Marketing No Comments

Housebuilders get back to business

The housebuilding sector started 2020 on the front foot thanks to the decisive victory by the Conservative party in the December 2019 general election.

The big majority seized by the pro-business Tory party injected optimism into the industry. The win for Boris Johnson’s Conservatives – who ran with a view to ‘get Brexit done’ – also put to bed the prospect the UK might hold a second referendum on EU membership, which set the scene for the UK to leave the EU in late January. A number of firms said they saw an uptick in customer interest after the election. It would appear that some people were holding off buying property until the political landscape became clearer. However, political uncertainty could reappear toward the end of 2020, when the UK will exit the transition period.

In recent years the sector has been fuelled by low interest rates, the Help to Buy scheme, and a willingness for banks to lend. The UK economy was in good shape at the start of the year as the unemployment rate was on par with levels last seen in the 1970s, and earnings were comfortably outstripping inflation, so workers were getting an increase in real wages. A strong economic backdrop combined with political stability provided a decent foundation for the housing market. The bulk of the big listed housebuilders saw their share prices go on to set record highs in early February, so traders were clearly bullish on the industry.

When the Covid-19 crisis took hold in the UK, there was a broad-based sell-off, so homebuilders took a hammering along with everyone else. The situation became even bleaker when banks such as Barclays and Halifax pulled a large portion of their mortgage products, a decision they have since then reversed. Rightmove, the property portal, said there was huge drop-off in the number of people offering to sell their properties. When the lockdown was introduced, government guidelines were for people not to move property, unless they had already exchanged contracts, but the guidelines have since been relaxed. Construction sites largely ground to a halt too. The industry was effectively frozen.

In reaction to the pandemic, the Bank of England cut interest rates to 0.1% – a fresh record low – but keep in mind in January they were only 0.75%, so they didn’t have that far to fall. Some would argue the recent rate cuts aren’t going to make much of a difference to the economy, as a slightly lower borrowing rate is unlikely to encourage people to take out a big mortgage, for instance. At the same time, cheap mortgage rates are no bad thing as far as the property market is concerned. A report from last month found that even though some mortgage rates have fallen because of the BoE rate cuts, others have actually risen. The FCA have called on mortgage providers to treat their customers fairly and pass on the rate cuts.

The UK construction PMI report for April crashed to 8.2, a record low. Keep in mind that 52.6 was registered in February – which was the strongest report since late 2018. The UK construction output for February was -1.7%, which was a fall from the -0.2% posted in January. If the output was falling off in February, the March reading will probably be even worse again.

There has been a lot of speculation about what will happen to house prices in the months ahead. The general consensus is they will fall, but industry professionals remain divided over how far they will slide, and what sort of a recovery will be witnessed. The house price reports have been mixed recently. The Halifax report for April showed that prices were down 0.6% on the month. The Rightmove update showed a 0.2% decline in April, while the Nationwide reading showed 0.7% growth in April. Mortgage approvals tumbled from 74,000 in February – the highest since March 2016 – to 56,000 in March, the lowest level in seven years. The mortgage data would suggest there was a huge fall in demand, but that could be a function of some banks cutting back on the number of mortgages being offered. Seeing as unemployment is tipped to jump, it is fair to say that property demand is likely to wane in the near-term.

For all the doom and gloom doing the rounds, there has been some positive news stories. Vistry, formerly Bovis Homes, was the first of the big housebuilders to return to work as operations resumed last week. Taylor Wimpey and Persimmon also recommenced work in the same period. Bellway began phased work on Monday. Barratt Developments will start preparations for new working guidelines next week, while Redrow will start preparing sites for the new working conditions too, with the view to reopening approximately 50% of sites in the near-term. Barratt, Bellway and Redrow were the only firms of the bunch to confirm that customer interest has been mediocre since the health emergency struck.

The firms will be adhering to strict social distancing guidelines, and they will be predominantly focusing on projects that are near completion. The level of activity that will be undertaken in the next few months is likely to be tiny in comparison to the pre-pandemic levels, but any progress should be welcomed. These days if you are taking any steps back toward normality, that sets you apart from the crowd.

On a year-to-date-basis, Berkeley Group are the best performer as the stock is down only 16%. Vistry are the worst performer as the stock is down 42%, but keep in mind it rallied over 60% in 2019, when it was still known as Bovis Homes. The group changed its name to Vistry in January just after it completed the takeover of Linden Homes, the housebuilding arm of Galliford Try. It is possible that Vistry’s underperformance was driven by the fact it finalised a £1.1 billion takeover deal, shortly before the health crisis struck.

