Thursday, 30 March 2017

Inside edge

All posts from: November 2009

To the rescue

Fri, 27 Nov 2009

Homelessness prevention has to go down as one of the success stories of the noughties in the wake of new figures showing that 130,000 families were helped last year.

Published for the first time yesterday, the homelessness prevention and relief statistics show that local authorities in England helped 75,000 families obtain alternative accommodation and 48,000 remain in their own home in 2008/09.

That’s great news even if the suspicion remains that in some local authorities the work is more about homelessness application prevention than homelessness prevention. As with the stats on homeless acceptances, that doubt will persist even though it’s hard to tell whether or where such gatekeeping is happening. 

That health warning aside, when taken as a whole the figures are vindication of the duty placed on authorities under the Homelessness Act 2002 to gave a strategy on preventing homelessness in their district. That duty applies to everyone, not just those in priority need. 

The broad scope of that work is shown by the breakdown of the help provided. For people helped to get alternative accommodation, half came from private rented sector accommodation, 18% through social housing and 10% through a hostel or HMO place. For people who were able to remain in their existing homes help ranged from debt advice to family mediation and resolution of housing benefit problems to sanctuary scheme measures for domestic violence.

That may not be as progressive as the legislation introduced in Scotland to phase out the whole concept of priority need by 2012 but it’s still a big step forward from what went before and has helped far more people than more-publicised help to prevent repossessions. What is also highlights though is the crucial role of the private rented sector at a time when tenants are under more financial pressure than ever - something that, as Shelter pointed out in its response, makes it all the more urgent to improve standards and management. 

To the rescue

Fri, 27 Nov 2009

Homelessness prevention has to go down as one of the success stories of the noughties in the wake of new figures showing that 130,000 families were helped last year.

Published for the first time yesterday, the homelessness prevention and relief statistics show that local authorities in England helped 75,000 families obtain alternative accommodation and 48,000 remain in their own home in 2008/09.

That’s great news even if the suspicion remains that in some local authorities the work is more about homelessness application prevention than homelessness prevention. As with the stats on homeless acceptances, that doubt will persist even though it’s hard to tell whether or where such gatekeeping is happening. 

That health warning aside, when taken as a whole the figures are vindication of the duty placed on authorities under the Homelessness Act 2002 to gave a strategy on preventing homelessness in their district. That duty applies to everyone, not just those in priority need. 

The broad scope of that work is shown by the breakdown of the help provided. For people helped to get alternative accommodation, half came from private rented sector accommodation, 18% through social housing and 10% through a hostel or HMO place. For people who were able to remain in their existing homes help ranged from debt advice to family mediation and resolution of housing benefit problems to sanctuary scheme measures for domestic violence.

That may not be as progressive as the legislation introduced in Scotland to phase out the whole concept of priority need by 2012 but it’s still a big step forward from what went before and has helped far more people than more-publicised help to prevent repossessions. What is also highlights though is the crucial role of the private rented sector at a time when tenants are under more financial pressure than ever - something that, as Shelter pointed out in its response, makes it all the more urgent to improve standards and management. 

Out of sight

Thu, 26 Nov 2009

Private tenants emerge as the forgotten victims of the recession in a new survey published today that shows 90% of lower-income renters are struggling financially.

While media and government attention has been firmly focussed on the fight to save homeowners from repossession, financial problems are stacking up for private tenants, according to research by Shelter and the Money Advice Trust. Just 51% of tenants said they were struggling in a similar survey in 2006. 

More than a third of lower-income private tenants - with a household income of less than £20,000 or £25,000 in London - had fallen behind with at least one major bill, including their rent. 

Worryingly that included many tenants whose rent is theoretically covered by the local housing allowance.  Of the 52% of tenants receiving it, more than 60% found it did not cover their full rent. Almost a quarter of benefit recipients were making up a shortfall of £49 or more per week.

Figures like that put all the good work done in limiting repossessions into perspective. While homeowners (and landlords) have benefited from record low interest rates and a range of other help little has been done for private tenants - and unlike housing association tenants they cannot look forward to a rent cut next year. 

And while the campaign continues to stop the government taking up to £15 a week away from private tenants on local housing allowance who shopped around for a cheaper rent, the survey is a stark reminder that rent shortfalls are an even bigger issue. 

