Business Failure down but interest rates stay the same ?

 The decline in the number of business failures, particularly in the construction industry, to a two-year low in April signifies a positive trend amidst the broader economic recovery. With only 13 construction firms facing administrations, down from 29 in March, it suggests a notable improvement in the sector's resilience. This reduction in business failures can be attributed, in part, to easing inflationary pressures, which likely alleviated some of the cost burdens on businesses.

The significance of this decline becomes more pronounced when considering that it marks the lowest level of construction industry administrations since May 2022, when only 11 construction firms faced similar challenges. This indicates a gradual but tangible improvement in the stability and sustainability of construction businesses, which are often sensitive to fluctuations in economic conditions.

Such a trend is not only encouraging for the construction sector but also for the broader economy, as the construction industry plays a crucial role in driving economic activity and employment. A reduction in business failures suggests increased confidence among construction firms, potentially leading to greater investment, hiring, and overall economic expansion.

However, while this decline in business failures is a positive sign, it's essential to continue monitoring economic indicators to ensure sustained recovery and growth across all sectors. Factors such as interest rates, consumer spending, and global economic conditions can still influence the trajectory of businesses in the construction industry and the economy as a whole.

Permitted Development Rights ? What is it ?

As we enter the final months of the government’s tenure, the pressure is on to make each department appear as shiny as possible ahead of the election. Those responsible for housing are counting on a further expansion of existing permitted development rights (PDRs).

The world of PDRs is a little complex

There are two main types of PDR with the first relating to the extension of one’s own home. For example, subject to certain size restrictions, you have a PDR to put an extension on the back of your house without asking the council for permission or even telling your neighbours. The second type relates to the change of use of existing commercial buildings, in particular into residential use, and it’s this type that the government hopes tweaking will result in more homes being built.

According to countryside charity CPRE, some 1.2 million new homes could be built using the country’s current stock of unused commercial buildings. The government has stated that we need to build 300,000 new homes every year, but in recent years, that target hasn’t come close to being met. Wholesale planning changes that would have many voters worrying about a new affordable housing estate being built at the bottom of their gardens is a little too turkeys-voting-for-Christmas. However, using permitted development rights to recycle existing commercial buildings is far more palatable to the electorate and allows the government to be seen to be addressing the housing crisis.

PDRs have been around for decades, but they came into their own in 2015 when the government allowed developers to convert office buildings into residential use. Since then, the number of permitted development rights has increased significantly. You can now also convert gyms, doctor’s surgeries, light industrial units, banks, cafes, and restaurants into residential, as well as add new storeys to existing blocks of flats.

All buildings have what’s known as a use class, and you would normally need to apply for planning permission to change a building’s use class (e.g. to turn an office building into a block of flats). Because applying for planning permission can be slow and tortuous, the government decided to create a streamlined process whereby the change of use was automatically approved, subject to some basic checks. Called ‘prior approval’, developers can make a PDR application for a change of use, and the council would have up to eight weeks to assess it against a short list of fundamental criteria. If they didn’t respond in that time, permission was automatically granted, making things a lot quicker and far less risky for developers.

What exactly is being proposed? 

The government has put forward several changes to the current PDR arrangements to try to woo voters. On the home front, it’s looking to let homeowners build wider and taller extensions, including wraparounds, loft conversions and kitchen extensions, all without planning permission. They also plan to scrap rules that dictate a home and any extension cannot make up more than 50% of the land surrounding it, as well as allowing homeowners to convert as much loft space as they like, again without needing permission. There’s been a fair amount of doom-mongering since the announcement, with certain sections of the media predicting pitched battles between neighbours. While there will be instances of neighbourly objections, I think most people will see this as a sensible proposal. The cost of moving home for many is prohibitive and, of course, is currently subject to stamp duty. Having the option to substantially extend one’s current home is, therefore, an attractive proposition for many people.

On the commercial conversion side of PDRs, the government is also looking to make some changes. Many commercial properties currently need to be vacant for three months before PDRs can apply, and the government is proposing to remove this restriction. This is excellent news for developers because it means they can start developing more quickly and with greater certainty. It also means they can secure the finance they need to acquire the property they’re about to convert. The government is also proposing to lift the 1,500m2 maximum size restriction of commercial properties that can be converted under one of the most significant PDRs.

Hold the champagne 

So, while all of these proposed changes sound positive, on their own, they won’t be a magic wand that fixes the housing crisis. Building 1.2million new homes from unused brownfield land would give us the equivalent of four years’ new housing, and we wouldn’t need to touch the green belt in order to do it. But the question is, who will be doing all this development? And that’s where we hit a snag, because brownfield projects are not a good fit for the major housebuilders.

