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Industry leaders call for emergency plan to save UK construction

The Construction Leadership Council has written to the prime minister setting out essential actions to secure the future of the sector.

Research last week showed that without further support nearly half of all companies in the sector face potential failure in the next three months.

Today, in a letter to the prime minister, the Construction Leadership Council has asked the government to implement measures to save cash-strapped companies in the construction supply chain:

Suspend PAYE and CIS tax due to HMRC in April and May for construction and consultancy firms and workers with no financial penalty;

Defer/cancel Apprenticeship Levy payments for the duration of the crisis;

Government to advise all public sector clients, regulated utilities, and firms in the private sector to expedite cash flow throughout the supply chain;

Support the directors of micro-businesses, who currently fall between the support provided by the Job Retention Scheme and assistance for the self-employed;

Direct all government bodies to release all retention monies;

Extend the £25k SME business continuity grants scheme to the construction sector.

In addition, the sector has asked for clear and visible encouragement that the production of building materials continues where possible, and that electrical, plumbing, and general builders’ merchants remain open so that the industry can function.

Andy Mitchell, co-chair of the Construction Leadership Council, said: “The construction industry is a key strategic sector of the UK economy and is playing a vital role in building and maintaining NHS estates, enabling the transport sector to function, and keeping the lights on in homes around the country.

“It is not an either/or question. The UK economy requires a functioning construction sector that can operate safely during this crisis and will rely upon construction workers and companies to get Britain building once we’ve won the war against Covid-19.

“We are calling on the government to take these steps not only to save jobs and companies in the long term, but to ensure our sector can continue to function throughout the weeks and months to come.

“The UK government’s response to this crisis has been bold and necessary. It is time now for it to roll out emergency measures to protect UK construction directly, which is a sector of national strategic importance in good times as well as bad.”

The letter was written by the Construction Leadership Council with support from National Federation of Builders, Civil Engineering Contractors, Build UK, Association for Consultancy & Engineering, Electrical Contractors Association (ECA), Home Builders Federations, Federation of Master Builders, British Property Federation, Construction Products Association, and Construction Industry Council (on behalf of 35 professional institutions and associations).

By Rob O’Connor

Source: Infrastructure Intelligence

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Boris Johnson under pressure to stop non-essential construction work amid coronavirus crisis

Boris Johnson is under growing pressure to stop non-essential construction workers heading to building sites as the country attempts to tackle the spread of coronavirus.

The Prime Minister has faced calls from across the political spectrum for more stringent rules so workers are not placed at risk, and public transport is not overwhelmed.

In an address to the nation on Monday, Mr Johnson told people not to leave their homes and go to work unless “absolutely necessary”.

Stopping non-essential construction would still see building work on new hospitals take place, but would halt the building of new homes.

Asked at PMQs by Labour leader Jeremy Corbyn why construction sites had not yet been closed, Mr Johnson said: “Everybody should work at home unless they must go to work.

“If a construction company is continuing, then they must do so in accordance with advice from Public Health England.

Earlier on Wednesday, Housing, Communities and Local Government Secretary Robert Jenrick said work on building sites can continue but workers should practice social distancing.

On Tuesday, Downing Street said that construction work should continue if it can be done following Public Health England (PHE) and industry guidance.

A day later, Mr Jenrick told ITV News: “If your employer thinks they cannot follow those guidelines then they should not be operating just as they shouldn’t be breaching any other form of health and safety guidance or regulation.

“So there’s an important duty on employers to consider whether they can operate within those guidelines and if they can’t then unfortunately they are going to have to temporarily close.”

Shadow Secretary of State for International Trade Barry Gardiner called for construction workers to be supported with “at least the living wage” when not working.

He told ITV News: “People need to know that they are going to have – at minimum – a living wage, then they know they can do the right things by themselves and the right thing by the wider public.

“But you cannot self-isolate on a building site, you cannot self-isolate and observe the social distancing measures if you are on a building site or a hairdresser or the many, many self employed professions.”