Out of sight

Thu, 26 Nov 2009

Private tenants emerge as the forgotten victims of the recession in a new survey published today that shows 90% of lower-income renters are struggling financially.

While media and government attention has been firmly focussed on the fight to save homeowners from repossession, financial problems are stacking up for private tenants, according to research by Shelter and the Money Advice Trust. Just 51% of tenants said they were struggling in a similar survey in 2006. 

More than a third of lower-income private tenants - with a household income of less than £20,000 or £25,000 in London - had fallen behind with at least one major bill, including their rent. 

Worryingly that included many tenants whose rent is theoretically covered by the local housing allowance.  Of the 52% of tenants receiving it, more than 60% found it did not cover their full rent. Almost a quarter of benefit recipients were making up a shortfall of £49 or more per week.

Figures like that put all the good work done in limiting repossessions into perspective. While homeowners (and landlords) have benefited from record low interest rates and a range of other help little has been done for private tenants - and unlike housing association tenants they cannot look forward to a rent cut next year. 

And while the campaign continues to stop the government taking up to £15 a week away from private tenants on local housing allowance who shopped around for a cheaper rent, the survey is a stark reminder that rent shortfalls are an even bigger issue. 

Mutual benefits

Wed, 25 Nov 2009

Labour loves the idea, the Conservatives adore it and the Lib Dems find it irresistible. So why is co-operative housing still struggling to take off in the UK?

The potential is clear from a report just published by the Commission on Co-operative and Mutual Housing. The sector makes up 18% of the stock in Sweden, 15% in Norway, 8% in Austria and 6% in Germany but just 0.6% in the UK.

This despite all that support from the main parties and the fact that surveys show resident satisfaction is higher than in other tenures. Co-operative housing is flexible and adaptable too, taking in tenant management organisations, community land trusts, co-housing schemes for older people and co-ownership schemes to give people a way on to the housing ladder. 

The commission calls for funding streams to be realigned to support the sector and for the legal and regulatory framework to be made more sympathetic. Meanwhile, local authorities and housing associations are challenged to support co-operative and mutual housing in their areas and within their own stock.

But it says the crucial ingredient is a commitment by government at all levels to introduce more democracy into housing to give ordinary people and communities the means to take control of their homes, lives and neighbourhoods. 

The recommendations seem obvious and the desirability of a bigger co-operative sector self-evident - even more so in the wake of the financial crisis and ahead of the public spending clampdown.

But the report also acknowledges some past problems. Co-ownership, as encouraged by the government and Housing Corporation in the 1960s and 1970s, failed in the 1980s because most members chose to buy and take a quick profit rather than remain as co-operators. Co-operatives can also be prone to governance problems and squabbles between residents.

You sense this is going to be about something much more difficult than changing legislation and regulations. Attitudes will have to change if co-operation is to take off because it represents a challenge to the traditional way of doing things.

For central government, that means more than paying lip service to the ideals of co-operation and mutuality and a determination to back them even when they seem more difficult to implement than the alternatives.

For local government, it means treating co-operative housing in the same way as other tenures rather than (like self-build) as some sort of hippy distraction. For housing associations it means asking themselves whether they have left something important behind in the drive for growth at all costs.

For lenders and funding agencies it means taking a long hard look at whether the criteria they use to judge housing schemes really lead to long-term value for money. For residents it means asking themselves what they really want from their home and their community. 

None of that will be easy but all of it has to change if co-operative and mutual housing is going to be anything more than something that everyone agrees is a good thing and then leaves it to other people to make happen.

Mutual benefits

Wed, 25 Nov 2009

Labour loves the idea, the Conservatives adore it and the Lib Dems find it irresistible. So why is co-operative housing still struggling to take off in the UK?

The potential is clear from a report just published by the Commission on Co-operative and Mutual Housing. The sector makes up 18% of the stock in Sweden, 15% in Norway, 8% in Austria and 6% in Germany but just 0.6% in the UK.

This despite all that support from the main parties and the fact that surveys show resident satisfaction is higher than in other tenures. Co-operative housing is flexible and adaptable too, taking in tenant management organisations, community land trusts, co-housing schemes for older people and co-ownership schemes to give people a way on to the housing ladder. 

