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House builders doing well
House builders doing well
Read about house builders doing well, the increase in the number of new homes, why the government’s right to buy policy continues to attract criticisms and much more in our round up of the week’s property press.
Pretty Woman makes pretty profit
Film star Julia Roberts whose biggest box office hit was the iconic film “Pretty Woman” has enjoyed a lucrative gain in selling her New York apartment for £600,000 over the asking price following a fierce bidding war. The three-bedroom home, complete with spectacular views over the city skyline from a stunning roof terrace, sold for £3.5 million having been put on the market just a few months ago for £2.9 million.
The home for the inspiration for Ralph Fiennes’ character “M” in the new Bond movie Spectre will be coming to market in spring 2017 after an extensive restoration. The house in Westminster was home of Mansfield Smith-Cumming (known as C) who took on the role of MI6 chief in 1909 and travelled between his home and the MI6 HQ in Broadway, using secret underground passages that still exist.
House in Van Home street on the market
A five-bedroom Grade II-listed house set in the tree-lined Primrose Hill street where homeless eccentric Mary Shepherd lived in her van on Alan Bennett’s driveway, is for sale for £4.25 million. The film adaptation of “The Lady in the Van” starring Dame Maggie Smith and Alex Jennings is based on the real events as captured in Bennett’s story of the same name.
A work of art
A stunning eight-bedroom house set in six acres of beautiful Tuscan countryside which was once home to Italian Renaissance artist Michelangelo is for sale for £5.36 million. The house of the artist famous for such beautiful works as the statue of David and the ceiling of the Sistine Chapel was in the family home for more than 300 years.
House builders doing well
House builders doing well is a familiar theme this year and two more major house builders this week each reported strong increases in housing volumes.
In a trading update Taylor Wimpey (Britain’s second biggest house builder by volume) reported its order book to be at record levels on the back of a UK housing market which it considers likely to remain “very positive” even though the Bank of England is expected to raise interest rates next year.
The group said: “Against a backdrop of rising real incomes and tighter mortgage regulation with good availability and affordability, we believe that consumers have resilience to future interest rate movements.”
Crest Nicholson (the FTSE 250 Company) also issued a trading update which revealed that it delivered 2,725 units in the year to the end of October, an 8% increase year-on-year and confirmed that its growth strategy remains on track.
Crest confirmed that it is making good progress towards achieving £1bn in revenue by next year, and £1.4bn in revenue and 4,000 homes by 2019.
Stephen Stone, group chief executive, said: “High employment and good mortgage access continue to enable purchasers to secure a new home and we are pleased to be playing our part in addressing the UK’s housing shortfall and delivering value for our customers, our staff and wider stakeholders.”
Increase in the Number of new homes
Official figures released this week showed that over the past 12 months the net number of new homes (after allowing for demolition of existing homes) rose by 25% to 170,690 compared to 136,610 the year before, representing the highest annual percentage increase in 28 years. A major contribution came from office-to-residential conversions with 20,650 homes delivered through change of use, a 65% increase on the year before.
Welcoming the news Housing Minister Brandon Lewis said: “We’ve brought the housebuilding industry back from the brink, giving them the tools they need to get on with the job and build the homes hard-working people need. That includes making it easier for developers to turn underused buildings into new homes with today’s figures showing a 65% increase in these kinds of developments over the past year.”
However, total supply is still well below the levels seen in 2007-8 when 223,530 net homes were delivered.
Disappointment with fine print changes to Nationally Significant Infrastructure Project
Back in July, the chancellor had major housebuilders anticipating a big opportunity when he announced that “an element” of housing could be included in infrastructure projects put forward for approval via the Nationally Significant Infrastructure Project (NSIP) regime.
The implications of the announcement were potentially huge because although it still takes a lot of time and effort the NSIP regime, which was designed to attract major overseas investment and to keep local political involvement to a minimum, provides a far greater degree of certainty and transparency for projects’ proponents.
But the government’s briefing note and draft planning guidance just published makes it clear that house builders will only be able to piggyback on major infrastructure projects where there is a “functional need” for homes and even then there will be a maximum of 500 housing units except in “exceptional circumstances”.
It now seems clear that the government’s intention was not to use the amendments as a form of “Trojan horse” for securing residential planning permission but the clarification produced by the briefing note has led to general disappointment and has put a big question mark against whether it is worthwhile for house builders to go through the NSIP process for the sake of 500 homes.
Right to buy criticism
Criticism of the government’s decision to offer social tenants the right to buy has come from Lord Kerslake, the chair of Peabody housing association and former head of the civil service, who claims that it will not help the issue of affordable housing supply in London.
Speaking at a conference this week Lord Kerslake said “The right to buy numbers simply do not add up. The money that will come from high value sales will only, at best, pay for the right to buy discounts – it will not pay for new properties.” He added that the issue was a “distraction” that would prevent housing associations and local authorities from playing their role in creating housing supply.
Kerslake also criticised the way that the 30 year old right to buy scheme for council tenants was being handled.
“The hard truth is that local authorities are the biggest losers of the right to buy policy. They’re going to be top-sliced no matter how many properties they sell: that’s just not good policy to me. I understand why London boroughs are so frustrated about the voluntary deal that housing associations struck with government, but we have more in common than we have apart. I don’t see the logic in allowing councils to borrow money to build a new swimming pool, but not to build new housing.”