The industry was very strong in advance of the health emergency, and some people would say it was overstretched. On average, the big six homebuilders saw their share price fall by 28% YTD, while the FTSE 100 and the FTSE 250 are down 22% and 27% respectively. The sector is only starting to emerge from the lockdown. It is encouraging to see that activity has restarted, but the real test will be whether client demand bounces back or not. Some industries are likely to remain in the doldrums in the near term, so the housebuilding sector is moving in the right direction, which is likely to pop up on traders’ radars.

BY DAVID MADDEN

Source: CMC Markets

Marketing No Comments

Shropshire Council to build 1,000 homes over five years under new plans

Shropshire Council has announced plans to to build 1,000 new houses, including 400 council homes, over the next five years.

Following decisions made at a full council meeting in February, the authority’s housing company, Cornovii Developments Limited, will have access to a rolling loan facility of £35 million, on top of a £14m loan previously agreed.

The project will run until 2025.

The council also agreed in principle for the Housing Revenue Account (HRA), which holds the authority’s 4,100 council homes and is managed by Shropshire Towns and Rural Housing (STaR Housing), to borrow £10m per year over the next five years. This, together with HRA reserves and potential grant funding, amounts to a £75m investment in new housing.

Both companies will provide a mix of housing tenures to help address an unmet housing need in Shropshire. This will include ‘affordable’ rent, low-cost home ownership, private rented, and open market sales.

Key workers
Development will include homes specifically built for key workers, veterans, older people, those with learning and physical disabilities, and those struggling to afford or buy on the open market.

Shropshire Council said it is focused on integrating health, education, employment, transport, shopping, leisure and amenity needs into any new development.

The authority added that the new homes across the county will help support the local economy, create new jobs and apprenticeships, and generate additional value to reinvest into council services.

Robert Macey, cabinet member for housing and strategic planning, said: “A great deal of work has gone into identifying the unmet housing need in Shropshire.

“This unprecedented level of local investment presents us with a unique opportunity to build the quality, reasonably-priced homes that people and their families need, whilst at the same time helping to address many of the other housing challenges facing our county.”

Mark Barrow, executive director of place, said: “This announcement demonstrates our determination to build the homes Shropshire needs.

“Last year, affordable housing accounted for just 14 per cent of overall new builds in the county. Our plans commit the council to delivering 40 per cent affordable housing across the portfolio of our new housing and business plans.”

By Rory Smith

Source: Shropshire Star

Marketing No Comments

Build-to-rent experiences boom

The number of completed homes for build-to-rent have increased by 42% between the first quarter of 2019 and the same period in 2020.

Research published by the British Property Federation shows there are 157,512 build-to-rent homes complete, under construction or in planning across the UK.

As it stands there are 33,505 build-to-rent homes under construction, 11% less than last year, though the number in planning is up 12% to £80,771.

Ian Fletcher, director of real estate policy, British Property Federation, said: “Pain is being felt across all sectors of the economy, but build-to-rent remains attractive to investors and we know from past experience that demand for rental housing usually leads homes-for-sale out of any recovery.

“Our statistics show that a quarter of build-to-rent delivery is now coming from major housebuilders and their support of the sector, through for example access to land, could really boost growth in this sector.”

Outside of London there were 58% more build-to-rent homes completed year-on-year.

However in the capital completions have increased by just 2% year-on-year, while homes in the planning stage are down 10%.

Fletcher added: “One concern is the London pipeline – the statistics show a sharp decline in the number of homes in planning across the capital.

“London was a leader in championing build-to-rent and the sector’s role in adding much-needed new homes to its housing market.

“The imbalance between housing demand and supply has not gone away, and if anything the impact of coronavirus has shown us that a safe and secure home for everyone is fundamental, and we should be doing everything we can to ensure the capital’s housing market delivers for everyone.”

Local developers are currently responsible for building 28% of the market, with UK housebuilders (27%), major UK developers (17%), contractors (14%), registered providers (9%) and major international developers (3%) making up the rest.

Jacqui Daly, director of Savills residential research, said: “We’d expect high levels of uncertainty to increase demand for rented accommodation as people look to avoid longer term commitments such as mortgages, or if borrowing remains more constrained.

“At the same time, we expect to see the leveraged buy-to-let sector to remain under pressure, driving demand into build-to-rent.

“This means that once lockdown is lifted, build-to-rent developers should be confident to progress stalled developments.

“Also, housebuilders will face particular pressure to restore their sales rates when restrictions on doing business are lifted so we could see a greater role for build-to-rent to absorb stock.

“Housebuilders now account for 27% of total build-to-rent pipeline compared to just 10% just three years ago. We could see this share increase significantly over coming months.”

BY RYAN BEMBRIDGE

Source: Property Wire

Marketing No Comments

£215m Edinburgh build-to-rent scheme to create 476 new homes

Apache Capital Partners and Harrison Street, an alternative real asset investment firm, are to fund a landmark build-to-rent development in central Edinburgh that will be delivered and operated for the long term by Moda Living.