The commission calls for funding streams to be realigned to support the sector and for the legal and regulatory framework to be made more sympathetic. Meanwhile, local authorities and housing associations are challenged to support co-operative and mutual housing in their areas and within their own stock.

But it says the crucial ingredient is a commitment by government at all levels to introduce more democracy into housing to give ordinary people and communities the means to take control of their homes, lives and neighbourhoods. 

The recommendations seem obvious and the desirability of a bigger co-operative sector self-evident - even more so in the wake of the financial crisis and ahead of the public spending clampdown.

But the report also acknowledges some past problems. Co-ownership, as encouraged by the government and Housing Corporation in the 1960s and 1970s, failed in the 1980s because most members chose to buy and take a quick profit rather than remain as co-operators. Co-operatives can also be prone to governance problems and squabbles between residents.

You sense this is going to be about something much more difficult than changing legislation and regulations. Attitudes will have to change if co-operation is to take off because it represents a challenge to the traditional way of doing things.

For central government, that means more than paying lip service to the ideals of co-operation and mutuality and a determination to back them even when they seem more difficult to implement than the alternatives.

For local government, it means treating co-operative housing in the same way as other tenures rather than (like self-build) as some sort of hippy distraction. For housing associations it means asking themselves whether they have left something important behind in the drive for growth at all costs.

For lenders and funding agencies it means taking a long hard look at whether the criteria they use to judge housing schemes really lead to long-term value for money. For residents it means asking themselves what they really want from their home and their community. 

None of that will be easy but all of it has to change if co-operative and mutual housing is going to be anything more than something that everyone agrees is a good thing and then leaves it to other people to make happen.

Double or quits

Tue, 24 Nov 2009

A doubling in mortgage approvals sounds like yet more evidence that the housing market mini-boom will continue. But stats released by the British Bankers Association (BBA) this morning also indicate it could be running out of steam.

The number of loans approved almost doubled from 21,361 in October 2007 to 42,238 now. The value of loans approved more than doubled from £2,783m to £6,075m. That’s impressive growth and lenders seem to be more relaxed about handing out bigger mortgages too - the average value of a loan for house purchase is up 10% since last October and 22% so far this year.

What’s more, approvals will show an even bigger improvement on a year ago next month since they reached their lowest point in November 2008.

However, the figures also show that most of the doubling in approvals happened up to mid summer and that there has been a marked slowdown since then. In the eight months between November 2008 and July 2009, the number of approvals rose 123%. In the three months since the increase is just 4%. 

This month’s total may be almost double that of October 2007 but it is also the second lowest October total recorded by the BBA since it started releasing the stats in 1997 and was barely changed on September. 

What’s happening with approvals tends to feed through into house prices a few months later, which suggests the mini-boom will start to run out by the end of the year. 

Double or quits

Tue, 24 Nov 2009

A doubling in mortgage approvals sounds like yet more evidence that the housing market mini-boom will continue. But stats released by the British Bankers Association (BBA) this morning also indicate it could be running out of steam.

The number of loans approved almost doubled from 21,361 in October 2007 to 42,238 now. The value of loans approved more than doubled from £2,783m to £6,075m. That’s impressive growth and lenders seem to be more relaxed about handing out bigger mortgages too - the average value of a loan for house purchase is up 10% since last October and 22% so far this year.

What’s more, approvals will show an even bigger improvement on a year ago next month since they reached their lowest point in November 2008.

However, the figures also show that most of the doubling in approvals happened up to mid summer and that there has been a marked slowdown since then. In the eight months between November 2008 and July 2009, the number of approvals rose 123%. In the three months since the increase is just 4%. 

This month’s total may be almost double that of October 2007 but it is also the second lowest October total recorded by the BBA since it started releasing the stats in 1997 and was barely changed on September. 

What’s happening with approvals tends to feed through into house prices a few months later, which suggests the mini-boom will start to run out by the end of the year. 

Groundhog Day

Mon, 23 Nov 2009

The National Empty Homes Week of Action has started with the depressing news that the problem is getting worse not better. 

A survey published by the Halifax Bank shows that the number of privately-owned homes empty for more than six months in England rose by 25,000 to reach more than 300,000 in 2007/08, the most recent year for which figures are available. The 8.6% increase took the total to levels last seen five years ago.