Support for Lord Kerslake’s view came from other speakers at the Conference including Kate Davies, chief executive of Notting Hill housing association who said “Lots of people have an aspiration to buy and if they can afford to I don’t have a problem with that,” but the [right to buy] deal with councils, I think that’s horrific.”
Starter homes were also on the agenda with Kerslake pointing out that a survey carried out by housing charity Shelter found that to buy a starter home in London you would need an average annual income of £77,000 “That isn’t affordable housing in any sense of the word,” he said.
He was also critical of those “public bodies that just don’t seem to have the incentive to want to sell their land. The classic highlight here is the NHS, and some of the sites they control,” he said.
Another topic covered by the debate was the resources of local planning authorities. Ian Sutcliffe chief executive of Countryside revealed that the average time his company took to get a development from expression of interest to starting on site was 39 months. He declared that he would be happy to pay extra fees for a better service as long as the money was spent on the application and didn’t “fall into a black hole”.
Louise Brooke Smith, director of Brooke Smith Planning Consultants claimed there was a “massive skills shortage” within the planning profession, and delivered a warning that funding for departments was “only going to get worse without intervention. The ‘stick’ approach of fining them for failing to meet targets seems to be a case of kicking them while they are already down,” she added.
“There is no money” for right to buy discounts, say council leaders
Ferris Cowper the leader of East Hampshire council this week told the Communities and Local Government Select Committee in Westminster that his council would not be able to fund discounts offered to housing association tenants under the proposed right to buy scheme.
“We have some commercial property investments which we use to fund our expenditure profile, but if we sold those we would be broke,” he said.
The proposed Housing Bill suggests that the discount could be funded by the sale of high-value property assets owned by councils, but Cowper said this would not be feasible. “If we had high value asset stock, we would have done something with it by now,” he said. “There is no money.”
Also presenting to the Select Committee Lib Peck, the leader of Lambeth council, which currently houses 10,000 right to buy leaseholders in former council homes, also said the proposals would have serious consequences for her authority. “There’s a limited pot of money in councils to deal with housing,” she said. “One of the things we’re committed to as a council is to build 1,000 new council homes during our administration. That’s going to become much more difficult while we’re trying to find upfront money to effectively pay the discount back to housing associations.”
“I don’t have an issue with people exercising their right to buy, but I do have a problem with a formula that takes away our ability to build, to negotiate affordable housing and which makes the issue around supply even worse.”
Stephen Hills, director of housing at South Cambridgeshire district council, also said his council would not be able to pay for the discount. “We expect that we are going to be asked for a fairly substantial contribution, and we won’t have the money to pay for that up front,” he said. “We would have to find some alternative means of borrowing.”
The proposed system would involve councils paying an annual bill at the beginning of a financial year, based upon homes they expected to become vacant during that period. Keith House, the deputy chair, environment, economy, housing and transport board at the Local Government Association, said this system could result in inaccurate taxing. “The ability of Whitehall to properly understand what is happening in local markets is unlikely to be sophisticated enough to do that job properly, so some will be under-taxed and some will be over-taxed,” he said.
“On the basis that it’s a forward looking tax not a backward looking tax, and that it’s based on a methodology not actuals, I can’t see a situation where you could get a fair outcome on that basis”.
House also suggested that the sale of public land could instead be accelerated to help foot the bill for right to buy. “Councils are really up for the wider disposal of public land,” he said. “We would like government to raise its game to the level of local authorities in terms of bringing land forward.”
There was also concern about how properties sold under the right to buy would be replaced. “There is some talk about high value property assets, but we don’t have any high-value property assets to deploy so we are unsure how we are going to be doing that,” said Cowper.
“We don’t have a homelessness problem at all because people are in affordable housing – but we are worried that this will create homelessness.”
Speaking about the mooted requirement to replace every right to buy home sold in London with an additional one, Peck was sceptical. “It seems to be a principle that we’re all signed up to because we know we’ve got a London housing crisis, but when you actually start interrogating these proposals I can’t see how that’s going to happen,” she said.
Property Firms look to work together
Property developers Stanhope and housing association Network have joined forces to seek sites across London with potential for “build to rent” developments. They will look to jointly purchase and develop the sites which Network will then manage.
Sites in Westminster, Brent and Harrow are currently on the agenda to provide mid-market build to rent schemes.
David Camp, chief executive of Stanhope, said: “Housing is the number one issue in London at the moment and one in four Londoners currently live in the private rented sector with its plethora of accommodation standards and landlord services. Within the next decade or so it will be one in three Londoners and Stanhope is keen to provide a range of housing tenures to include build to rent to meet this demand.”
Residential Property Statistics (thanks to Property Week)
This week’s vital residential statistics
£50,000 is the average salary needed to get on the property ladder in the UK – well above the average UK salary of £22,000, according to GoCompare.com.
£14,000 is the salary required in Blackburn to buy a flat – the lowest level in the UK.
£275,000 is the minimum household income required to buy a detached house in London, where the average price is £869,415.
215 is the number of flats sold off-plan in three hours at the launch of Galliard Homes’ Trinity Square development in Hounslow last week.
2.8% is the quarter-on-quarter rise in UK house prices in Q3 2015 – up 10% on the same period last year, according to the latest Halifax House Price Index.
3,000 is the number of homes that could be built on the site of inner-city prisons to be sold off by the government
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