If we look at the Persimmons, Barratts, and Taylor Wimpeys of this world, they have a simple, cookie-cutter model which involves rolling out standard house designs on empty building plots. Give them a plot of land anywhere in the country, and they can build some houses from their existing range of designs, and they’ll make a tidy multi-million pound profit. But give them an unused commercial building, and the model doesn’t work. They could, of course, demolish it and start again, but that’s considerably more expensive than building on virgin land. If they were to convert what’s already there, they’d have to employ architects to create a one-off design for each building. They’d also have to retrain their workforce since converting an existing building requires a different skill set than building a standard design on a vacant plot. Finally, most of these sites wouldn’t make them enough profit – they’re simply not big enough.

Who will transform unused commercial property?

If the scale housebuilders are out of the frame, who is best placed to convert these buildings? The answer lies with the much smaller operators, known as small-scale developers. These range from individuals like you or me to relatively small SME enterprises. Putting some flats above an unused shop can net you a six-figure profit in relatively short timescales. It’s not very exciting to the likes of Persimmon, but it’s highly attractive to an individual landlord, investor, or entrepreneur – experienced or otherwise. The government has made life increasingly difficult for property investors (particularly regarding buy-to-let) over the last decade, but it now needs to encourage new small-scale developers to enter the market. SME developers used to account for 30% of new housebuilding, but today that figure has dropped to just 12%.

Another critical challenge 

The local planning authorities who must give prior approval to PDR applications before works can begin, are massively under-resourced, often lacking in experience (due to many senior planners departing) and are not predisposed to like PDRs, which they often see as undermining their authority. As a result, councils can still make it difficult for prior approval to be granted, despite the government’s intention of making PDRs a streamlined and unbureaucratic process. It’s imperative that the government gets planning authorities on side and starts reinvesting in this vital area.

The proposed PDR changes will undoubtedly create more opportunities to unlock more housing by recycling and improving our existing building stock – which has to be a good thing. But it will only happen if the government also encourages new small-scale developers to come to the party and once again account for a larger share of the market. And the government also needs to get local planning authorities on side so that they view PDRs as an opportunity to solve the housing crisis in their area, rather than something that undermines their authority.

What 99% mortgages could mean for first-time buyers... and the housing market

 Exploring the Impact of 99% Mortgages on First-Time Buyers and the Housing Market

Reportedly, Jeremy Hunt is crafting plans to enable first-time buyers to enter the property market with only a 1% deposit, potentially to be unveiled in the March 6 Budget by the Chancellor. This initiative, akin to the existing Mortgage Guarantee Scheme but covering 99% of a home's value, aims to assist those facing difficulties accumulating enough savings to purchase a home.

While this policy could be advantageous for some first-time buyers by reducing the deposit requirement, critics express concerns about potential repercussions. They argue that it might inflate house prices and pose challenges for buyers managing the monthly repayments, especially amid relatively high interest rates.

The proposed scheme lacks detailed information, but in principle, it could lower the barrier to homeownership for aspiring buyers. For instance, purchasing a £300,000 property with a 5% deposit currently demands savings of £15,000, while under the new scheme, this could decrease to as little as £3,000, alongside additional expenses like solicitor fees and surveys.

Mark Harris, CEO of SPF Private Clients, views any initiative aiding first-time buyers positively, emphasizing its significance for market functionality. However, critics caution against the risks of negative equity if property prices decline, potentially trapping borrowers in financially precarious situations.

Peter Stimson, from MPowered Mortgages, critiques the move as irresponsible, arguing that it may exacerbate financial risks for buyers and conflict with the government's encouragement of prudent financial behavior.

In summary, while the 99% mortgage proposal may offer a pathway to homeownership for some, its implementation warrants careful consideration to mitigate potential downsides and safeguard buyers' financial stability.

FIRST LOOK AT NEW ASHBOURNE HOUSING DEVELOPMENT AS SALES GET WRAPPED UP FOR CHRISTMAS

 

A Derbyshire housebuilder has provided a sneak peek inside its flagship Ashbourne development after batch of surprise pre-Christmas sales.   

Hodgkinson Builders has been handed an early Christmas present having sold the first three homes at its highly anticipated Rosarium Heights site.

Rosarium Heights appears to be bucking the traditional trend of a sales slow-down in the approach to Christmas with a small flurry of unexpected November and December sales as the development approaches its final stages of completion. 

Robert Hodgkinson, operations director at the firm, said: “We are immensely proud of the homes at this select development. 

“House hunters have proved that they agree that what we have created is something special, with three of the 10 properties already snapped up.” 

New homes partner Kerri Bywater, of Bagshaws Residential, confirmed that the development, off Clifton Road, has produced three sales in the last month and a half.   

She said: “Since the spade was first put in the ground a year ago, there has been much anticipation when it comes to what the finished properties would look like. Buyers have not been disappointed.” 