The total number of empties is now 970,000 - one in 30 homes in the country. The arguments for the sort of concerted national campaign called for by the Empty Homes Agency seem unanswerable when Audit Commission research shows that a 5% cut in that total would save local authorities £500m a year.

The case is even stronger when you consider that the increase in the number of empty homes is happening at the same time as a decrease in starts of new ones. Starts fell by 16,000 between 2006/07 and 2007/08 and by 66,000 between 2007/08 and 2008/09.

The time lag in the empty homes stats makes it hard to judge the impact of the downturn. The biggest increases came in the North West and in areas that already had high levels of deprivation. In theory the downturn should have led to an increase in the number of unsold homes that would then either be rented out or sold at cheaper prices. In practice, though, low interest rates mean there is less pressure on owners to sell empties and they even get perverse incentives through the council tax to leave them vacant.

Ahead of next month’s pre-Budget report the Empty Homes Agency is making yet another call for the Treasury to tackle the issue of VAT being charged at the full rate on repair and improvement work and zero on new homes. 

That call has been made so many times before that writing about it again makes me feel like this must be Groundhog Day. But with that worrying increase in empties and the full rate of VAT due to go back up to 17.5% in January surely now is the time for action at last.

Groundhog Day

Mon, 23 Nov 2009

The National Empty Homes Week of Action has started with the depressing news that the problem is getting worse not better. 

A survey published by the Halifax Bank shows that the number of privately-owned homes empty for more than six months in England rose by 25,000 to reach more than 300,000 in 2007/08, the most recent year for which figures are available. The 8.6% increase took the total to levels last seen five years ago.

The total number of empties is now 970,000 - one in 30 homes in the country. The arguments for the sort of concerted national campaign called for by the Empty Homes Agency seem unanswerable when Audit Commission research shows that a 5% cut in that total would save local authorities £500m a year.

The case is even stronger when you consider that the increase in the number of empty homes is happening at the same time as a decrease in starts of new ones. Starts fell by 16,000 between 2006/07 and 2007/08 and by 66,000 between 2007/08 and 2008/09.

The time lag in the empty homes stats makes it hard to judge the impact of the downturn. The biggest increases came in the North West and in areas that already had high levels of deprivation. In theory the downturn should have led to an increase in the number of unsold homes that would then either be rented out or sold at cheaper prices. In practice, though, low interest rates mean there is less pressure on owners to sell empties and they even get perverse incentives through the council tax to leave them vacant.

Ahead of next month’s pre-Budget report the Empty Homes Agency is making yet another call for the Treasury to tackle the issue of VAT being charged at the full rate on repair and improvement work and zero on new homes. 

That call has been made so many times before that writing about it again makes me feel like this must be Groundhog Day. But with that worrying increase in empties and the full rate of VAT due to go back up to 17.5% in January surely now is the time for action at last.

Colour coding

Mon, 23 Nov 2009

What do you think would most impress a new Conservative government? Traditional, sober blue? New, tree-hugging green? Or pink?

The Tenant Services Authority (TSA) is clearly going to have its work cut out if it is not to join regional spatial strategies, eco-towns and home information packs on the scrapheap if the Tories win next year’s election - and it will need more than the bold branding that distinguishes it from its predecessor, the Housing Corporation. 

As Inside Housing reports today, a plan floated by shadow housing minister Grant Shapps to transfer the regulation of housing associations to local authorities has sparked a rearguard action by landlords, lenders and tenants dubbed ‘Operation Pink’.

Shapps has made little secret of his scepticism about both the TSA and Homes and Communities Agency. ‘Not impressed’ is his general line - with the HCA’s 20 offices and £4.5m a month salaries bill and with the fact that by July the TSA had ‘so far spent its time surveying 27,000 tenants to get responses and then writing a draft report about what it might do’.

We’re now seeing the results of all that consultation and trips in the pink camper van and the TSA appears to be starting to find a balance between cutting red tape for landlords and giving tenants something a bit more meaningful than warm words about ‘empowerment’. 

But will that cut any ice with the Conservatives? Transferring regulation to local authorities would certainly be in tune with their localist thrust - even if it would be completely at odds with what they did to local government between 1979 and 1997.

