10 Jan 2018

Is Housing Minister Raab ready to be wowed by custom build?

Is Housing Minister Raab ready to be wowed by custom build?

How was last year for you at work? Did you work hard? Or did you just do the bare minimum to get by? Working in the custom build sector, I’d imagine you’ve been working really hard to revolutionise housing and disrupt a dominant supply model. After all, doing something a bit different is never plain sailing, which I’m sure new Housing Minister Raab knows all about.

Recently it was reported that CEO of Persimmon, Jeffrey Fairburn, did such a blindingly good job last year that he earned £110 million in bonuses.  He “worked very hard” to reinvigorate the housing market. Or, to boost share value, whichever way you look at it.

But we live in a capitalist society, so what’s wrong with business performing well?

Well, nothing at all, although we do have a system that favours an established housing market dominated by a handful of companies. And then you have a Government policy, Help to Buy, that supports this market by effectively subsidising it. Plus, these businesses operate in a market that we know is massively under-supplied and over-priced. And works to super-tight margins.

Who wouldn’t want to work in an industry operating in this context? Your product is subsidised, massively in demand and you’re not far off operating as a monopoly, meaning you cherry-pick where you build so it’s most profitable. Where do I sign up?

And luckily for the big builders, Theresa May has committed more money to Help To Buy to the tune of £10 billion – is that the sound of Champagne corks popping in board rooms?

In research released last year, the Adam Smith Institute claimed that Help To Buy actually pushed up house prices by increasing the numbers of buyers, but not of supply. But the problem for May is how do you stop subsidising, once you’ve started?

According to the Independent, back in 2013 then Bank of England Deputy Governor Paul Tucker, said that Help To Buy would be “unwise” as a medium or long-term scheme, saying: “This is not a market that needs a permanent subsidy…. [home loan guarantees] are devices for getting out of a hole to dig another one for the future.”

So keep digging, Prime Minister May. Another Government will surely sort it out later.

So did Fairburn earn his bonus? Well I’ve not sat in on board meetings, so how would I know? But from ‘fat cats’ to ‘corporate looting’, the terms that tend to get applied to this sort of activity reflect the public’s attitude.

After all, they are the taxpayers who actually fund Help To Buy and are also lumbered with the bill for our hyper-inflated housing market. Well, at least the younger generation that is trying to climb the housing ladder are.

Only it’s not even a ladder now, as moving and housing is so expensive that people move far less than they used to do. And they don’t even want the products of the big six volume builders, with reports of poor quality and poor design as they build to the lowest denominator to maximise profits.

New housing minister

So it’s in this market that the sixteenth housing minister since 1997 and the tenth Conservative housing minister since 2010 joins the parade. So welcome Dominic Raab to the position, we hope you’re open to change.

And people want change – there are now over 220 Community Land Trusts in the UK and the legislation to grow custom build and SME builders and developer is firmly in place.

Government support for change is clear, as is public appetite as people finally start to realise that the lack of housing will cripple and control their children’s lives for ever.

The average deposit a first time buyer now needs in London has increased four-fold in the last decade from £26,700 to £100,445, as reported in last year’s Halifax First Time Buyer Review, with the average deposit being £33,000.

Help To Buy has certainly ensured that more people get on board with home ownership. But our market has traditionally relied on these starters trading up the ladder, and is no longer a given, not at the speed they used to anyway.

Last year the Resolution Foundation found that average pay is back at 2006 levels (when adjusted for inflation). So a generation of people who’ve seen the least earnings increases are also facing the highest housing costs we’ve had in a long time.

Still think that £110 million in bonus is fair reward for Fairbank’s labours?

Personally I think it’s yet more evidence of the toxic market that the White Paper referred to mildly as “broken”. I don’t think having a third housing minister in 18 months shows much dedication to fixing this home-grown market problem. After all, most jobs take a few months to truly get to grips with.

Perhaps Brexit is just driving everything, but you’d think that a few home wins/good news stories in housing might garner a bit of support for May, who’s said that fixing the housing crisis is a “personal mission”.

Well Mr Raab, you’ve a lot to take on board to get up to speed. But we’re getting good at explaining our industry as this will be the third time we’re doing it in a year and a half.

But as a sector we know that your predecessors supported and backed our new model to housing supply, and we hope you do to. We think it’s really quite brilliant. So here’s a shortcut to the best bits.