There are 10 homes on the site providing a perfect spread of 2-, 3- and 4-bed semi-detached houses. 

Each home will be finished to a high standard with quality kitchens and integrated appliances, oak style internal doors and patio or bi-fold doors onto the rear gardens. 

Layout choices include either open-plan living or separate kitchen and living spaces. Generously sized bedrooms and en suites wrap up the house buying package. 

Robert said the firm was also keen to keep the history of the site, recognising the importance of the location within the local community. 

Rosarium Heights is named after a cottage that was historically on the site, while individual homes are named after nearby beauty spots – The Dovedale, The Carsington and The Wolfscote. 

While the Ashbourne development draws on the firm’s 30-plus years' experience in the industry, this is the first development in the Midlands under the Hodgkinson Homes banner.

The Hodgkinson Builders team, which enjoyed TV fame recently on the BBC3 fly-on-the-wall documentary Brickies, is the big name behind landmark construction projects such as the apartment building on the site of the former Debenhams store in Derby’s Victoria Street. 

It is also hailed for its social housing projects as well as the construction of family homes for other property clients – all sectors of the business that continue to thrive. 

Robert said: “We are passionate about building the right properties for individual communities and helping those communities to grow and flourish. Reaction to the almost-finished homes has been tremendous and we can’t wait to show off their stunning interiors. 

“From a muddy field in Ashbourne just a year ago to the stunning development we have now... we are thrilled by the result. Kerri and the team at Bagshaws Residential are doing an amazing sales and marketing job for us with homebuyers first and foremost.” 

As always, Hodgkinson is also championing apprenticeships and trade jobs in the industry.

Robert added: “On any development that we create, we will always be looking for local people first, and we’re always keen to get good people on board.”

Prospective homebuyers are now invited to book a first look around the Rosarium Heights homes. For more information contact Bagshaws Residential, in Ashbourne, on 01335 346677. 

For information about the firm, or to check available job opportunities, visit www.hodgkinsonbuilders.com.

Land and Housing where is it going ?

 Title: Land Requirements for Housing Development: A Comprehensive Guide

Introduction

The development of housing is a complex and multifaceted process, and one of its fundamental components is the acquisition and utilization of land. The amount of land required for a housing development project varies depending on several factors, including the type of housing, location, local regulations, and the developer’s goals. In this article, we will explore the crucial aspects of land requirements for housing development.

1. Type of Housing

The type of housing being developed has a significant influence on the land requirements. Different housing types, such as single-family homes, multi-family apartments, or condominiums, demand varying amounts of land. Single-family homes typically need more land per unit, while multi-story apartment buildings can accommodate more residents on a smaller footprint.

2. Location and Zoning Regulations

The location of the development site plays a vital role in determining land requirements. Local zoning regulations, which vary by region, dictate factors like minimum lot size, setbacks, density, and allowable land use. Understanding and complying with these regulations is essential for successful development.

3. Density and Plot Ratio

The density of a housing development, often measured in units per acre or square meter, directly affects land requirements. Higher-density developments require less land per unit, making them suitable for urban or suburban areas with limited available land. Developers may use a plot ratio, which defines the maximum buildable area in relation to the land size, to determine how many units can be constructed.

4. Infrastructure and Common Areas

Land requirements also encompass space for essential infrastructure and common areas. This includes road access, parking facilities, green spaces, community amenities, and utility installations. Proper planning for these elements is crucial for the functionality and appeal of the development.

5. Environmental Considerations

In some cases, environmental factors can limit the available land for development. Protected natural areas, wetlands, and steep slopes may restrict the usable land. Ensuring compliance with environmental regulations is not only legally required but also an ethical obligation.

6. Affordable and Inclusive Housing

Developers aiming to provide affordable and inclusive housing may require larger parcels of land to accommodate a mix of housing types, including units for various income levels. Such projects often prioritize community development and social inclusivity.

7. Market Demand and Profitability

Market conditions and profit margins play a pivotal role in determining the amount of land a developer may require. A developer seeking to maximize profit may choose a higher-density project, while one focused on high-end, low-density housing may opt for larger plots.

8. Feasibility Studies and Site Analysis

Conducting a feasibility study and comprehensive site analysis is a crucial step in assessing land requirements. This includes evaluating the local market, understanding the costs associated with land acquisition, infrastructure, and construction, and determining the optimal land-use mix for the intended development.

Conclusion

The land requirements for housing development are contingent on various factors, from housing type and location to zoning regulations and market demand. Successful housing development begins with a thorough understanding of these factors and careful planning to ensure that the land is utilized effectively, sustainably, and in compliance with local laws and regulations. Ultimately, land is a finite and precious resource, and responsible land use is essential for creating thriving and sustainable communities.

Build to Rent: Is it worth it?