The imminent extension of TSA regulation to local authorities is another factor in the equation. The Local Government Association supports domain-wide regulation but says it ‘will need to be assured the entire regulatory system is designed so that landlords focus on their tenants and delivering for them, not on satisfying what they see as the regulator’s concerns and priorities’.  

At the same time it’s very hard to see banks and building societies supporting the idea of regulation of the landlords it lends to by anything other than an independent body - and there is that key argument that having independent regulation saves £500m a year in interest payments. 

The grey old Corpie managed to survive repeated threats to its existence in the 80s and 90s because that regulatory role is so vital. Sometimes grey can be the new pink - or even the new blue. 

Colour coding

Mon, 23 Nov 2009

What do you think would most impress a new Conservative government? Traditional, sober blue? New, tree-hugging green? Or pink?

The Tenant Services Authority (TSA) is clearly going to have its work cut out if it is not to join regional spatial strategies, eco-towns and home information packs on the scrapheap if the Tories win next year’s election - and it will need more than the bold branding that distinguishes it from its predecessor, the Housing Corporation. 

As Inside Housing reports today, a plan floated by shadow housing minister Grant Shapps to transfer the regulation of housing associations to local authorities has sparked a rearguard action by landlords, lenders and tenants dubbed ‘Operation Pink’.

Shapps has made little secret of his scepticism about both the TSA and Homes and Communities Agency. ‘Not impressed’ is his general line - with the HCA’s 20 offices and £4.5m a month salaries bill and with the fact that by July the TSA had ‘so far spent its time surveying 27,000 tenants to get responses and then writing a draft report about what it might do’.

We’re now seeing the results of all that consultation and trips in the pink camper van and the TSA appears to be starting to find a balance between cutting red tape for landlords and giving tenants something a bit more meaningful than warm words about ‘empowerment’. 

But will that cut any ice with the Conservatives? Transferring regulation to local authorities would certainly be in tune with their localist thrust - even if it would be completely at odds with what they did to local government between 1979 and 1997.

The imminent extension of TSA regulation to local authorities is another factor in the equation. The Local Government Association supports domain-wide regulation but says it ‘will need to be assured the entire regulatory system is designed so that landlords focus on their tenants and delivering for them, not on satisfying what they see as the regulator’s concerns and priorities’.  

At the same time it’s very hard to see banks and building societies supporting the idea of regulation of the landlords it lends to by anything other than an independent body - and there is that key argument that having independent regulation saves £500m a year in interest payments. 

The grey old Corpie managed to survive repeated threats to its existence in the 80s and 90s because that regulatory role is so vital. Sometimes grey can be the new pink - or even the new blue. 

Starter homes

Thu, 19 Nov 2009

It’s not exactly time to get carried away but housing starts are now higher than a year ago for the first time since the credit crunch.  

Third quarter figures from the Communities and Local Government (CLG) department today show starts in England were up for the third quarter in a row at 26,550 - 18% up on the second quarter and 16% up on the same quarter a year ago.

While starts by housing associations were up again at 4,930, the lion’s share of the improvement came in the private sector with starts increasing from 17,770 in the second quarter to 21,600 this time. 

That fits with evidence from the trading statements of the major housebuilders that Kickstart and Homebuy Direct funding and the general improvement in the housing market since the Spring have persuaded them to restart work on sites that were mothballed and even start work on some new ones.

That’s the good news. The bad news is that the total number of starts over the last four quarters is barely a third of the government’s target of 240,000 net additional homes. 

Take off conversions and that amounts to about 210,000 new starts. That is actually the total since the start of the credit crunch more than two years ago and it means there is already a deficit of something like 250,000 homes to be made up.  

Meeting even the more modest target of matching the peak in starts of 185,000 in 2005/06 looks a tall order. The current total is half that and, while the improvement looks set to continue, it’s hard to see where a sustained increase is coming from. Housebuilders are looking to repair their margins by cutting costs and building fewer, more expensive homes  while public funding for housing associations is about to fall off a cliff. 

Starter homes

Thu, 19 Nov 2009

It’s not exactly time to get carried away but housing starts are now higher than a year ago for the first time since the credit crunch.  

Third quarter figures from the Communities and Local Government (CLG) department today show starts in England were up for the third quarter in a row at 26,550 - 18% up on the second quarter and 16% up on the same quarter a year ago.

