The Housing Forum Yorkshire and the Humber Industry Leaders' Workshop

22 July 2009 | Darren James

The Housing Forum visited the offices of Frank Haslam Milan in Doncaster on 11th June 2009 for its latest Industry Leaders’ Regional Workshop. Our regular engagement with the market on house building activity takes us across the country in order to assess the opportunities in the current market conditions.

Chaired by Shelagh Grant, Chief Executive of The Housing Forum, the workshop was attended by 15 of the region’s senior figures from Housing Associations, Developers, Contractors and House Builders in order to build a rounded view of the area.

Background

The purpose of the Industry Leaders’ Regional Workshops is to understand the current issues of the industry at a regional level and how the leaders propose going forward.  It is important that we voice regional needs and concerns.  The Housing Forum uses the information gathered at the workshops and will feed it back to the Housing Forum Board, our Government observers and wider trade bodies, stressing the issues that are affecting the regions.

Yorkshire and The Humber Housing Statistics

Neil Herries, Regional Director for NHBC, provided comprehensive house building statistics for the region. 

Statistics show that:

  • There were 699 new homes registered in Yorkshire and The Humber in the 3 months to the end of May 2009, 4% of the total UK figure.  This gives a 72% decrease against the same 3 month period a year ago (47% were in affordable housing-which is below the National figure).
  • In the 3 months to the end of May 2009, 1240 homes were completed giving a 52% decrease on the same period last year.
  • At the end of May 2009, there were 8380 homes being built, this is a 34% decrease on the same time last year.
  • Both starts and completions for the region are below the national average.

Regional Assessment

  • The Industry Leaders’ Regional Workshop began with an overall assessment of housing in the region.  Overall, there has been pressure on sales, with an 18 month period of reducing tender prices creating friction in the market as base costs remain relatively high.
  • Conversely, there is a risk that an upturn might see subcontractors walking away from frameworks agreed during the recession.  Security for the future relies on supply chain partnerships.
  • New Framework arrangements are not delivering much activity, particularly in new build.  Examples included membership of 12 Frameworks of which only 1 was active.
  • Reduced Government spending is co-inciding with restrictions on the availability of credit.  The situation is made worse by the media speculating and affecting confidence in the industry.  The Government is prioritising the green agenda but there is uncertainty where the money will come from to fund this.

Valuations

  • The major issue currently affecting the region is downward valuations.  This creates uncertainty with sales.  Loan : Value ratios are altered and there are perceptions of inconsistencies in valuations.
  • Banks are risk averse despite pressure from the Government to make cash available for housing providers, The Government has directed funds into the HCA but we are only seeing a trickle of activity emerging from the investment.  
  • The subsidy of social housing through market sales in the current climate is not possible and higher grant rates are needed from the HCA to deliver against targets.  The shared ownership market has strengthened which indicated that there is still strong demand for housing.
  • Downward valuations also affect shared ownership sales as the rent calculation is driven by valuations.

Government Targets

  • Commentators felt that Government timescales and targets set by the HCA show a limited understanding of the commercial development process.  Funding “gaps” exist where sites have a negative value.

General Concern for Skills Capacity

  • There is concern in the region over the impact of the recession on our skills capacity.  The industry is losing many valued workers that have been trained to a high standard.  Have we lost these people that are core to our businesses?  With a weaker workforce the industry will be slower to react to an upturn in the market and a growth in demand.  Adequate training cannot be given to apprentices.  In basic construction skills, as the slowdown in house building means apprentices do not have opportunities to access all house building stages, land buyers are leaving the industry and trainees are not getting work.

The Future of ALMOs

  • With a large representation of ALMOs in the region, the future of ALMOs as a sustainable business in their own right is critical. Their main drivers to date have been the completion of the decent homes programme. 

Replenishing Land Stock

  • There are concerns about ability to buy the land to deliver homes.  The affordable housing element of S106 is a regulatory burden.  RSLs indicate that land values for council land are too high.
  • In some circumstances land owners are waiting 2-3 years to sell.
  • Part of the solution is to actively build on prime locations.  This policy approach would have an impact on secondary locations and regeneration sites and stimulate the rest of the market to sell.  In some areas of the region, the planning system has been helpful in re-mixing sites.

We would like to thank the following for their interest and insight into the housing market in the Yorkshire and The Humber region:

Noel Adams, Regional Director, Lovell Partnerships

Ron Brannon, Development and Partnership Manager, Berneslai Homes

Chris Burton, Managing Director, Barratt

Karen Chiverall, Asset and Development Manager, Leeds City Council

Mark Connors, Construction Director, Shepherd Homes

Neil Herries, Regional Director, NHBC

Darren Howell, Managing Director, Cala Homes

Joanne Jamieson, Business Unit Director, Wates Living Space

John Marsh, Development Director, Jones Homes

John Murphy, Managing Director, Taylor Wimpey

Steve Rawson, Director of Operations, Wakefield and District Housing

Martin Smithurst, Managing Director, Frank Haslam Milan

Richard Watson, Managing Director, Clayfield Construction

Mick Werritt, Director of Property Services, St Leger Homes 

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