Memorandum submitted by The Home Builders
Federation
THE HOME
BUILDERS FEDERATION
1. The Home Builders Federation (HBF) is
the principal trade association representing private sector home
builders in England and Wales. Its members range from large national
companies through regional companies to smaller, local firms.
Between them, HBF member companies are responsible for about 80%
of the new homes built annually.
INTRODUCTION
2. Residential development is an important
sector of the construction industry with its own characteristics
distinguishing it from civil construction and contracting.
3. Home builders serve a mass retail market
of individual purchasers. Although the annual output of new homes
has increased by some 25% since 2001to over 160,000 homes, such
sales only constitute around 10% of residential property sales
at anyone time. In consequence home building is a price-taking
rather than a price-making industry with new homes always competing
with a much larger stock of existing properties in the property
market.
4. There is also a high degree of risk in
home building relating to a range of factors from the uncertainties
involved in securing planning permission for particular sites
to the potential volatility of the residential property market.
5. This business environment is an important
factor to be taken into consideration in assessing the issues
that the Committee wishes to investigate in its current inquiry.
THE MAIN
CURRENT ISSUES
AFFECTING HOME
BUILDING
6. The housing market in England and Wales
is characterised by a significant under supply of new homes. The
latest Government figures for 2005-06 indicate that there were
185,000 net additions to the housing stock in England. This figure
compares to an estimated increase in the number of households
of 223,000 and the Government's target of increasing output to
240,000 net additions a year by 2016. As the problem of under
supply has existed for well over a decade it has contributed greatly
to the current problem of affordability affecting all parts of
the country.
7. The main constraint on home builders
supplying more homes to meet this shortfall is an insufficient
supply of land with implementable planning permission for housing.
Between 1997 and 2003, Government figures show that the amount
of land coming through the planning g system annually for residential
development fell by 7%. The level of home building has only increased
since 2001 as a result of an increase in densities from 25 to
41 homes per hectare. As it is unlikely that the average density
levels can increase much further, the only means of further increasing
the supply of new homes will be to bring more land through the
planning system.
8. In this regard, the HBF welcomes the
Government's new Planning Policy Statement 3 (PPS3) on Housing
which entered into force in April 2007. PPS3 requires local authorities
to identify a rolling five year forward supply of developable
land sufficient to meet their agreed housing requirements. Consistent
and effective implementation of PPS3 will be fundamental to successfully
resolving the current housing supply crisis.
9. The other major current focus for the
home building industry is action to further improve the environmental
performance of new homes.
10. The HBF is working closely with the
Government with a view to achieving its objective that from 2016
new homes should be built to a zero carbon performance standard
resulting in no net carbon emissions from the use of the home
following construction.
11. Achieving this standard would make the
UK a world leader in low carbon housing and the objective is very
challenging for the industry to attain. New forms of partnership
with suppliers, local authorities and energy providers are likely
to be necessary. The industry will also need to determine carefully
which solutions work well for consumers to prevent the risk of
a public loss of confidence.
INDUSTRY CAPACITY
12. Provided the policy and regulatory framework—most
importantly the planning system—enable sufficient land for
residential development to be made available to meet demand, the
industry does have the capability to increase its output.
13. The HBF jointly commissioned with CITB-ConstructionSkills,
a study of the labour and skills issues associated with a significant
increase in housing output following the publication of Kate Barker's
2004 report on housing supply. A copy of the summary report is
attached (not printed).
14. In broad terms the report found that
with the right business conditions and sufficient land supply,
home builders would be able to achieve sustained improvements
in labour productivity. As a result, the scale of increase in
the numbers of the workforce required to build significantly more
homes would not itself be a constraint on expansion.
15. The report did, however, point to skills
shortages in management, professional and trade occupations which
need to be tackled. The HBF and its members are working with CITB-ConstructionSkills
and other bodies on these skills challenges.