While starts by housing associations were up again at 4,930, the lion’s share of the improvement came in the private sector with starts increasing from 17,770 in the second quarter to 21,600 this time. 

That fits with evidence from the trading statements of the major housebuilders that Kickstart and Homebuy Direct funding and the general improvement in the housing market since the Spring have persuaded them to restart work on sites that were mothballed and even start work on some new ones.

That’s the good news. The bad news is that the total number of starts over the last four quarters is barely a third of the government’s target of 240,000 net additional homes. 

Take off conversions and that amounts to about 210,000 new starts. That is actually the total since the start of the credit crunch more than two years ago and it means there is already a deficit of something like 250,000 homes to be made up.  

Meeting even the more modest target of matching the peak in starts of 185,000 in 2005/06 looks a tall order. The current total is half that and, while the improvement looks set to continue, it’s hard to see where a sustained increase is coming from. Housebuilders are looking to repair their margins by cutting costs and building fewer, more expensive homes  while public funding for housing associations is about to fall off a cliff. 

Left in limbo

Wed, 18 Nov 2009

If it’s any consolation to those affected, it’s not just key housing reforms that were left out of today’s Queen’s Speech - and it may not have made much difference if they had been included. 

As Tom Lloyd blogged yesterday, the stripped-down programme of legislation published today does not include a Housing Bill. That will disappoint council tenants and their local authorities who might have expected measures to reform the housing revenue account subsidy system and will now apparently be left hoping that the government can broker a voluntary agreement.  

But it could mean a double whammy for private rented sector tenants. It’s hard to see how they will now get the extra protection pledged by the government if their landlord is repossessed. While the government can still implement some aspects of the Rugg review of the sector, many of the proposals are long term and require primary legislation. 

That will disappoint reputable landlords and agents too. As the Royal Institution of Chartered Surveyors (RICS) put it today: ‘Without teeth provided by legislation this initiative will have limited impact and be confined to agents and landlords who are already protecting consumers.’

Other bills left in the legislative waiting room appear to include a Health Bill giving new rights to NHS patients, an Animal Health Bill. However, with little parliamentary time left and the Conservatives promising delaying tactics in the House of Lords, it is by no means certain that the bills that are in the speech will make it into law before the election.

That’s exactly what happened the last time a Labour government lost power. The final Queen’s Speech of the Callaghan government included a Housing Bill that would have given council tenants security of tenure. 

The fate of that bill then lay with the incoming Conservatives - just as the fate of the unfinished housing business will if they win their expected victory next year.

Will that mean yet more months in limbo? Not necessarily. I’m not quite sure what the lesson from history might be but it’s often forgotten that the victorious 1979 Tories actually went ahead and introduced security of tenure in their first Housing Act and then added something of their own -  the right to buy. 

 

Left in limbo

Wed, 18 Nov 2009

If it’s any consolation to those affected, it’s not just key housing reforms that were left out of today’s Queen’s Speech - and it may not have made much difference if they had been included. 

As Tom Lloyd blogged yesterday, the stripped-down programme of legislation published today does not include a Housing Bill. That will disappoint council tenants and their local authorities who might have expected measures to reform the housing revenue account subsidy system and will now apparently be left hoping that the government can broker a voluntary agreement.  

But it could mean a double whammy for private rented sector tenants. It’s hard to see how they will now get the extra protection pledged by the government if their landlord is repossessed. While the government can still implement some aspects of the Rugg review of the sector, many of the proposals are long term and require primary legislation. 

That will disappoint reputable landlords and agents too. As the Royal Institution of Chartered Surveyors (RICS) put it today: ‘Without teeth provided by legislation this initiative will have limited impact and be confined to agents and landlords who are already protecting consumers.’

Other bills left in the legislative waiting room appear to include a Health Bill giving new rights to NHS patients, an Animal Health Bill. However, with little parliamentary time left and the Conservatives promising delaying tactics in the House of Lords, it is by no means certain that the bills that are in the speech will make it into law before the election.

That’s exactly what happened the last time a Labour government lost power. The final Queen’s Speech of the Callaghan government included a Housing Bill that would have given council tenants security of tenure. 

The fate of that bill then lay with the incoming Conservatives - just as the fate of the unfinished housing business will if they win their expected victory next year.

