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Strong increase in sustained house building activity

From Property Talk Live on December 9, 2013

Figures released in the latest HBF Housing Pipeline report show a big increase in the number of planning permissions being granted for new homes.

The report – produced for HBF by Glenigan – shows that 44,251 permissions were granted in Q3 in England on 826 sites. This is:

* Up 31% year on year and 19% on the previous quarter; * The highest total number of permissions granted in a Q3 since 2007; * The highest no of sites granted planning approval since Q2 2008; * The total for the 12 months to September, at 166,978, is up 44% on the trough in 2011.

This is a strong forward indicator of future levels of home building. The upturn reflects the positive planning principles of the new “National Planning Policy Framework” planning system introduced last year. The NPPF is having an increasing impact as local authorities attempt to put local plans in place – or risk losing decisions on appeals as a result.

It is also undoubtedly an indicator that developers are looking to get work underway on new sites as they build out their existing sites more quickly as a result of the enormously successful Help to Buy Equity Loan scheme. Since its introduction in April it has resulted in over 18,000 reservations of new homes, bringing a renewed level of confidence to the industry and directly leading to a significant increase in build rates.

The planning figures are the latest positive indicators to emerge for the sector. Last week official Government statistics showed the number of private sector new homes started in England in Q3 was up 29% year-on-year to the highest level since Q1 2008; while the largest new home warranty provider, NHBC, said registrations of new homes in Q3 were up 19% on last year.

While extremely positive in demonstrating an upward trend, the total figure is still well short of the 60,000 permissions required on average per quarter to meet the country’s level of housing need. It is also concerning that many residential planning permissions come with long lists of “conditions” that local authorities then take a long time to clear, which then delays house builders from starting work on new sites. If build rates are to increase, local authorities have to play their part or Government must act.

Stewart Baseley, Executive Chairman of the HBF, said: “This is the latest indicator to show how the industry is looking to quickly increase output. We have already seen evidence of a rise in new homes starts and these figures show the industry’s intent to increase and sustain that over the next few years. Developers are building out current sites more quickly and are now looking to invest in new sites and begin development sooner than previously planned.

“The figures reflect the positive principles of the new planning system. They are also a clear demonstration that builders are looking to increase supply as a result of increased market confidence generated by the Help to Buy Equity loan scheme.

“But if we are to see the required increase in supply continue we need to see all local authorities playing their part. Increasingly we are seeing onerous conditions being attached to permissions that unnecessarily delay work starting on new sites. There are now tens of thousands of plots with permission but which house builders cannot start. This is a situation that Local Government – and ministers – need to urgently address if we are to see recent home building increases sustained.”

Glenigan’s Allan Wilen said “Glenigan has tracked a progressive strengthening in planning approvals during the course of this year. The latest quarterly rise in planning approvals bodes well for 2014, indicating that housebuilders are responding to the rising demand from house purchasers, which is in part supported by the Help to Buy scheme. Furthermore the sharpest rises in planning approvals during the quarter were outside of London and the South East, pointing to a broadly based upturn in new housing market activity and project starts during 2014.”

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Source: Property Talk Live