Housebuilding in England slows as Brexit looms
Posted by The Oracle Group on 5th July 2019 -
INDUSTRY
Housebuilding in England slows as Brexit looms
The government’s target for new home construction looks to be in jeopardy as housebuilding in England has continued to slow amid political uncertainty and skills shortages. In the first three months of 2019, the number of new builds starts declined by 9% compared to the previous three months, and dropped 9% annually, according to the Ministry of Housing, Communities, and Local Government. “The decrease in starts does look like a potential issue in the market. Longer-term it looks like overall delivery has levelled out at about 220,000 net additions a year,” said Neal Hudson, an independent housing market analyst. The government plans to build 300,000 new homes a year by the mid-2020s.
Property listings decline in June
The number of new UK property listings fell by 1.9% in June, according to Housesimple’s property supply index. Last month, 61,755 new properties came onto the market, down from 63,001 in May 2019. The biggest declines were in the South East and South of England, where new listings fell by 11.1% and 8.7% respectively. Meanwhile, the North West saw an increase of 3.92% and London 2.03%. “Although new property supply fell slightly in June, new listings still exceeded 60,000 for the second month in a row, as new sellers took advantage of the better weather and reduced Brexit uncertainty to market their properties,” said Sam Mitchell, chief executive at Housesimple.
Property investors feel government is failing to support market
Almost all of the respondents (97%) to a UK property investor survey believe the government is not doing enough to support the property market. MT Finance canvassed the opinions of 135 property investors. Findings also revealed that 50% thought scrapping the 3% stamp duty surcharge would improve conditions in the UK real estate sector. Further to this, 17% believed introducing a tiered tax system on BTL property would better support the market “It is interesting that the stamp duty surcharge and removing it is more important to property investors than mortgage interest tax relief - it suggests this group of investors are the ones who are most likely to expand their portfolios,” said Gareth Lewis, commercial director at MT Finance.
Private equity funds build firepower for property slump
Figures from Preqin show that private equity funds planning to invest in distressed property assets raised $8bn in the first quarter of 2019, more than the last two years put together.
HOUSING
Small flats are ‘slums of future’
An investigation by the Times concludes that landlords are making the “slums of the future” by housing children and vulnerable adults in tiny bedsits squeezed into former commercial buildings. The paper notes that developers have converted offices into hundreds of flats, exploiting a change in planning rules to side-step minimum-size requirements, with some being subject to safety breaches. Commenting on the investigation, Henry Smith, of the Town and Country Planning Association, said developers had taken advantage of the loophole in planning rules to create “the slums of the future”. He described some of the flats being created by the rule change as “appalling” and said it was “a really shameful way to be housing people in the 21st century in a wealthy nation”.
FIRMS
Persimmon reveals declining revenues
Despite higher average selling prices, of £216,950, revenues at Persimmon have declined 4.5% year-on-year - to £1.75bn. At 7,584, the housebuilder put up almost 500 fewer homes over the six months, compared to the same period in 2018, and said in a trading update that it was focusing on improving customer service. Elsewhere, the chief executive of Persimmon, Dave Jenkinson, has refused to deny that the housebuilder paid to take control of a Facebook group dedicated to complaints about the company before shutting it down.
MJ Gleeson on track to double output
MJ Gleeson said it's “comfortably on track” to double its number of completed homes to 2,000 per year by 2022, as the housebuilder revealed a 25% jump in the number of completed homes for this financial year. MJ Gleeson built 1,529 homes for the year ending June 30, while its Gleeson Homes division upped its number of plots 5.6% year on year to hit 13,575 plots.
New retirement property developer launches
New retirement property developer Guild Living has entered the market with the announcement of plans to develop over 3,000 new homes specifically for the older generations with the aim of meeting the UK’s longevity and urbanisation needs. The firm has already secured two development sites, in Bath and Epsom.
Great Portland Estates welcomes more London tenants
London landlord Great Portland Estates has racked up more tenants in the City and West End - agreeing nine new lettings in the quarter to June 30 to generate a £1.9m share of annual rent. A further 12 lettings are under offer, totalling £3.7m of rent per year, and GPE also completed on £9.2m of residential sales.
Britain's oldest building firm ceases trading
R Durtnell and Sons - Britain's oldest building firm - has ceased trading, putting more than 100 jobs at risk. The company was founded in 1591, and has been run by 13 generations of the same family. It was working on a £22m project to refurbish parts of the Royal Pavilion Estate in Brighton when it failed. R Durtnell & Sons made a loss before tax of £679,877 in the year ended 31 December 2017, according to documents submitted to Companies House.
PRIME
Premium house prices stabilise
London’s premium house prices have held steady rather than fallen over the past few months for the first time in nearly three years, according to Savills. Prices showed no change in Q2 - the first time they have held steady rather than dropping since 2015.
COMMERCIAL
European agency to sublet Canary Wharf HQ
The European Medicines Agency (EMA) has agreed to lease its Canary Wharf headquarters to flexible space provider WeWork. Earlier this year, the EMA lost a landmark Brexit case for the commercial property industry ahead of Britain’s departure from the EU, when it tried unsuccessfully to cancel on its £500m lease in favour of a move to Amsterdam.
RETAIL
William Hill announces 700 store closures
William Hill has confirmed plans to close nearly 700 high street betting shops, putting 4,500 jobs at risk, following the government's decision in April to reduce the maximum stake on fixed-odds betting terminals to £2. The bookmaker said that since the decision it had seen "a significant fall" in gaming machine revenues. The Ladbrokes owner, GVC, has already said 900 shops could close, threatening 5,000 staff, while Betfred has predicted up to 500 closures, which would reduce its headcount by 2,500. Overall, a combined 2,100 shops could close, which represents 25% of the UK’s 8,423 bricks-and-mortar bookmakers, potentially affecting up to 12,500 staff, or nearly 12% of people employed in the UK gambling industry.
OTHER
Homeowner claims over 400 problems with new build home
A homeowner claims to have found over 400 faults on his new build home – including roof tiles attached with duct tape. Joe Tompkinson and his wife were excited about the prospect of a “fresh start” when they moved into their Linden Homes property in December 2017. But they started noticing problems after three weeks when a tile fell off the roof and caused £3,000 of damage to their car. Linden Homes said they’ve received “an unusually high number of reported issues” on the development – with 40 other homeowners describing problems. “We have confirmed to Mr Tompkinson, on a number of occasions in writing, that we will attend to any issues with his home which do not comply with NHBC standards,” the firm said in a statement.
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