Will that mean yet more months in limbo? Not necessarily. I’m not quite sure what the lesson from history might be but it’s often forgotten that the victorious 1979 Tories actually went ahead and introduced security of tenure in their first Housing Act and then added something of their own -  the right to buy. 

 

Proceeding with caution

Tue, 17 Nov 2009

Orders up, reservations up and debt down all sound like pretty good news for Britain’s biggest housebuilders so why does it not quite feel like it?

Interim management statements from Barratt today, Persimmon yesterday and Taylor Wimpey two weeks ago all contain plenty of green shoots. Taylor Wimpey said it had already sold its stock of homes for 2009, Persimmon could boast the same plus forward orders up 50% on a year ago and Barratt said net private reservations per site were running 34% ahead of a year ago. 

Following a rights issue, Barratt’s debt is half what it was this time last year at £700m, Taylor Wimpey’s net debt is £860m against £1.87bn and Persimmon owes £399m rather than £960m. The companies are even starting to buy land again.

All of which is an impressive recovery compared to the doom and gloom of last year, partly thanks to government support through HomeBuy Direct (Persimmon has just seen its 1,000th house reserved through the scheme since March).  However, the focus in all three companies still seems to be on continuing to dig themselves out of a hole by achieving sales prices increases and controlling costs. 

‘Sustaining the current recovery will be dependent on improvements in mortgage availability and the wider economy,’ says Taylor Wimpey. ‘We remain concerned about the potential impact on our markets of any significant increase in unemployment over the coming months,’ says Persimmon. 

The same caution is evident in Barratt’s statement today. The company is operating from 20% fewer active sites than a year ago and warns: ‘Whilst there has been an improvement in market conditions, further recovery will be dependent on increases in mortgage lending particularly in the higher loan to value segment.’

Given that the Council of Mortgage Lenders (CML) said last week that ‘to all intents and purposes the UK mortgage book is stagnating at present’ the prospects of that do not look great. 

The unspoken fear for housebuilders is a double dip in the housing market. 

Proceeding with caution

Tue, 17 Nov 2009

Orders up, reservations up and debt down all sound like pretty good news for Britain’s biggest housebuilders so why does it not quite feel like it?

Interim management statements from Barratt today, Persimmon yesterday and Taylor Wimpey two weeks ago all contain plenty of green shoots. Taylor Wimpey said it had already sold its stock of homes for 2009, Persimmon could boast the same plus forward orders up 50% on a year ago and Barratt said net private reservations per site were running 34% ahead of a year ago. 

Following a rights issue, Barratt’s debt is half what it was this time last year at £700m, Taylor Wimpey’s net debt is £860m against £1.87bn and Persimmon owes £399m rather than £960m. The companies are even starting to buy land again.

All of which is an impressive recovery compared to the doom and gloom of last year, partly thanks to government support through HomeBuy Direct (Persimmon has just seen its 1,000th house reserved through the scheme since March).  However, the focus in all three companies still seems to be on continuing to dig themselves out of a hole by achieving sales prices increases and controlling costs. 

‘Sustaining the current recovery will be dependent on improvements in mortgage availability and the wider economy,’ says Taylor Wimpey. ‘We remain concerned about the potential impact on our markets of any significant increase in unemployment over the coming months,’ says Persimmon. 

The same caution is evident in Barratt’s statement today. The company is operating from 20% fewer active sites than a year ago and warns: ‘Whilst there has been an improvement in market conditions, further recovery will be dependent on increases in mortgage lending particularly in the higher loan to value segment.’

Given that the Council of Mortgage Lenders (CML) said last week that ‘to all intents and purposes the UK mortgage book is stagnating at present’ the prospects of that do not look great. 

The unspoken fear for housebuilders is a double dip in the housing market. 

Worcester sauce

Mon, 16 Nov 2009

If there are three words that are guaranteed to get the goat of any Conservative parliamentary candidate they are regional, spatial and strategy.

The Tories are already pledged to abolish the hated product of the last Labour shake-up of the planning system, which is routinely described as ‘top-down’ at best and ‘Stalinist’ at worst and housing spokesman Grant Shapps says have created ‘a generation of NIMBYs’. 

But statements so far by local candidates include an awful lot more about the homes they don’t want than his new policies to make local communities pro-development.

