simple – but probably politically unacceptable – measure would be to try to separate the concepts of a house as a “home” and as an “investment” by removing capital gains tax exemption from the principal private residence. The sky did not fall in when tax relief on mortgage interest was removed.
Paul Russell
Winchester
•?The National Housing Federation talks of the “chronic under-supply of housing” in the context of unprecedented developmental pressure on green spaces. However, markets are composed of supply and demand. England is the most densely populated country in Europe. Given that the UK is experiencing its highest rate of population growth for 50 years, with an estimated 10 million more citizens over the next 15 years, should we not also be talking about – and addressing – our chronic over-supply of people?
Simon Ross
Chief executive, Population Matters
Posted in Boris Johnson, Business, Communities, Construction industry, Homelessness, House News, House prices, Housing, Housing market, Letters, Liberal-Conservative coalition, London, London politics, Money, Politics, Property, Public sector cuts, Public services policy, Real estate, Society, The Guardian, UK news | Comments Closed
Tuesday, August 30th, 2011
• National Housing Federation says home ownership falling
• Group predicts house prices to rise 21% by 2016
• Rents forecast to rise almost 20% by 2016
• Call for more housebuilding to tackle crisis
The housing market is in crisis as home ownership tumbles and house prices soar, a study has warned.
Home ownership in England will slump to just 63.8% over the next decade – the lowest level since the mid-1980s, the National Housing Federation’s forecast, published on Tuesday, said.
Huge deposits, combined with high house prices and strict lending criteria, have sent home ownership into decline, the federation said.
The housing minister, Grant Shapps, admitted that “we have not been building enough homes”, but insisted the government was “in the process of reversing that through massive planning reform” and a “massive programme” involving the release of thousands of acres of public land to build new homes.
The National Housing Federation, which represents England’s housing associations, warned that the housing market will be plunged into an unprecedented crisis as it also forecast steep rises in the private rental sector and a house price boom. It blamed the bleak outlook on an under-supply of homes in the UK.
The chief executive, David Orr, said: “With home ownership in decline, rents rising rapidly and social housing waiting lists at a record high, it’s time to face up to the fact that we have a totally dysfunctional housing market.
“Home ownership is increasingly becoming the preserve of the wealthy and, in parts of the country like London, the very wealthy.
“And for the millions locked out of the property market, the options are becoming increasingly limited as demand sends rents rising sharply and social homes waiting lists remain at record levels.”
Shapps said the reason house prices had become so unaffordable was a tripling of prices in the space of 10 years from 1997 to 2007, which put them out of reach for many people.
Asked about the study’s forecast for future levels of home ownership, the minister said forward predictions were “hellishly difficult” to make and were “nearly always wrong”.
He cited a Halifax survey showing that house price affordability has been “improving quite dramatically” and that prices were more affordable than any time over the last 12 years.
However, he admitted there were significant challenges for first-time buyers and said the government had a responsibility to help home ownership.
Asked about the measures being taken, he told BBC Radio 4′s Today programme: “We are releasing enough government land to build Leicester twice over across the country – it is a massive programme.
“The new homes bonus is a multi-billion pound incentive to communities to build programmes, and we are hugely reforming the planning system, which is massively complex.”
He said thousands of pages of planning guidance and law were being boiled down to about 60 pages in a reform “that even the National Housing Federation, who have produced this report this morning, approve of”.
He added that he would be very disappointed if it did not achieve the goal of building more homes.
The federation forecast that, in England, the proportion of people living in owner-occupied homes will fall from a peak of 72.5% in 2001 to 63.8% in 2021.
In London, the majority of people will rent by 2021, with the number of owner-occupiers falling from 51.6% in 2010 to 44% by 2021, it said.
The north-east will be the only English region to see any increase in owner-occupier numbers over the next decade, rising marginally from 66.2% to 67.4%, the federation predicted.
Meanwhile, the average house price in England will rise by 21.3% over the next five years from £214,647 in 2011 to £260,304 in 2016, according to Oxford Economics, which was commissioned to produce the forecasts.
Average rents in the private sector are forecast to increase by 19.8% over the next five years, fuelled by high demand and a shortage of properties.
About 4.5 million people are currently on social housing waiting lists, but only those in the most desperate of circumstances have a realistic chance of being allocated a home.