On Tuesday, Health Secretary Matt Hancock said those who cannot work from home, including key workers in the NHS and social care, should go to work “to keep the country running”.

The Health Secretary said construction workers were among those who could continue to work as long as they could remain two metres apart at all times.

But some builders and construction workers have said they feel “angry and unprotected” going to work, while others are under pressure from employers to go in.

London Mayor Sadiq Khan’s office said the Government must act urgently to get more people staying at home following construction workers reporting to building sites and images of packed Tube trains appearing on social media.

It comes as housebuilder Taylor Wimpey said on Tuesday that it has closed its construction sites, show homes and sale sites due to coronavirus.

Transport for London (TfL) has also said work on its Crossrail sites was being temporarily suspended – but that essential maintenance of the transport network will continue.

Conservative former cabinet minister Sir Iain Duncan Smith added his voice to the calls for non-essential building work to be stopped, telling BBC Two’s Newsnight: “I think the balance is where we should delete some of those construction workers from going to work and focus only on the emergency requirements.”

Andy Burnham, mayor of Greater Manchester, told the programme: “This decision about allowing non-essential work appears to be taken for economic reasons when actually – when you’re in the middle of a global pandemic – health reasons alone really should be guiding all decision making.”

One of the reasons construction workers are still attending building sites is because they are self-employed.

The Government is also under intense pressure to set out a financial support package for self-employed workers – measures senior Conservative MP Sir Iain said were soon to be announced.

“I believe the Government has reached a conclusion about that, the best way to do it is to look back over the average for the year but that does leave out some who haven’t been self-employed for over a year,” he told Newsnight.

Source: ITV

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Housebuilders call for consistent government message

The National Federation of Builders (NFB) has called for a consistent message from the government about safe on-site working practices.

Housebuilder Taylor Wimpey is one of few firms to have closed its sites to protect the spread of coronavirus.

Yesterday Prime Minister Boris Johnson said people may only leave home to exercise once per day, to travel to and from work, to shop for essentials, and to fulfil any medical or care needs.

Richard Beresford, chief executive of the NFB, said: “The Prime Minister’s address was a strong warning to the nation and we now need written guidance about which industries can remain open.

“Industry has been working on safety guidance, which will be updated to reduce all risks but we also need a consistent message across the government.

“At the moment, it’s absolutely not business as usual but we are trying to support our industry to fit within this new and ever changing normality.”

The NFB has welcomed regular engagement from the Government and partnership working with the Construction Leadership Council (CLC), especially as many businesses are desperate to keep sites operational with their staff and supply chain, in work.

Nick Sangwin, NFB chair, said: “It has been a very difficult few months and we have been working hard to ensure our members and the wider industry has strong guidance on safe working practices.

“Projects vary in size and complexity and we look to the government for clear guidance on this issue.

“There are also key strategic national assets that are under construction that may fall under the key worker category that needs looking at.

“We would ask the government to consult with the experts such as the NFB to provide assistance on this.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Finance provider secures £15m funding to help boost housebuilding

Manchester-based Assetz Capital has become the first property-focused marketplace platform to receive funding from British Business Investments (BBI), a commercial subsidiary of the British Business Bank.

The £15m commitment from British Business Investments will support in excess of £100m of new lending to smaller businesses and smaller housing developers, helping them grow, as well as helping fuel the development of new homes across the UK.

The funding will be used for development finance loans and SME commercial mortgages originated by Assetz Capital.

Stuart Law, Assetz Capital CEO, said: “Assetz Capital was founded to help resolve the housing crisis and create a fairer lending landscape by providing funding to SMEs and property developers who were no longer being fully supported by traditional banks.

“To date, we’ve lent more than £1bn to UK businesses, providing over £100m of much-needed gross income to a community of 38,000 retail and institutional investors in the process.

“The support of British Business Investments is a further milestone in this mission, and we are grateful for their new backing towards our continuing commitment to addressing the housing crisis and SME funding gap.”

