• Issue 35

  • Apr 2018

The Source

Housebuilder News

Upturn & Acquisition for Countryside

According to a recent trading statement, total completions at Countryside Properties have increased by 15% in the six month period to the end of March 2018. Completions reached 1,655 overall, up 19% for their partnerships arm and up 7% for the private division. The company’s net reservation rate stands at 0.87 (H1 2017: 0.89) with open sales outlets up 8% to 52.

Private average selling price is down 11% to £392,000, though this is “in line with stated objectives”; ASP at the partnerships side have decreased from £368,000 to £308,000 whilst the private ASP for the housebuilding arm stayed “broadly flat” at £531,000, compared to last year’s £538,000.

Countryside confirmed that completions and revenue are in line with their expectations with Group Chief Executive at Countryside, Ian Sutcliffe, stating: “We continue to deliver our strong organic growth trajectory with robust trading in all regions.”

Additionally, “accelerated cash delivery” has helped Countryside fund the acquisition of housebuilder Westleigh Group, in a deal worth up to £135.4 million.

Westleigh, a Leicester-based partnerships business building homes in the Midlands and South Yorkshire, delivered 1,159 homes (92% of which were affordable) in partnership with local authorities and housing associations in the year ending March 2018. Producing an operating profit of £15.6 million, the company’s revenue for the year was stated as £150.6 million.

With Westleigh expanding the geographical reach of Countryside Partnerships to areas with strong demand, Countryside said the acquisition “provides a strong strategic and cultural fit to Countryside and provides us with an excellent platform for further partnerships growth. We see huge opportunity in combining Westleigh’s regional expertise with the Countryside’s mixed tenure business model.”

New Build House Price up 8.5%

The price of new builds has risen 8.5% since December 2016, according to Land Registry data, with the average price of a new build house now standing at £307,378. Whereas, the price of existing house prices has increased by 4.6% since December 2016 and the average price of existing property, as at December 2017, was £239,015.

However, the recent February data shows:

  • UK house prices have fallen, on average, by 0.1% since January 2018
  • UK house prices grew by 4.4% in the year to February 2018 (down from 4.7% in the year to January 2018) taking the average property in the UK to £225,047
  • England house prices have risen, on average, by 0.2% since January 2018
  • England house price rose by 4.1% in the year to February 2018 taking the average property value to £242,176
  • The North East region experienced the largest monthly price rise, up by 3.1%
  • London saw the most significant monthly price fall, down by 2.1%

SME Builders want Homebuilding Process to be more about Building Homes

CRL recently surveyed SME builders and developers to gain insight into the challenges and opportunities they face and to discover if the goal of building 300,000 new homes a year is achievable; here is what they found:-

Getting tangled up in red tape is every small to medium builder and developer’s nightmare. Overly complex policies, unnecessary processes, outdated legacy systems and piles of local government paperwork all cause long, costly delays. This bureaucracy repeatedly threatens to pull focus from the job at hand – building homes and meeting the challenge of our national housing crisis.

The results clearly show the feelings and grievances experienced by those who are building the homes of tomorrow, today.

One strong theme that emerged is the belief that there is inadequate support from those who set regulatory and legal stipulations and requirements; 53% of those surveyed described the government as either ‘unsupportive’ or ‘very unsupportive’. Just 2% thought legislators were ‘very supportive’ of the industry.

“There’s an inbuilt irony here,” said Steve Mansour, CEO of CRL. “There is a radical disjuncture between the support expressed by policymakers for the building trade, and the level of practical help that they deliver.”

Current legal frameworks are outdated and no longer fit for purpose, Mansour said. Government policy unfairly favours larger homebuilders over small to medium developers.

In her foreword for the White Paper, Mansour points out that the Prime Minister promises the government will be “giving councils and developers the tools they need to build more swiftly” in order to “tackle unnecessary delays”.

“If this sentiment was translated into practical action, our industry would gain great momentum,” Mansour said. “Instead, one developer working on a project to construct just over 100 homes was faced with 40 different demands from the council that had to be met before the development could progress.”

Measures included: obtaining approval for roadworks; seeking permission to move any foliage that birds might use for nesting; erecting pre-approved fences around five silver birch trees; reporting on colours and other details of door, window and garage lintels; submitting detailed drawings showing proposed brick types and design of windows, garage and house doors; taking steps to protect hedgehogs; protecting slow worms by filing an ecologist report; and building 10 bat boxes and 22 bird boxes.

“I don’t want to trivialise the importance of some of these measures, but others seem overly onerous,” Mansour said. “What’s even more worrying is that this example is from three years ago and yet 39% of those we recently surveyed said they thought the government’s support had decreased over the years, with 32% claiming that it had stayed the same.

“In addition, the government has proposed reducing the time that builders have to work on projects that have gained planning permission to just two years before permission is removed. Ministers have also proposed that developers which fail to construct homes quickly enough could have their land confiscated by local authorities.”

In response, Mansour said that builders were keen to point out that there was a substantial difference between outline permission, where land for housing is approved by planners, and detailed permission, which is required for the builder to actually begin work. If the two-year deadline for work commencement was counted from the time outline permission was granted, many projects would be undeliverable.

“We believe it’s vital to cut as much red tape as possible, without delay,” Mansour said. “This doesn’t mean cutting corners in terms of building quality, health and safety or building regulations. We are certainly not advocating buildings that are less structurally sound.

“Instead, we are simply calling for a reduction in the complexity involved in inspection and certification, to streamline the process. This will be of particular help to small to medium builders who don’t have the resources to deal with overly burdensome bureaucratic requirements. It’s important to unshackle the construction industry.

There is one clear and optimistic note, though. Those surveyed remain confident about 2018, with 65% saying they are planning to build more homes than they did last year.

Can the industry meet the government’s target of building 300,000 homes a year? “The answer is an emphatic ‘yes’, but only when the barriers to building are removed, and red tape is purposefully pared back.” Mansour said. “We’re doing everything we can, it’s time for the government to do the same.”

Source – CRL