Housing Industry Leaders' Workshop - Summary of the Regional Issues for the Eastern Region

Held on 16th November 2010 at Hill Residential Ltd, Harston Mill, Cambridge
 
Barry Munday, Chair of The Housing Forum, welcomed everyone and stressed the importance of events such as this as an exchange of information and as an aid to The Forum’s activities including its influencing role with Government and its four working groups. These are currently looking at Decentralisation, Localism and Delivery; Affordability Later in Life; Routes to Community Level Retrofit and At the Heart is Housing – the economic and social importance of the housing industry.
 
Regional Perspective
Emma Fletcher, Hill Residential, gave a short outline of the business of the Hill Group and then her concerns from the regional business point of view. Cambridge is fortunate in having continuing strong demand which is outstripping supply but within the wider region there are significant areas of relative poverty. Many town centres have empty shops and a growth in low-end retail.
 
Land supply is a major issue. The removal of the Regional Spatial Strategy and the anticipation of Localism are both contributing to this problem. It is exacerbated in Cambridge by highly educated and vocal activists who are often able to halt or slow planning approvals.
 
Competition is strong with new developers continuing to move in. The market is constrained by the inability of first time buyers to raise large deposits and then obtain a mortgage. The first time buyer age is rising and there is increased demand for private or intermediate rental. The student market now appears to be saturated but there is significant opportunity in housing for the over 55’s. Hill Residential are looking at developing a range of new models and joint ventures in response to this changing market place with an emphasis on unlocking the first time buyer problem.
 
Hill Residential foresees skill shortages on the horizon and has taken on 15 apprentices this year in order to be ready for when the market takes off again.
 
Housing Market Statistics
Richard Hartshorn, Regional Director – East, NHBC, gave an overview of the latest NHBC statistics for the Eastern Region.
 
In the three months to the end of November, 2559 new homes had been started in the East of England region, 39% below the 10 year average, roughly in line with the overall UK figures. 3148 homes were completed in the same period, a 14% decrease from last year.  This compares with a 1% increase in starts across the whole of the UK and a corresponding 13% decrease in completions for the same 3 month period last year.
 
Richard also reported changes to the NHBC resolution service as from 1st January 2011 whereby there will be a charge of £350 per dispute. This was needed because of the high level of claims.
 
Key Concerns
There was a full range of topics raised by industry leaders present. These are summarised below under group headings:
 

Financial

The continuing fallout from the 2008 banking crisis overshadows the market. There was a plea to Government to assist in freeing up lending in general but in particular, to resist further unwarranted restrictions to mortgage lending as proposed by the FSA.
 
Banks are also looking very critically at new development proposals and at how existing project viabilities might be improved.
 
Shared ownership mortgages are a particular problem with lenders not understanding (or not wanting to understand) the nature of the product.
 
The foreign exchange rates are affecting materials costs, particularly timber and other imported materials. This should offer opportunities for more use of UK based materials and products.
 

Political and Social

Forthcoming changes to the benefits system and increased rental levels for RP’s will have a significant effect on the affordable sector. Increased rental levels will only help in certain high value areas and will exacerbate the North/South divide.
 
The balance between home ownership and rental is likely to change but there is a strong need to introduce more institutional investment into the sector. At present the returns are not sufficiently attractive and Government should consider doing more in the form of tax breaks or other incentives.
 

Environmental

The Government has continuing obligations on climate change and CO2 reduction. However, the industry badly needs clarity of definition and simplification of regulation. There is a strong preference for all requirements to be contained within the Building Regulations.
 
New homes have been too much of a focus and much more needs to be done with the existing stock. There should be an emphasis on the building fabric and caution with regard to too much technology in the home. Feed in Tariffs are a good opportunity but there needs to be long term certainty to encourage investment. There is also an urgent need to provide better information and education for homebuyers and tenants.
 
RICS needs to take energy efficiency into account as part of the valuation process.
 

Planning

There was a plea to provide a clearer definition of what Localism is and how it will be implemented. There is a fear that there could be too many site specific planning restrictions which will militate against production efficiency. Will decision making responsibility rest with the Local Authority or will it be pushed even further down to say Parish councils? If so, there are worrying implications on the level of debate and decision making. There are real issues of leadership within authorities and lack of resources which will become even more acute.
There is a risk that design quality will suffer without bodies such as CABE to give guidance to local communities and local authorities.
 
There is also a severe problem with land availability in the eastern region where there are relatively few brownfield opportunities left. This might mean that the Green Belt restrictions should be eased or boundaries redefined. Not all Green Belt is of high amenity value. It was also noted that land needs to be brought forward quickly if it is “ready to go” and should not be deemed “premature”.
 
Local Enterprise Partnerships were discussed as a possible route to better decision making however, there were concerns about the lack of funding available for their establishment and running costs. Cambridge and Greater Peterborough are included on the initial list of 20 LEP’s.
 
Other Issues
Regeneration has been badly hit by the market falls and this will get worse with the New Homes Bonus which is applicable to additional homes and not replacements.
 
The effects of the ageing population will increase and there are major opportunities in providing attractive products for older people wanting to trade down and in the extra care models.
 
Infrastructure funding is problematic with viability of schemes threatened by Section 106 or CIL requirements.
 
The New Homes Bonus effect is as yet unknown. There were very mixed views during the discussion but local authorities could be so starved of other funds that it might become a significant factor in their decision making.
 
Conclusion
Barry Munday concluded the meeting by thanking all those who had taken part for their very thoughtful and incisive contributions. These would be helpful in framing feedback to at the next CLG Sounding Board meeting in early December. The Housing Forum will continue to press the case on many of the matters raised in the various contacts with Government and other industry organisations.
 
 
The Housing Forum would like to thank the following for their interest and insight into the housing market in the East of England, and to Hill Group for hosting the event:

Barry Munday Chairman The Housing Forum
Sue Beecroft Sub-Regional Housing Strategy Co-ordinator Cambridge Horizons
Andy Berridge Sector Manager Willmott Dixon
Krystyna Blackburn Project Director The Housing Forum
Martin Clark Managing Director Campbell Buchanan
Fiona Coulson Assistant Development Director Circle Anglia
Emma Fletcher Land & Strategic Project Manager Hill Residential Ltd
Richard Hartshorn Regional Director, East NHBC
Karl Hick Managing Director Larkfleet Homes
Sarah Ireland Assistant Development Director bpha
Brendan Kilpatrick Director PRP Architects
Stephen Lee Planning Manager Taylor Wimpey (East Anglia)
Philip Makepeace Managing Director Norfolk Homes
Roger Trigg Executive Member for Housing Welwyn Hatfield Borough Council
Andrew Vickery Partner Trowers & Hamlins
Colin Wiles Consultant Wiles Consulting
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