He added: “It’s a testament to the impact that can be delivered by Assetz Capital and a welcome addition to our growing stream of institutional funding sources, including other banks and investment funds.”

Catherine Lewis La Torre, British Business Investments CEO, said: “This £15m commitment to Assetz Capital supports British Business Investments’ objective to increase the diversity and supply of finance for smaller businesses across the UK.

“By providing finance to smaller housebuilders, we’re able to help them to fulfil their growth plans and increase the country’s new housing stock.”

Since being founded as a FinTech start-up in 2013, Assetz Capital has lent more than £1bn to smaller businesses and housebuilders, becoming one of the UK’s largest marketplace lenders in the process. It has funded the development of 4,846 homes across the UK.

In addition to funding housing developments, Assetz Capital funds care home construction, purpose-built student accommodation and provides commercial mortgages across a broad range of businesses – all with property as security for the loan.

By Neil Hodgson

Source: The Business Desk

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New build homes started increased by 24%

The latest quarterly statistics on new housebuilding and affordable housing supply have been released by Scotland’s Chief Statistician.

In the year to end September 2019, 24,873 new build homes were started across all sectors. This was a 4,876 (24%) increase on the previous year and the highest number of homes started since 2007.

Private-led starts increased by 4,516 homes (34%), local authority starts increased by 377 homes (22%) and housing association approvals decreased slightly by 17 homes (0.3%). The total number of homes started across both housing associations and local authorities increased by 360 homes (5%).

The number of new build homes completed increased to 21,805, a rise of 2,972 new homes (16%) on the previous year and the highest number of completions since 2008. There was also a 19% increase in private sector new build homes from the previous year, with 2,668 completed. Housing association completions increased by 230, a 6% increase, while completions for local authorities rose by 74, an increase of 5%.

In the year to end December 2019, 9,317 homes were delivered through the Affordable Housing Supply Programme, an increase of 61 homes on the previous year.

In the same period 11,829 affordable homes were approved, a 6% decrease on the previous year, while 10,765 homes were started, an increase of 4%.

Source: Scottish Government

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1.2 million homes need to be built to close the housing gap

The UK housing market is facing grave challenges, according to a recent, in-depth report by the BBC. The Housing Brief points to a figure of a 1.2-million gap of new homes needed to accommodate everyone who currently needs a home. The inability to get on, or progress up the housing ladder is hardly just due to people’s inability to find the best mortgage rate or save up for a deposit.

A 2019 study by Heriot-Watt University estimates that closing this housing gap would take about 15 years at current building rates – and that’s provided that nothing changes, for example that the population doesn’t suddenly expand, or that private building firms don’t build less housing than they do now.

The number of new dwellings added to the UK housing market stood at 275,000 last year, but, as the report explains, this by itself might not be enough to resolve the UK housing crisis by 2030. The current household growth forecast suggests that, even if we are to close the current housing gap in 15 years’ time, by 2035, we will once again have a housing shortage of four million homes. Besides, there is no guarantee that building new homes per se will make them suitable for people’s needs, especially where it comes to affordability.

The lack of new social housing being built is hitting families at risk of homelessness particularly hard: councils are struggling to find suitable accommodation for the increasing number of people struggling to rent privately, with the number of homeless families in the UK standing at 140,000. Only 5,000 of them are rough sleepers, with the rest sleeping in shelters, on friends’ sofas, and in temporary accommodation.

The recommendation of the report is clear: the government can increase housing supply by funding local councils to build more social housing. It also suggests that subsidising private developers could incentivise them to build more affordable housing – although similar schemes in the past haven’t yielded the expected results.

A number of other recommendations from think tanks and research bodies are collected in the report, many of them pointing to the need for regulating private development, the need for further schemes to help young people onto the property ladder, and increasing housing benefit for those struggling to rent privately.

BY ANNA COTTRELL

Source: Real Homes

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The West Midlands redefines ‘affordable housing’

The West Midlands Combined Authority (WMCA) has redefined ‘affordable housing’ to mortgages or rent costing less than 35% of the lowest quarter of wage earners in the local area.

