Memorandum by the National Federation
of Builders (NFB) (AH 34)|
1. The NFB is the construction industry's
longest established trade association, and represents some 2,000
builders and contractors across England and Wales with an aggregate
turnover of more than £10 billion (over 10% of the industry's
total gross turnover). 800 of its members are housebuilders.
2. We wish to make two specific observations
about issues that will affect housebuilding rates, which are particularly
relevant to our predominantly small and medium sized members (SMEs).
3. We welcome the Government's intention
to increase housebuilding levels and support the proposals in
"Planning for Housing" to increase the number of available
sites. This explicit recognition of a connection between site
availability and housebuilding output has been absent from policy
since the late 1980s.
4. However there are potential conflicts
between these proposals to require local authorities to make more
sites available and another major policy plank, aimed at increasing
housing output; Growth Area policy.
5. Growth Areas policy involves a very high
degree of concentration in major locations, and this policy is
taken forward in the RSS for the East of England (the East of
England Plan). While. in the long run. it is undoubtedly helpful
to have these long term major allocations because they can help
infrastructure planning, they are not the whole answer. Indeed,
the degree of concentration and the resulting high levels of output
that are assumed will follow, are themselves likely to lead to
an under-performance against Plan.
6. This is because any individual housing
market has a finite size and each site within that market only
sells at an average of 50 units per year. Thus there must be sufficient
sites and markets to sustain a policy level increase in output.
This point was recognised in DoE Circular 44/78, "Private
Sector Land: Requirements and Supply", which said:
"The phasing of development, for instance,
is one kind of marketing constraint which is commonly overlooked.
There is a limit to the rate at which dwellings can be sold on
any one site. Rarely, if ever, would a site be capable of generating
more than 100 sales a year. Typical annual production on a large
site is unlikely to exceed 50 houses. A site with a capacity of
(say) 1,000 dwellings should be seen, therefore, as providing
100 dwellings a year (at best) over 10 years; the site's entire
capacity is in no real sense immediately available for development."
7. Similarly, the Growth Areas are characterised
by long lead times and by heavy infrastructure requirements, which
raises a real risk that instead of increasing output and providing
a step change, they will actually delay housebuilding and reduce
provision. It is therefore essential that PPS 3 and RSS policies
in the Growth Areas address the question of how to ensure a sufficient
flow of sites, including what are termed "oven ready,"
easy-to-develop sites, both in the short term, in order to avoid
a hiatus in supply and in the longer-term, to complement the mainly
large and difficult-to-develop sites in the Growth Areas.
8. We would invite the Committee to consider
the impact of the proposed HIPs on housebuilding output. There
has been a great deal of publicity about the cost of HIPs and
their relevance and value to the consumer. However there has been
little discussion of their effects on the size of the total housing
9. ODPM has itself acknowledged that their
introduction could deter "casual" sellers and might
reduce the total size of the housing market by 10%. Estate agents
who recognise the role of the vendor who wants to test the market
and withdraws if the house does not sell, have estimated the reduction
could be as great as 30%.
10. This is enormously significant for new
housebuilding, because 50%-70% of new home sales, depending on
the market cycle, are dependent on a second-hand sale. If that
market is slowed down and is reduced in total size, it will inevitably
reduce effective demand for new homes. In turn, this means that
other Government policies to improve planning policies or performance
will be thwarted by the downsizing of the total market.
11. However, on the wider question of the
value of the Packs, we totally reject the premise on which they
have been promoted by Government; namely, that they will increase
the likelihood of transactions completing because, at present,
they fail due to lack of information. All the evidence clearly
shows this is a very insignificant cause of failed transactions.
12. Given that the Government intends to
pilot the Packs sometime in 2006, before introducing them in 2007,
we would urge your Committee to hold an Inquiry into the results
of the pilot and to instruct the Government that sufficient time
must be allowed for that Inquiry to be completed and its findings
to be considered before introducing the Packs.