Plans to shake up the housing market by unblocking the planning system have met with a muted response.
The new homes industry had hoped for much more, with leaks that the Government had in fact been proposing to bring in a radical three-year ‘holiday’ for affordable homes, which would have let developers off the obligation to include, typically, 40% affordable homes in schemes.
Sources say ministers were still discussing the possibility of an affordable homes holiday as late as Wednesday evening.
Chancellor George Osborne had apparently hoped to relieve developers of a duty which many say makes sites unviable to develop, instead ploughing Treasury money directly into a new homes building budget.
However, although there is some potential for relaxing the affordable homes requirement in the planning shake-up, it appears that the Tories were unable to convince the Lib Dems of their case.
Instead, yesterday morning, the housing market got a very different kind of break – conservatories.
Under the planning changes, permitted development rights are being temporarily loosened so that home owners will be able to build conservatories, while businesses will also be able to build extensions without planning permission.
John Hitchcox, chairman of development firm Yoo, reacted in disbelief. He said that allowing people to add more lofts and porches to their homes would simply 'lessen demand for new ones'.
Peter Bolton King, global residential director of the RICS, also made it clear that this would not be enough.
He said: “Families and businesses looking to extend their properties will not deliver the required new homes to solve the housing crisis . . . more ambition from the government would help create the homes and jobs we need to pull the UK out of recession.”
Jonathan Haward, chairman of County Homesearch, said that allowing unchecked extensions to be built could even detract from local property prices if they were ugly or low standard.
He added: “The coalition is just tinkering and while this may give a boost to local house builders, it will do nothing significant to improve the wider economy or the housing market. More radical measures are needed.”
He called for the burden of Stamp Duty to be moved from buyer to seller.
Jon Neale, director of research at Jones Lang LaSalle, said: “There is no doubt that, in some instances, heavy affordable housing requirements are holding back development.”
But he said planning was not the main obstacle for most developers. He said: “In the shorter term, I would question whether there is a huge appetite in the house building industry for a large increase in volumes. Most are concentrating on margin rather than volume and have no intention of starting a building boom.”
Liz Peace, of the British Property Federation, warned that development sites which had been stalled should not be replaced by a programme of ‘over-building’.
She said: “House builders are not on strike. They are not building because there are few people in a position to buy or seeking to move. Simply building homes for non-existent buyers has been tried before, in Spain and Ireland, with disastrous consequences.”
A loosening up of the requirement on developments to build affordable homes does, however, form part of the planning shake-up.
Developers with new planning consents who consider that schemes will be unviable because of the requirement will be able to appeal, and inspectors will be able to reduce the number of affordable units required.
However, there is little further detail on this proposal.
Other proposals in the planning shake-up include:
· Acceptance of this summer’s Montague report, calling for a build to rent sector. This would provide 5,000 new homes, and there would be a £10bn debt guarantee for institutions looking to invest – with expressions of interest invited as from today;
· A £200m investment in stalled housing sites;
· Bids for up to an additional 15,000 affordable homes through the use of loan guarantees, asset management flexibilities and capital funding (total investment, including refurbishment and empty homes programme, of £300m);
· Extension of the FirstBuy shared equity scheme to March 2014, allowing a further 16,500 first-time buyers to purchase new-build homes;
· Encouragement for councils to reconsider the use and/or reclassification of previously developed land lying within the Green Belt;
· Legislation to allow applications to be decided by the Planning Inspectorate if the local authority has consistently poor performance in the speed or quality of its decisions;
· Various measures to ‘fast track’ applications through the Planning Inspectorate.
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Comments
Hamish_McTavish: 'Just a wholly sensible 5% or 10% deposit, an average or better credit score, and a stable job, being enough to get a mortgage at non-punitive margins above bank funding costs. And we're about as far away from that being the case today as you could imagine.'
At what salary multiples?
Bearing in mind interest rates will go up at some point in the next 25 years.
And, based on sensible salary multiples, how do house prices compare in your area?
some very naive people on here...the housing market has been BAILED OUT otherwise it would crash
but prices are falling because of tightened credit criteria
builders will get what the market price is and if it doesn't fit into their business plans then tough
the housing bubble is bursting with falling prices expected for 2 decades
beware
[[“House builders are not on strike. They are not building because there are few people in a position to buy or seeking to move. Simply building homes for non-existent buyers has been tried before, in Spain and Ireland, with disastrous consequences.”]]
No kidding.
With up to 90% of mortgage applications with a historically prudent, sensible and normal 10% deposit being rejected, it's no wonder the builders won't build what they can't sell.
There will be no significant recovery in the housing market or wider economy until the volume of mortgages being issued returns to more normal levels.
And no.... (this one's for you Rant)..... That does not mean returning to the days of 125% liar loans.
Just a wholly sensible 5% or 10% deposit, an average or better credit score, and a stable job, being enough to get a mortgage at non-punitive margins above bank funding costs. And we're about as far away from that being the case today as you could imagine.
Mortgage rationing is endemic, bank profiteering is rampant as they try to make 3 times the margin from a third of customers, and an entire generation of potential FTB-s are locked out and forced to enrich their landlords as a result.
Tinkering around the edges won't work. There need to be hard targets for increasing volumes of mortgage lending, and they need to be somewhere around 300% of today's levels if we're to build enough houses for the future.
Otherwise Generation Rent are royally stuffed for the long term, and the economy will remain depressed for a decade or more.
We need house sharing. One family has it for 12 hours and another family has it for the next 12 hours. Schools to be open all night so life can continue as normal for the people who have the night shift - and all businesses to be forced to open 24 hours a day - and run 2 12 hour shifts - so people don't need their houses whilst on shift.
Problem solved.