This replaces the typically used ‘affordability’ definition of 80% of market value.

The West Midlands is the first UK region to introduce a local definition, which is significant because any development schemes receiving WMCA investment from its devolved housing and land funds must make a minimum of at least 20% of the homes in their scheme affordable.

Andy Street, mayor of the West Midlands, who chairs the WMCA, said: “In recent years would-be homeowners have been forced to stand by and watch as house prices outstrip wages.

“The current ‘affordability’ definition is 80% of market value, which for many people in the West Midlands still leaves homes frustratingly out of reach.

“By linking the definition of affordability to local people’s earnings rather than property, and using this alongside our minimum 20% requirement, we can help make the prospect of homeownership a very real one for many more hard-working individuals and families.

“It also sets out a very clear ambition to developers and partners who want to work with us to deliver homes. This is the kind of inclusive growth that is key to building the future of the West Midlands.”

The West Midlands needs to build 215,000 new homes by 2031 to meet future housing and economic demand.

To help reach the target the WMCA has introduced a ‘brownfield first’ policy where new homes and commercial developments are built on former industrial land wherever possible and has secured new funding from national government to help make it happen.

With such sites being notoriously difficult to build on because of the high clean-up costs for developers, and other constraints, the WMCA has committed substantial funding for land purchases and for brownfield remediation so sites can be made viable for development.

A total of 16,938 properties were built in 2018/19 – a 15% rise on the previous year and twice the UK average increase. That compares to just 7,500 homes built in 2011.

Cllr Mike Bird, WMCA portfolio holder for housing and land and leader of Walsall Council, said: “This is another example of how the WMCA and its partners are changing the housing market, using our funding to deliver the homes we need in the places where we need them.

“By building on brownfield land, regenerating local areas, supporting living in town centres and linking affordability to local incomes, we are leading the housing revolution.”

BY RYAN BEMBRIDGE

Source: Property Wire

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New build starts fall in 2019

The number of new build starts fell by 7% to 157,550 in the year to September 2019, signalling that the government is failing to meet its housebuilding targets.

On a more positive note completions rose by 9% to 177,980 – however that is still well short of the government’s aim to deliver 300,000 homes a year.

Clive Docwra, managing director of leading construction consulting and design agency McBains, said: “The government has set a target of delivering a million homes in the next five years, yet today’s figures show that the construction industry is way off meeting those rates on current trends.

“Annual new build starts in the year to September 2019 saw a decrease of 7% on the previous year, and while completions totalled close to 178,000, we need to be building more than 200,000 homes each year to meet the government’s ambitions.

“Last month’s Queen’s Speech contained lots of detail on demand-side measures – such as first-time buyers being offered a discount on purchases – but nothing on the supply side.

“The government needs to set out how it intends to boost housebuilding and increase the supply of new homes needed to tackle the housing crisis, such as freeing up more land to build and cutting red tape on planning.”

New build dwelling starts in England were estimated at 39,510 in Q4 2019, a 2% increase compared to the previous three months and an 11% increase on a year earlier.

Completions were estimated at 46,000, a 2% increase from the previous quarter and 11% higher than a year ago.

BY RYAN BEMBRIDGE

Source: Property Wire

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West Midlands records highest ever house-building numbers

JUST under 17,000 new homes were built in the West Midlands last year – the most ever recorded in the region.

Figures published by the West Midlands Combined Authority (WMCA) this week show that 16,938 new homes were built in the region across 2018/19, representing a 15.8 per cent increase on the previous year.

The authority currently has a target to build 215,000 new homes by 2031, something it appears on course to do with these latest figures.

However, papers also note that there remains a ‘considerable under supply of affordable housing.’

Last year 3,801 ‘affordable homes’ were built in the West Midlands, representing 22 per cent of the overall total – a figure which meets the WMCA’s 20 per cent target.