The federation said that, in 2010-11, 105,000 homes were built in England – the lowest level since the 1920s.
Posted in Business, Communities, Construction industry, First-time buyers, guardian.co.uk, House News, House prices, Housing, Housing market, Money, News, Politics, Property, Real estate, Society, UK news | Comments Closed
Tuesday, August 23rd, 2011
The housebuilder, whose brands include Charles Church and Westbury, said sales had climbed 4% over the last eight weeks while its order book is 10% ahead of last year at £1bn
Britain’s second-largest housebuilder Persimmon has seen a bounceback in summer sales, driven by the north, after a dip in the first half of the year. Shares in the York-based company climbed 3.4% to 396p, as it cheered investors by raising its dividend to 4p from 3p.
“The sales momentum in the northern business has been maintained – normally we see a slowdown in the summer months,” said Mike Farley, the chief executive. “We have seen some slowdown in the south and central [England],” after the south saw better sales rates in the first half.
“We need to see what happens in the autumn period when a pick-up usually takes place.” The autumn selling season should kick off from the second week in September.
“We’re not getting carried away, but the market is stable which is down to mortgage availability. Mortgage rates are very low, and low interest rates will be here for a while. We don’t see problems with affordability, it’s that lack of deposit.” But he noted that the average loan-to-value ratio [LTV] is 80%, against 75% a year ago, which means there are more deals that require smaller deposits from buyers.
The housebuilder, whose brands include Charles Church and Westbury, said sales had climbed 4% over the last eight weeks while its order book worth £1bn is 10% ahead of last year. This comes after a 5% dip in the first six months of the year, when Persimmon completed 4,439 homes, compared with 4,657 a year ago. It expects sales volumes to be flat over the year as a whole. The group made an underlying profit before tax of £59.7m in the first half, up 52%.
Shrugging off the gloomy economic news and financial market turmoil over the past few weeks, Farley said: “People would rather buy their own homes than rent – it’s cheaper to buy than to rent.” He said first-time buyers usually made up 15% of Persimmon’s visitors on site, but that number had risen to 23% thanks to the government’s First Buy scheme. Having secured a fifth of available funding (£35m), Persimmon has earmarked 2,100 properties on 290 sites around the country for sale with First Buy funds.
Paul Connolly, a director at project and at construction consultancy Turner & Townsend, said: “Housebuilders are in a more robust position than a year ago and continue to move in the right direction, but further challenges lie ahead. People buy houses when they feel confident and confidence is in short supply at present given rising living costs and the ever-present threat of unemployment. The fact that house prices are falling in most areas of the country also hits confidence and may even see people delay committing to a purchase in the hope of getting property at a lower price further down the line.
“On a positive note, there is increased competition among the lenders with some exceptional mortgage rates available at present, even at higher LTVs. While criteria remain tough, this will add to demand and drive transactions.”
The average price of a home sold by Persimmon in the first half fell nearly 4% to £162,647 because the builder sold more affordable homes, with an average price of £100,000, and more smaller houses with two bedrooms. This will reverse in the second half, as it has taken more orders for larger homes with three or four bedrooms, with an average price of £205,000.
Killian Murphy at Davy Research said: “Amongst the UK housebuilders, Persimmon is considerably better placed than its peers, with 43% of the landbank acquired following the downturn and only 13% impaired, and is virtually debt-free.”
Persimmon had reduced its debt to £15m from £51m at the end of 2010.
Posted in Business, Construction industry, Editorial, House News, Housing market, Money, Persimmon, Property, Real estate, The Guardian | Comments Closed
Monday, August 8th, 2011
Homebuilder’s sale of part of its shared-equity loans portfolio could trigger other housebuilders to attempt similar sell-offs
Barratt Developments, one of Britain’s biggest housebuilders, has raised a “For Sale” sign over some of its shared-equity loans, issued to struggling homebuyers in recent years to help them build sufficient deposits to get a mortgage.
The group is in talks with potential buyers for some of these loans, most of which have been depreciating in line with falling UK house prices.
Barratt, which will deliver its full-year results next month, is understood to have about £170m of shared-equity loans on its balance sheet. For the year to June 2010 it nearly doubled the number of such loans on its books, advancing £77.5m to help buyers build their home-equity deposits. At the same time, however, it wrote down the value of its shared-equity portfolio by £27.7m to £136.3m.
