Redrow Says 'bureaucratic Mess' Behind Housing Shortage

[Eddie_George]

British housebuilder Redrow dismissed debate that government mortgage schemes were fuelling a housing boom and said the country's "bureaucratic mess" of a planning system was the main cause of the housing shortage.

The coalition government has been criticised by economists and industry players for its launch of the Help to Buy scheme in March, the first part of which provides equity loans to help Britons buy homes with small deposits.

Business Secretary Vince Cable entered the debate this week, warning of the risk of a house price bubble and suggesting that the second part of the scheme, due to take effect in January, be rethought.

"I've seen some pretty silly things written in the last week or two and stated by certain politicians," Chief Executive Steve Morgan told reporters on Wednesday, declining to name who he was referring to.

"The real issue is not whether Help to Buy is fuelling a new boom, the real issue is that we're not building enough houses, and we're not building enough houses because we've got an antiquated planning system that's so bureaucratic."

Acknowledging the problem, the government has tried to speed up planning approvals by giving local authorities more decision-making powers but Morgan said the process had to be further streamlined, and give councils time limits on making decisions.

"We had one site in the north west, we built several hundred houses a few years ago and had 9 conditions. We just had a site on the opposite side of the road recommended for approval with 103 conditions. They just take such a long time to clear these conditions before you can start," he said.

Economists say Britain needs 250,000 homes a year to keep up with population growth, with demand far exceeding supply. Private housebuilders completed 88,000 homes last year, data from Savills showed.

Redrow, which reported a 63 percent jump in full year profit on Wednesday and reinstated its full year dividend of 1 pence per share, said Help to Buy had made a significant contribution to forward sales.

Morgan said it might take another two years for the housebuilder to reach normalised profit levels, as about a third of its completions were from low margin land. A normal level was an operating margin of between 16-17 percent, compared to the current 12.2 percent level, he said.

Reuters

[Tired of Waiting]

Reuters

What a moron. If the planning system is liberalised his company goes bust in a few years.

Only Britain has this absurd market concentration, with just a handful of building companies responsible for most of the market. In countries with liberal planning systems small builders and even individuals can easily out-compete big bureaucratic companies with huge over-heads. But here only these huge companies can break the planning block. Our planning system in effect protects these big builders from smaller, nimbler competition.

[NorthamptonBear]

What a moron. If the planning system is liberalised his company goes bust in a few years.

Only Britain has this absurd market concentration, with just a handful of building companies responsible for most of the market. In countries with liberal planning systems small builders and even individuals can easily out-compete big bureaucratic companies with huge over-heads. But here only these huge companies can break the planning block. Our planning system in effect protects these big builders from smaller, nimbler competition.

How many thousands or even hundreds of thousands of plots with planning does this company have banked?

Putting council tax or even better business rates on should get a few houses built or plots sold to others.

[Tired of Waiting]

How many thousands or even hundreds of thousands of plots with planning does this company have banked?

Putting council tax or even better business rates on should get a few houses built or plots sold to others.

That would be a very good start.

But we would still need more land allocated for housing in the SE, and IMPO preferably thinly spread, around all existing villages, towns and cities, instead of a few large estates.

[goldbug9999]

What a moron. If the planning system is liberalised his company goes bust in a few years.

Only Britain has this absurd market concentration, with just a handful of building companies responsible for most of the market. In countries with liberal planning systems small builders and even individuals can easily out-compete big bureaucratic companies with huge over-heads. But here only these huge companies can break the planning block. Our planning system in effect protects these big builders from smaller, nimbler competition.

Well thats the UK version of "capitalism" all over - regulation and bureaucracy is used to keep the big boys free of competition.

[Tired of Waiting]

Well thats the UK version of "capitalism" all over - regulation and bureaucracy is used to keep the big boys free of competition.

Exactly.

[Eddie_George]

Don't know if this was ever posted:

Housebuilder land banks are falling

Citing low levels of housing completions, some commentators have claimed development land is being hoarded unnecessarily as landowners wait for values to increase. Our analysis of the permissioned landbanks of the top eight listed housebuilders would suggest otherwise, see Graph 1 below.

Permissioned land held by the top eight fell by around 100,000 plots between 2007 and 2012, as land buying slowed and existing stocks were built out. Relative to recovering build rates, the supply of land held by housebuilders is in fact falling. In 2009 the volume of permissioned land held by the top eight peaked at held 7.5 years of permissioned land, as the rate of delivery slowed.

In 2012, permissioned landbanks declined to 5.3 years supply. Some builders, such as Barratt, are actively targeting shorter landbanks to improve capital efficiency.

These headline supply figures are deceiving as not all of this permissioned supply will be financially viable to develop in the short term. Landbanks will include permissioned land in weaker markets, and larger sites that need to be phased for delivery.

Help to Buy will aid the rate of delivery of land in marginal locations. An emerging build to rent sector offers the opportunity to increase delivery while creating a reliable income stream.

Housebuilders are actively finding ways of improving return on capital and examples are emerging of how institutional forward funding of build to rent can boost this measure.

Part of the challenge lies in bringing forward those permissioned sites not under the control of developers and housebuilders. In London, Molior has concluded that 45% of permitted sites are held by ‘non-builders’, but note that many of these are historic landowners (rather than speculative purchasers), or are in public hands. Not all this land will be viable. Growing demand, emerging investment in the private rented sector and broader industry expansion will help to unlock more of this land for delivery.

Savills

[zugzwang]

Useful insights into Organ's obnoxious character from his disasterous acquisition and indiscriminate spending spree at Wolves. What he really wanted was Liverpool FC!

http://www.liverpooldailypost.co.uk/sport/other-sport/ian-doyle-steve-morgan-era-5398115

“Running businesses is like running a football club and being Mr Nice Guy is seldom the right attribute to head and lead a successful organisation, whether it's a football club, a hotel or a house building company,” he said.

[NorthamptonBear]

That would be a very good start.

But we would still need more land allocated for housing in the SE, and IMPO preferably thinly spread, around all existing villages, towns and cities, instead of a few large estates.

Every village has to have a plot of 0.1 acre made available via auction for every 200 houses every year. Minimum of 1 every 3 years (for small villages).

Current owner of land gets farmland price plus a bonus.

House must be a minimum in terms of a set of criteria meant to control size of rooms, environmental, storage, rainwater runoff etc. ie build a decent usable house raising average build quality and usability over time.

[Tired of Waiting]

Every village has to have a plot of 0.1 acre made available via auction for every 200 houses every year. Minimum of 1 every 3 years (for small villages).

Current owner of land gets farmland price plus a bonus.

House must be a minimum in terms of a set of criteria meant to control size of rooms, environmental, storage, rainwater runoff etc. ie build a decent usable house raising average build quality and usability over time.

Yes, exactly, something like that.

For instance, a 2% growth per year. A village of 100 houses should allow 2 new houses per year.

[NorthamptonBear]

Yes, exactly, something like that.

For instance, a 2% growth per year. A village of 100 houses should allow 2 new houses per year.

From memory, someone on here said 4% total increase (not 4% a year) would do the trick.

ie 2% first year, 1 next, 1 next, 0.5 thereafter.

Not sure how true. But also agree with others on not wanting housebuilding dominated by land bankers.

They subcontract out building to cheapest contractor and quality is therefore awful.

It would be hard to design a worse system than at present.

Who did design it? Who keeps it in place? Follow the money....