But figures also show that this housing ‘is particularly concentrated in certain pockets of the region’ – something which mayor Andy Street says needs to change if the WMCA’s house building drive is to be considered a success.

“Housebuilding is one of the West Midlands’ real success stories of the last few years and I am delighted that we are well ahead of schedule to build the 215,000 homes we need by 2031,” he said.

“The figures clearly show that the West Midlands is leading a brownfield-first housing revolution in the UK.

“What is most pleasing however is we are building the vast majority of new homes on brownfield land, protecting the region’s precious greenbelt. We are doing this through our brownfield first policy, which, thanks to cash from Government, sees the WMCA remediate derelict industrial sites that have sat untouched for decades.

“However there is plenty more still to be done, particularly around the number of affordable homes being built. To help tackle this the WMCA is introducing a new requirement that any housing development that uses WMCA funds must be at least 20% affordable.”

By Tom Dare

Source: Hereford Times

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House builders demand more Help to Buy subsidies from government

Lobbyists acting for the housing industry have demanded continued Help to Buy (HTB) subsidies from the Scottish Government, despite criticism that the cash simply inflates house prices and benefits large house builders, The Ferret can reveal.

The heads of Homes for Scotland and banking and financial services body UK Finance both pressured the government to extend HTB, according to communications released under freedom of information law.

Both bodies sit on the government’s Help To Buy Scotland affordable new build monitoring group, which gives them privileged access to senior civil servants and monitoring data the government holds on the HTB scheme.

With HTB, the government subsidises the mortgages of prospective buyers by up to 15 per cent of the price of a new home. But critics say it pushes up house prices to the detriment of those on low incomes.

In 2017 we reported that a social policy expert, housing charity Shelter Scotland, and the Scottish Greens, all called on the government to end the controversial scheme. The Greens said the government is now facing pressure from groups with “vested interests”.

‘Dysfunctional’ Help to Buy subsidy should be scrapped, say critics

Transparency campaign group, Spinwatch, said that problems arise “when private companies abuse privileged access in clear conflict of interest situations”. They called on governments to “move away from the involvement of private industry in policy making”.

However, Homes for Scotland said it conveys the views of its members in “a professional and evidence-based manner at all times”, while UK Finance said HTB was a good example of “public and private sector engagement”.

Between 2017-19, the government allocated an average of £25,300 in equity for each home purchased with the subsidy.

Data shows that just under half of the estimated £118 million in taxpayer subsidised mortgages went to Scotland’s three largest housebuilders, Persimmon, Taylor Wimpey and Barratt, between 2017-19. These three firms are all members of Homes for Scotland.

In a letter to finance secretary Derek Mackay MSP, Homes for Scotland chief executive Nicola Barclay put pressure on the government to continue HTB and expand its financial contribution to the scheme.

In a letter dated 8th December 2017, Barclay urged Mackay to inject more money into HTB after the UK Chancellor announced more funds for the English HTB scheme during the 2017 Autumn budget.

Mackay was urged to use the extra money made available to Scottish Government as a result of Barnett consequentials to commit to “as an absolute minimum – an annual budget of £50m for HTB Scotland up to and including 2020-21”.

This would equate to “just 10 per cent of the consequentials”, allowing the government to “fund social rent and other forms of social housing”, Barclay claimed. The government’s “ongoing support is, in our opinion, essential,” she added.

The government was also pressured to extend HTB by UK Finance.

“Our members are getting more concerned about the lack of news on the future of the scheme, particularly as some firms have just joined”, the banking body told a civil servant in an email dated 3 April 2019.

The government’s timescale did not leave “enough time for the industry (both lenders and builders) to adapt or transition”, it added. “What’s happening, please?”

A civil servant replied that the scheme was due to be evaluated “based on evidence, as well the latest economic position”, with the results due by the end of 2019.

In response, UK Finance warned that certain factors had the potential to make it difficult for the government to implement an extension of the scheme if it did not act quickly. These included a Financial Conduct Authority consultation on mortgage affordability rules, as well as Brexit uncertainty and Westminster having extended the scheme in England.

