What’s in a name? Well, for the Government, quite a lot. And, if you are prime minister and have made it your personal ambition to drive the building of the 300,000 homes this country needs each year, then it becomes very important indeed.
But it still caught the sector off guard when Theresa May began the year with announcements around ministry name changes and, more interestingly, the ministers themselves, handing the housing brief to the seventh person since 2010.
The new housing minister is Dominic Raab MP, who represents an upmarket constituency on the edge of South-west London, surrounded by green belt, so he may have a conflict of interest from the very start.
But the bigger news was the change for secretary of state Sajid Javid, who adds housing to his long title and sees his department upgraded to a ministry: the Ministry of Housing, Communities & Local Government. Finally, after many impassioned pleas from mortgage industry experts, we have housing at the Cabinet table.
The challenges facing the MHCLG (catchy) with its annual target of 300,000 new homes appear considerable. But one aspect is becoming clearer as each month passes: the private housebuilding sector is close to its limit for the number of new units it can build; not necessarily because of demand, which remains good, but more because of logistics and elongated planning timetables.
This became more evident just before Christmas with the publication of new-build starts in England, which show a plateauing of figures, with the past five reported quarters since Q2 2016 looking very similar.
And, as if to underscore this, reporting on its first-half trading results to 31 December, Britain’s largest private housebuilder, Barratts, said its previous volume growth of 8 per cent a year was not sustainable.
“We believe we can continue to grow our volume but we think it will be modest, at 1–2 per cent this year and then 3–5 per cent per annum,” said the housebuilder.
No surprise, then, to read that Barratts’ increase in completed sales in those six months was just 144 units — 2 per cent up on the previous year.
None of this will be new to the Government, which has been making plans to widen the structure and financing of the housebuilding industry, beyond the large companies currently dominating, by encouraging the resurgence of the SME players, which are better placed to build on smaller plots not viable to the national ones.
Finally, after many impassioned pleas from industry experts, housing is
at the Cabinet table
It was timely therefore that, in the same week that the Department for Communities & Local Government became the MHCLG, the Homes & Communities Agency changed both its name and focus, to Homes England.
Key to this new body is the implementation of last February’s Housing white paper. Homes England will use its existing planning expertise and new land-buying powers to play a major role in securing land in areas where people want to live, support smaller and more innovative housebuilders in entering the market, and resource brownfield sites from across the country.
This is good news for the Federation of Master Builders, whose recent survey of members put land acquisition as its biggest challenge but had access to finance as a close second.
Future of help to buy?
Something that has not had a name change is the Help to Buy Equity Loan scheme. Since my last article, there has been no further indication from the Government of the scheme’s future beyond the committed date of March 2021.
This does not make it any easier for the national housebuilders to make plans for build programmes, given that it could take four or more years from acquisition of land to committing the first spade in the ground.
Of keen interest to new-build mortgage advisers is the worrying sparcity of lenders in the Help to Buy remortgage market. The recent count stands at fewer than 10, with only four of these doing more than a ‘like for like’ loan amount by also permitting staircasing of the equity loan.
With the majority of existing Help to Buy homeowners coming off two- or three-year products this year, together with the initial borrowers from 2013 soon to be charged interest on their equity loans, the lack of lenders stepping up to assist with remortgage options is of great concern.
James Chidgey is new homes relationship manager at Mortgage Advice Bureau