Over at the official The Blue Blog on the party website, West Worcestershire candidate Harriett Baldwin waxes lyrical about how growth has happened organically in Worcester and nearby villages and towns and is raging about the regional spatial strategy. ‘This centuries-old process changed when Prime Minister Gordon Brown decreed in 2007 that 3,000,000 homes in Britain should be built by 2020,’ she says.  ‘Does he know how many bathplugs will be needed too, do you think?’

The county has a particular electoral resonance given the popular view that the votes of so-called Worcester Woman handed New Labour its early election victories. In the city itself, the Tory hoping to unseat Labour’s Mike Foster, Robin Walker, has warned of the danger of Worcester being ‘swallowed up in a gigantic West Midlands urban agglomeration’.

The key issue for both is the imposition of 25,000 new homes in the city, Malvern Hills and Wychavon, where the Conservative-controlled local authorities are backing a six-month delay in adopting their joint core strategy until after the election. Baldwin says Malvern Hills needs 4,900 new homes, not the 11,000 in the strategy, and has urged the joint core strategy team that ‘it would be prudent to phase these imposed housing numbers, so that should the national government abolish the RSS after the General Election, changes can still be made’.

Delay was also urged by shadow communities secretary Caroline Spelman in her leaked letter to local authorities in August advising them to delay major developments. She urged them ‘not to rush ahead with implementing the controversial elements of regional spatial strategies’ and pledged not to pay disappointed developers any compensation.

Baldwin argues on her blog that: ‘There is no question that the open spaces are there to be built on.  There is no shortage of farmland that farmers are willing to option off to developers.  What is lacking is local demand for the homes, local infrastructure and local democratic control over the scale of development.’

A similar message is being heard from Conservative candidates around the country and my guess is the voters will find it a seductive one - without asking what happens if every district only builds enough homes to meet ‘local demand’.

Worcester sauce

Mon, 16 Nov 2009

If there are three words that are guaranteed to get the goat of any Conservative parliamentary candidate they are regional, spatial and strategy.

The Tories are already pledged to abolish the hated product of the last Labour shake-up of the planning system, which is routinely described as ‘top-down’ at best and ‘Stalinist’ at worst and housing spokesman Grant Shapps says have created ‘a generation of NIMBYs’. 

But statements so far by local candidates include an awful lot more about the homes they don’t want than his new policies to make local communities pro-development.

Over at the official The Blue Blog on the party website, West Worcestershire candidate Harriett Baldwin waxes lyrical about how growth has happened organically in Worcester and nearby villages and towns and is raging about the regional spatial strategy. ‘This centuries-old process changed when Prime Minister Gordon Brown decreed in 2007 that 3,000,000 homes in Britain should be built by 2020,’ she says.  ‘Does he know how many bathplugs will be needed too, do you think?’

The county has a particular electoral resonance given the popular view that the votes of so-called Worcester Woman handed New Labour its early election victories. In the city itself, the Tory hoping to unseat Labour’s Mike Foster, Robin Walker, has warned of the danger of Worcester being ‘swallowed up in a gigantic West Midlands urban agglomeration’.

The key issue for both is the imposition of 25,000 new homes in the city, Malvern Hills and Wychavon, where the Conservative-controlled local authorities are backing a six-month delay in adopting their joint core strategy until after the election. Baldwin says Malvern Hills needs 4,900 new homes, not the 11,000 in the strategy, and has urged the joint core strategy team that ‘it would be prudent to phase these imposed housing numbers, so that should the national government abolish the RSS after the General Election, changes can still be made’.

Delay was also urged by shadow communities secretary Caroline Spelman in her leaked letter to local authorities in August advising them to delay major developments. She urged them ‘not to rush ahead with implementing the controversial elements of regional spatial strategies’ and pledged not to pay disappointed developers any compensation.

Baldwin argues on her blog that: ‘There is no question that the open spaces are there to be built on.  There is no shortage of farmland that farmers are willing to option off to developers.  What is lacking is local demand for the homes, local infrastructure and local democratic control over the scale of development.’

A similar message is being heard from Conservative candidates around the country and my guess is the voters will find it a seductive one - without asking what happens if every district only builds enough homes to meet ‘local demand’.

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