Clearly houses are so precious and expensive they must be used as a shared resource eh?
@Tony - I think it depends on where and who you are.
Certainly I know housebuilders in the south-east that build 100% affordable housing.
I appreciate that building, planing and finance costs are fixed wherever you trade and are dependent almost exclusively on the size of the development.
Land costs are higher in some areas than in others which will have a huge effect on the overall costs.
But they find the land, option it, get planning, build it and deliver it key ready to the Housing Associations. All 100% of it.
They are in business, doing well and paying market rates for the land - otherwise other people would buy the land instead.
These companies are not doing it for the laughs or as a charitable enterprise! If they can do it, pay the bills and make a profit then so can others.
"Rant N Rave, so if all these new houses were built, who is going to buy them?? "
That's the point. No-one, or not enough people, because they will be priced too high. They can't be priced much lower because the builders have bought land at peak prices. They're not going to build them if they can't recoup their investment, let alone make a profit. In days gone by, there was a procedure for such a scenario, called 'bankruptcy'. It's gone out of fashion these days though.
The 125% mortgages, liar loans and interest-only deals needed to buy the properties at a profit for the builders are no longer available. They aren't going to be coming back, which I hope is now regarded as a good thing, so we have a stalemate. As the housing shortage goes on (well, in the South East anyway), the builders will do little until this is resolved, probably by more government schemes. The taxpayer is likely to be on the hook for this, again...
@ Tony, I think you need to re-read AC post.
Rant N Rave, so if all these new houses were built, who is going to buy them??
What is the point of building a ton of new houses if there aren't enough people that are able to get mortgages etc.
It's all down to lending, the easier mortgages are to obtain (yes interest rates are all time low blah blah blah, but deposits aren't) the more houses will sell. The problem is, once that happens, we start another bubble, it's one big giant cycle that will repeat over and over again.
I completely disagree with Anonymous Coward on affordable homes - the price a developer gets from the housing association barely covers the construction cost, never mind the driveways and roads, the landscaping, the cost of the land, the design and planning fees, the environmental and bat surveys, or any kind of profit or personal income for the developer. Selling 40% of a site at a loss-making price means all the other costs and the profit margin demanded by a bank and one's shareholders, never mind one's own need to make a living, is borne by the remaining 60% for private sale. Affordable homes *increase* risk, because they are loss-making and more expensive to build than private houses because there's a housing association inspector sniffing round all the time and the quality and CSH rating imposed is often *higher* than with the private houses.
And there are S106/CIL taxes on top of the affordable homes requirement, in my area now running at an average of £20,000 per house.
Affordable Homes and infrastructure payments should be scrapped in favour of building social houses from the public purse, raised from, yes, corporation tax on developers and CGT on landowners but also from taxes raised on the rest of the population and the businesses who benefit so much from new housing and associated improvements in facilities and local trade. The notion that developers and new home buyers should pay for the government's social housing policies and to "compensate" local communities for new building just shows the fundamentally negative and Nimby view taken of new housebuilding and development in general. Developers and housebuilders should be praised and encouraged to build houses and businesses and make a profit, not treated like pariahs.
Kick start the house building sector........
Create more good quality buyers.
The government should provide some help and incentive to all prospective buyers of new builds, not just first time buyers.
Developers aren't developing because their target market is dwindling away.
Government need to create more schemes for new build buyers. Part of that should include new funding schemes with lessor deposit requirement and reasonable rates backed by government.
Give new build buyers a deal along with confidence and the new build market will be back in action.
When there is no demand you have to create demand. Lifting planning rules for house extensions will create the absolute opposite.
It wouldn't surprise me if wannabe first time buyers who are struggling to pay rent (as it increases) and can't afford to get a mortgage move back home with mum and dad who have been able to create a bigger house due to the planning ban. After all giving their son or daughter a 30% deposit on a 250k property (in a unstable market) if far more expensive and much higher risk than spending half that money on their own home to create more space and potentially increase its value (particularly as new builds have a reputation for being over priced).
The government should take a look in to the number of buyers given deposits by parents (which is continuing to increase some reports say) and the number of wannabe buyers moving back in with parents (which is also on the increase some reports say).
Quite a scrappy decision from the government, but great for small local traders.
When I listened to this 'news' on the BBC this was not supposed to be a boost for the housing market but a boost for the economy.....
When I listened to this 'news' on the BBC this was not supposed to be a boost for the housing market but a boost for the economy.....
“House builders are not on strike. They are not building because there are few people in a position to buy or seeking to move. Simply building homes for non-existent buyers has been tried before, in Spain and Ireland, with disastrous consequences.”
Housebuilders are on strike - there are some 400,000 homes which have been given the go ahead but are yet to be built. The builders bought too much land at peak prices which they can't develop for a profit given today's return to more sensible lending practices. So, they are holding out for a taxpayers' bailout. Much better if they went bust and all the land they have banked was sold on at a discounted rate to someone who would be willing to build on it.
Well,derrr!
Building 40% of any development to hand over to affordable housing takes a lot of the risk element out of building a new development. It's not that you make a huge profit (if any at all) but you know that you have a guaranteed buyer for nearly half of the development. Why would you want to remove that?
Ne build companies are keeping their money in their pockets for three reasons:
1) Because no matter how good their track record and how sensible the projections are BANKS will make them jump through hoops and charge massive interest rates.
2) Buyers with 30% deposits are just not out there and everyone else struggles to get a mortgage. If you have a development of 30 units to sell then where are all the buyers going to come from
3) BTL is a complete non-starter unless the developer is prepared to give huge discounts and essentially work for free.
The rest of the proposals are of nearly zero value in the real world too.
And making it easier for people to stay in their existing properties is also hardly likely to improve the number of transactions.
That's obvious isn't it.