The £215 million scheme, known as Springside, will include 476 new homes alongside 48 existing full-leased studio and one two-bedroom apartments. It will also include shops and leisure space.

Apache Capital and Moda Living purchased the Springside site, which included the 48 existing homes, in March 2017 from Grosvenor Great Britain and Ireland.

Grosvenor, which is one of the UK’s oldest property companies, was said to have specifically chosen Apache and Moda for the two firms’ BTR expertise.

The Fountainbridge site will offer access to entertainment, shopping, public transportation as well as proximity to some of the city’s largest employers including Pricewaterhouse- Coopers, Ernst & Young and BlackRock.

It will also have communal lounges, health and wellbeing facilities plus roof terraces and a private dining room with unique views of Edinburgh Castle, as well as managed communal gardens. The site will be centred around new landscaped public squares, with claims it will create an “urban village” with a year-long calendar of events and activities for residents and the wider public.

John Dunkerley, chief executive and co-founder of Apache said: ”We are committed to delivering and expanding our build-to-rent pipeline with both Harrison Street and Moda Living despite the near-term disruption being caused by Covid-19.”

He said “there remains a fundamental mismatch between supply and demand for high quality purpose-built rental housing in the UK and for investors seeking long-term, steady income streams from assets with defensive, counter-cyclical qualities, build-to-rent remains highly attractive as a sector”.

By Brian Donnelly

Source: Herald Scotland

Marketing No Comments

Nearly 250 new homes planned for Hallhill

NEARLY 250 new homes could be built to the south of the East Coast Mainline in Dunbar.

A section of land at Hallhill North, to the west of the town’s Lochend campus of Dunbar Primary School, has been earmarked for development by Taylor Wimpey East Scotland and Hallhill Developments Ltd.

The scheme, if approved, would likely be the final development in the Hallhill area of the town, south of the railway line.

However, Dunbar Community Council has concerns about the proposals and how they would connect with the rest of the town.

The scheme is made up of 242 houses – 29 with two bedrooms, 91 with three bedrooms, 76 with four bedrooms and six with five bedrooms – as well as 29 two-bedroom flats and 11 one-bedroom flats.

Pauline Mills, land and planning director for Taylor Wimpey East Scotland, said: “We are delighted to confirm that we have made our detailed planning application for the development of land off Yosemite Park in Dunbar, following our consultation process late last year.

“Our proposal includes a provision of 25 per cent affordable homes within the development, as well as a range of contributions that can be announced when our discussions are concluded with the council.

“As well as delivering the next phase of new homes following completion of our Albany Grange development, our latest proposal for development will provide a range of economic benefits for the local area which includes supporting over 160 jobs per year of construction, as well as the attraction of new customers to local businesses.

“We believe this development would be a great further addition to the local area.

“It also complements our other developments across the region.”

Dunbar Community Council met with the developer at the beginning of last year.

Pippa Swan, the group’s chairwoman, said they had concerns about the proposals.

She said: “We knew it was coming as it is all part of the [Hallhill] masterplan.

“The comments that we made were simply about how the additional 240 homes were going to impact on the circulation of traffic along Brodie Road and the impact it was going to have on traffic into Belhaven past the hospital, on Hospital Road and Beveridge Row.”

The drawings for the development, which is with East Lothian Council’s planning department, highlight space being left for a pedestrian tunnel under the railway line to the north.

Talks have been taking place for a number of years regarding the possibility of reopening the tunnel, between Ash Grove and Elm Street, or creating a new tunnel.

Mrs Swan stressed the importance of creating a development that was “porous” and allowed connectivity between the town to the north of the East Coast Mainline and the homes at Hallhill, to the south of the railway line.

She said previous discussions had estimated the cost of a pedestrian tunnel to be in excess of £1 million and added: “It would be absolutely marvellous if it happened.

“It is the same old chestnut – who owns the railway line? Who is going to pay to reopen the tunnel?”

Meanwhile, separate proposals for a further 37 homes in Hallhill are still being weighed up by East Lothian Council’s planning department.

Harrison Hunt Ltd and Hallhill Developments Ltd are looking to build new houses on the south-west corner of the Hallhill area, between Beveridge Row and Yosemite Park.

The proposed housing is a mixture of three and four-bedroom properties.

The plans, which were submitted to East Lothian Council’s planning department in November last year, show 13 of the homes would be four-bedroom detached properties.

The remaining 24 homes would all have three bedrooms, with 12 of the properties detached, eight of them semi-detached and four as terraced homes.

By Cameron Ritchie

Source: East Lothian Courier

Marketing No Comments

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

Marketing No Comments

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

Marketing No Comments

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

Marketing No Comments

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

Marketing No Comments

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