Custom build benefits

  • Gets communities on board with local planning decisions,
  • Provides additional housing, often in areas where developers won’t build,
  • Supports the SME market and local economies,
  • Builds better quality homes,
  • Gives people greater choice – about how their home reflects their lives and needs,
  • Offers diversity in a limited market place,
  • Builds relationships with people that work and live together, and stay in their homes longer as their homes reflect their needs more, and
  • Offers solutions to the downsizer market, enabling them to move into a suitable home that frees up more family sized-properties.

But custom build homes need Government support and endorsement, and thankfully we’ve had this from Government in the last few years, with huge gains in planning, legislation and financing options, both for development and mortgage finance.

So Mr Raab, please do continue to back the Right To Build, and help us change housing for the better. We’re here to help grow the sector and are happy to chat!

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  13. pinewbold says:

    How are we supposed to self-build when the planners won't even let us build a Band A passive house on an established residential site on the edge of a village? The crux of the matter can be viewed in an article I wrote for the Soapbox section of the AECB website at http://www.aecb.net/passivhaus-planning-refusal/

    This single planning refusal may seem insignificant but the Court Judgement against Braintree District Council (copy attached) has national implications for sustainable development in rural areas as it demonstrates the way in which planning legislation, in particular NPPF Paragraph 55, is being mis-applied to prevent the most sustainable new homes from being built in what the planners consider to be “isolated locations” due to the lack of public transport provision

    Through my local MPs (Pat Glass and now Laura Pidcock), I have tried and failed over the last 12 months to engage three successive Planning & Housing Ministers (Gavin Barwell, Alok Sharma and now Dominic Raab) in meaningful conversation on this matter

    The rubbish homes that major housebuilders throw up and often peddle as “affordable housing” are nothing of the sort, either to buy, rent or in paying the energy bills

    I’m afraid my patience is wearing very thin now, listening to a succession of ill-informed and misguided views on what is considered, in planning terms, to be “sustainable”. It is becoming clear that those currently working in Planning do not have the faintest clue what real sustainable housing is or where it should be built to maintain the sustainability of our towns and villages

    What is also becoming clear from the recent Braintree judgement is the realisation that legislation that was drawn up to prevent large-scale, urban sprawl into the countryside is being abused and mis-applied to prevent the construction of one much-needed, highly-sustainable, new home on a residential plot on the edge of an existing small conurbation. Not only was the planning refusal wrong-headed in so many ways but the mistake was compounded by the Planning Inspectorate upholding one wrong decision with another. The Council have clearly seen this as an endorsement of their decision but I aim to prove that this is nothing of the sort. Durham County Council Planning Department are already a much-ridiculed, laughing stock in the UK Passive House fraternity who are simply trying to raise the deplorable standard of housebuilding in the UK to genuinely sustainable levels of energy use

    My own national award-winning new home/office, the only Band A dwelling in County Durham, was originally refused planning consent because of its “isolated location” in Upper Weardale. After much protesting, common sense eventually prevailed and we can now live and work in a rural community, use and support all the local services and pay less than £200 a year for energy

    As I have articulated at great length, attempts to prevent car use by mis-applying planning legislation is doomed to failure and simply continues to strangle the life out of rural towns and villages and reduce the viability of the services therein. We have a horrendous housing shortage in the UK and stopping the construction of a Band A passive house in an established residential area is completely indefensible on so many levels. As much of my business is based around trying to help people realise their dreams of living in accessible and sustainable homes, I am finding that every planning application now results in a battle against the “whatever it is, I’m against it” brigade. Their stubborn and often spiteful resistance towards development of any kind is now becoming embarrassing and I am beginning to advise clients that unless they want to build some poor quality (Band D) housing near a bus stop, they may as well not bother trying to create a sustainable new home anywhere in rural County Durham

    I am still hoping to arrange a meeting with the new Planning & Housing Minister, Dominic Raab MP, but, like his predecessors, his head is stuck firmly in the Brexit Shed. This is a shame because it appears that the only way we are going to re-introduce some common sense into Planning Law is to change the legislation which is currently providing misguided Planning Officers with the ammunition to refuse applications for real sustainable homes

    I would ask you to consider helping me to change this crazy planning policy

    Kind regards

    Philip Newbold
    Director & Accessible Design Consultant
    Certified Passivhaus Consultant


    • Duncan Hayes says:

      Hi there Philip
      While we can't comment on individual cases, I couldn't agree with you more about sustainably growing development in the countryside. NPPF Paragraph 55 has been criticised for its impractical approach to cars, and the reality is that most areas in the countryside are car reliant. Rather it's cities that should be more car free. Unfortunately, I don't think it's a case of mis-applying planning, rather that poor policy enables rejection on these grounds. And we'd like this to change. Perhaps the new NPPF will offers some resolution.