16. Approximately one third of the industry
is directly employed by the home building companies, with the
remaining workforce being sub-contractors. In order to ensure
the workforce as a whole is safe and competent the members of
the HBF's Major Home Builders Group have adopted the objective
of a fully qualified workforce. Their aim is that all site workers
will have CSCS or equivalent cards by the end of 2007 and be competent
with the appropriate vocational qualifications by the end of 2010.
The HBF is also seeking to extend this initiative to other member
companies.
17. Migrant workers from the new EU Member
States have played an important part in meeting skills requirements
in the last two or three years. Many of these workers are skilled
in their trades and professions and have usefully supplemented
the indigenous workforce usefully.
18. Major home builders are also working
with the Princes Foundation to promote and recognise the constructive
use of urban design principles in new housing developments and
to build skills capacity in this field within the industry. In
addition, the HBF—with the Commission for Architecture and
the Built Environment—is one of the two principal sponsors
of the Building for Life initiative and awards. Building for Life
promotes good urban design principles for residential development.
19. The increasing focus on sustainability
is opening a new series of research, design, skills, and implementation
challenges for home builders. These challenges are most clearly
seen currently in the work being undertaken by home builders in
relation to the Government's objective that all new homes should
meet a zero carbon performance standard from 2016. Many of the
major companies are conducting research and modelling potential
means of achieving this standard and the interim steps towards
it set out in the Government's proposed 2010 and 2013 changes
in Part L of the national building regulations.
20. As well as companies' own research,
publicly backed programmes such as English Partnerships' Carbon
Challenge should assist the industry in working out the most technically
and cost-efficient means of achieving improved carbon efficiency
as well as design solutions that are acceptable to purchasers
and those living in new homes.
21. Significant work is also now being undertaken
on water efficiency in the light of the Government's plans to
introduce new national building regulations in 2008 based on a
usage standard of 125 litres of water per person per day. Further
reductions in the amount of water used in new homes are likely
to be sought in future and such charges will raise some significant
product and design challenges both for home builders and their
product suppliers.
22. More generally, the HBF is participating
actively in discussions being led by the Department for Business,
Enterprise and Regulatory Reform on a new Sustainable Construction
Strategy and with the Department for Communities and Local Government
on the deployment of the Code for Sustainable Homes.
23. In view of the comparatively fragmented
nature of the industry, HBF considers that an enlightened longer-term
strategy for the evolution of national building regulations is
of great importance to assist effective innovation in sustainable
construction and other fields.
24. The HBF has held detailed discussions
with the Department for Communities and Local Government about
the reform of building regulations and other policies over the
last year with a view to providing a more effective future framework
within which the industry and its supply chain can innovate. We
would in particular welcome a simplification of the structure
of the regulations, a focus on required outcomes rather than specific
or prescriptive means of achieving them and a longer-term strategy
for changes in the key areas. Collectively such charges would
enable the industry to work out the best solutions as cost-efficiently
as possible while promoting effective forward planning by suppliers.
25. We would favour the adoption of similar
principles in other areas of regulation affecting home builders.
The industry faces a plethora of regulatory requirements in the
planning system and otherwise. Overall these requirements have
made the business climate increasingly complex and it is important
that "better regulation" principles are applied to minimise
the risk of delivery of the Government's housing supply targets
being adversely affected.
NATIONAL AND
LOCAL PARTNERSHIP
26. The challenge of tackling the national
housing supply crisis while improving the sustainability standards
of new homes and meeting other housing objectives cannot successfully
be met by any one party alone—whether it be national government,
local authorities, the industry, regulators or the supply chain.
27. Current policy priorities such as the
2016 zero carbon homes target illustrate the need for partnership
very clearly. In the case of zero carbon the recognition of the
need for co-operation between different parties has been publicly
recognised in the 2016 Commitment—signed by national government,
the HBF and home builders, construction products manufacturers
and suppliers, local authorities, energy suppliers, and other
bodies including green NGOs.
28. Similar partnership approaches will
be required at regional and local level in order to translate
the growing consensus on national housing supply and policy objectives
into reality on the ground.
30 November 2007
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