Despite already heavy provisions taken on the book value of these loans, any buyer of the portfolio is expected to demand a further discount to reflect the risk of further declines in UK house prices.
Barratt has made extensive use of shared-equity loans in recent years as homebuyers, particularly new entrants to the housing market, have found it hard to secure financing from more conventional mortgage lenders. The loans, which do not carry an interest charge, are advanced in return of a pro rata share of equity. This can leave Barratt holding up to 75% of the equity in a home it has sold.
Shared-equity loans were deployed on 27% of Barratt sales for the 2009/10 financial year. That figure has dropped to 22% for the year to 30 June, suggesting buyers had become less reliant on Barratt to secure the financing to purchase homes.
Should the group, which is being advised by Credit Suisse, successfully dispose of part of its shared-equity portfolio it could trigger other housebuilders to attempt similar sell-offs, relieving some uncertainty on their balance sheets.
In a statement on Monday Barratt confirmed: “[We are] in the early stages of looking at options to monetise part of its interest in this portfolio. There is no certainty that any transaction will be concluded.”
The move comes against a backdrop of improving mortgage offers for some housebuyers. Turmoil in the eurozone and anaemic economic growth in the UK have combined to leave the markets expecting interest rates in the UK to remain at exceptionally low levels well into next year. As a result, fixed-term mortgages are getting much more affordable and tracker mortgages are looking more appealing.
However, the latest vacillations in the financial markets may do little increase the accessibility of mortgages to first-time buyers. Fearful of eroding their capital bases, many banks remain as reluctant as ever to lend to those with low deposits.
Posted in Barratt Developments, Business, Construction industry, guardian.co.uk, House News, House prices, Housing market, News, Property, UK news | Comments Closed
Friday, July 1st, 2011
Housebuilder expects to beat City profit forecasts this year as mortgage lending constraints ease
Taylor Wimpey was upbeat about the housing market on Thursday, citing a gradual improvement in the availability of mortgage finance.
The housebuilder reported stronger margins and said that it expected to beat City profit forecasts this year as the market continues to stabilise.
There are signs that confidence is gradually returning, although mortgage approvals remain weak. Nationwide reported that house prices were flat across the country in June, standing at an average of £168,205. The London-focused builder Berkeley Group said last week it would return £1.7bn to shareholders over the next decade after annual profits rose by almost a quarter.
Pete Redfern, Taylor Wimpey’s chief executive, said that he saw signs of “incremental” improvement in mortgage lending.
He explained: “The word ‘incremental’ is important. Valuations are little bit easier and we’re seeing a little more competition from specialist lenders. For most of the banking sector, balance sheets are slowly improving. There’s no big sea change but the mortgage market is slightly freer than it was six months ago.”
Taylor Wimpey expects to complete 4,550 homes in the first half of the year against 4,804 homes a year ago, as it chases margins over volumes. The average selling price nudged up to £170,000 from £168,000 a year ago. The company has sold its North American division to focus on the UK and slash debt from £800m to below £200m.
Steve McGuckin, UK managing director at the project and construction consultant Turner & Townsend, said: “Although developers are increasingly committing to new schemes, with the exception of the capital there are still real concerns about the direction of the market. With the odd exception, the residential property market outside London is continuing to decline, which will naturally disincentivise developers to develop and banks to lend. There continues to be an appetite among the banks for new prime developments in the capital, but outside the opposite is the case.”
However, Redfern thought talk of an increasingly polarised country was overdone. He admitted Taylor Wimpey’s housebuilding was weighted 60-40 in favour of the south-east, but pointed to schemes in Scotland, northern England, the Midlands and Wales.
“I don’t think the gap is growing quite as widely as people believe. There is a gap, but there has always been a gap.”
The group has recruited Mike Hussey, a former Land Securities executive, whose vehicle Almacantar recently bought the Centre Point and Marble Arch towers in London, to its board as an independent director, following the appointment of Kate Barker, the housing expert and former Bank of England rate setter, in April.
Posted in Business, Construction industry, House News, House prices, Housing, Housing market, Money, Mortgage lending figures, Mortgages, News, Property, Real estate, Society, Taylor Wimpey, The Guardian | Comments Closed
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