“Without a prompt announcement of Scotland’s intentions for this period, there is a risk of potential competitive disadvantage for Scotland if builders scale-back production there in favour of England where there is clear future commitment of support”, warned UK Finance.

In another email dated 18th June 2019, the body asked when “stakeholder involvement” would be included in the development of the government’s first-time buyer deposits, adding: “the clock is ticking.”

‘Clear conflict of interest’

In minutes of the HTB monitoring group dated 19th June 2018, a civil servant indicated that the two groups would be given privileged access to government data on housing.

Joanne McDowell of the government’s More Homes division confirmed the government was “happy to share monitoring information with Homes for Scotland and UK Finance but not for wider circulation outwith these organisations.”

David Miller, co-founder of Spinwatch, said the relationship between the two bodies and the government was “another indication of the need to move away from the involvement of private industry in policy making”.

He said: “This example shows the problems that arise when private companies abuse privileged access in clear conflict of interest situations.

“The government should be building many more homes to meet the housing crisis and the wholly avoidable daily deaths of homeless people on our streets. They should avoid lining the pockets of building company owners in the process.”

The Scottish Greens’ Andy Wightman MSP, who chairs the cross-party group on housing at Holyrood, argued that HTB “does nothing to tackle the housing crisis”.

The scheme “actually makes housing more expensive for everyone else by pushing up prices generally and does little to benefit those on low incomes or in rural areas,” he said. “It doesn’t surprise me that vested interests are putting pressure on the government.”

Jackie Bennett, director of mortgages at UK Finance argued that HTB “has helped many homeowners to take their first step on to the housing ladder and is a great example of public and private sector engagement.”

She added: “The mortgage industry continues to work with the Scottish Government to support its housing strategy.”

A Homes for Scotland spokesperson said: “As a membership organisation, it is our responsibility to convey the views of those we represent. We do this in a professional and evidence-based manner at all times.

“Our member companies are responsible for delivering the vast majority of new homes that Scotland needs to meet the housing needs and aspirations of its growing population.”

HTB ‘not benefiting those in rural areas’

Data obtained by The Ferret reveals that of the 4,662 subsidised homes built between 2017-19, more than half went to properties in five central belt council areas, with little going to properties in rural council areas.

Some 15 per cent were built in Glasgow, 12 per cent in South Lanarkshire, 11 per cent in North Lanarkshire, and 7 per cent each in Renfrewshire and Edinburgh.

Scotland’s most remote areas benefited least from subsidised mortgages. These included Orkney and Argyll and Bute, the latter of which saw just two homes built. Not a single home supported by HTB was built in Shetland and the Western Isles.

In July we reported that the Scottish Government was failing to meet targets to boost the number of affordable homes for rural and island communities. Campaigners said that excessive bureaucracy, lack of support, tight time frames and restrictive regulations had prevented communities from making use of the funding.

Scottish Government failing to meet rural housing targets

Derek Logie, chief executive of the Rural Housing Scotland charity, said new figures show that HTB “has had a limited impact in some rural areas; despite the welcome Help to Buy for Small Developers scheme.”

Logie called for a “Help to Build” scheme in rural areas “to provide grant support for self build, with the grant converted into an equity share in the completed build.” Such a scheme would “better reflect the nature of housebuilding in rural Scotland and enhance the support already provided through the Self Build Loan Scheme”, he added.

The Scottish Government defended HTB as “a demand-led scheme” that helps buyers into homeownership, while letting them “decide which area they wish to purchase in”.

A spokesperson said that first time buyers and under 35s were the main beneficiaries of HTB and Open Market Shared Equity schemes, making up over 80 and 70 per cent of participants respectively.

However, an “independent evaluation” of all the government’s shared equity schemes was underway and would inform its decisions on the future of HTB ”beyond 2021”, the spokesperson added.

By Jamie Mann

Source: The Ferret