Build to Rent are new build developments designed specifically for renting. They come with longer tenancies, a dedicated on-site manager and purpose built communal spaces, as well as a premium price tag. Here's everything you need to know about Build-to-Rent.

Renting privately comes with a whole range of issues for many people: complaints of damp properties which landlords refuse to repair, dealing with extortionate rents and the precariousness of short leases. But is Built to Rent the answer? We look at the pros and cons

What is Build to Rent?

As the name suggests, Build to Rent (sometimes known as BTR or B2R), describes new build apartment developments that have been built specifically for renters. Build to Rent addresses many of the problems that renters face when renting privately such as problems associated with short-term leases.

But they are also designed to offer:

• Good quality homes, mainly in larger towns and cities and often located near good public transport links.
• Residents will typically have access to communal facilities like gyms.
• Developments typically have on-site staff.

How many Build to Rent homes are there?

Build to Rent was introduced in 2012. One famous example is the London Olympics athletes’ accommodation in Stratford, east London, that was turned into rental accommodation. Other large developments followed and the Build-to-Rent scheme has grown in popularity.

In 2023, according to the British Property Federation, there are 251,208 Build to Rent homes in the UK, of which 78,717 are complete, with 72,244 new Build to Rent properties under construction and 113,379 in planning stages.

Given that there are an estimated five million rental properties in the UK, Build to Rent represents a small percentage, but it is growing. In fact, John Lewis is pledged to build and rent out 10,000 homes in coming years.

How many Build to Rent London properties are there?

There are around 96,000 London Build to Rent homes, while outside London, there are around 155,000. Build to Rent Manchester properties are available as well as in Birmingham, Liverpool and many other towns and cities.

How are Build to Rent developments different?

Developers are designing their Build-to-Rent properties to suit the lifestyles of the people they expect will want to live there. So as well as offering good quality accommodation, they are also trying to create Build to Rent communities within the developments by including features like communal areas, gyms and games rooms. Some have their own concierge service.

3 Benefits of Built to Rent

Many renters have encountered issues with private renting. Common problems include:

• Short-term leases
• Complaints that rents have unfairly increased
• Landlords being slow to carry out essential repairs

By comparison, the benefits of renting a new build through the Build to Rent scheme are:

1. Tenancy options of over three years

With Build to Rent, developers should usually offer longer tenancy agreements of 3 years or more to all new tenants who want one. These are also known as ‘family friendly tenancies’ because they offer longer-term security and stability for people wanting to settle down within a community.

However, there isn’t an obligation for the renter to take up a 3 year tenancy. If they want a tenancy of 6 months, 1 year or 2 years, companies should offer these.

Although there may be periods when the offer of longer tenancies would interfere with planned refurbishment works. In this case, it would be permissible to offer shorter tenancies, running up to the date of the refurbishments.

2. Easier to address problems

The big benefit is having one landlord responsible for managing and operating the whole development. This should make it easier for tenants to get in touch with the landlord and get problems resolved quickly.

Another benefit is the landlord must have a complaints procedure in place and be a member of a recognised ombudsman scheme. This means if things do go wrong tenants should have a clear way to complain and get issues addressed.

3. The rent is clearly laid out including any basis for increase

Where the rent or service charges are to be reviewed during the period of the tenancy, the basis for the review and for calculating the increase (whether as a fixed percentage or index linked to inflation) should be clearly set out in the tenancy agreement.

So what are the disadvantages of Build to Rent?

So, are there any disadvantages to Build to Rent? Yes. Firstly, while more Build to Rent homes are being built, they are still only a small proportion of private rental properties. Secondly, you may not qualify to live in the existing Build to Rent developments. That’s because many of the ones that are already built are targeted at specific demographics such as over 55s or young professionals or people with pets.

Finally, and most significantly, living in a Build to Rent property isn’t cheap….

Is Build to Rent affordable?

All the benefits of Build to Rent homes don’t come cheap. With many offering communal workspaces, laundry services, concierge, event spaces and gyms it isn’t surprising they can come at a premium. When you rent a new build flat with these extra facilities and services, it means the average rent on these developments is typically higher than comparable properties on the private rental market.

But while you may be able to afford the rent now, bear in mind that paying a premium for your rent is going to make it even harder to save if you are hoping to one day buy your first home. If you are looking at rental but one day want to afford to buy, take a look at our saving for a deposit guide. Other government schemes (Rent to Buy and Shared Ownership  for example) may also enable you to get on the property ladder while renting. And check out the numerous other alternatives to the government’s now defunct Help to Buy scheme.

Do developers need to provide affordable housing?

Yes. The Government’s guidelines say 20% is a ‘suitable benchmark’ for the level of affordable private rent homes to be provided. Although this can be challenged by local authorities should they wish to set a different proportion.

So what is affordable housing when it comes to Build to Rent? The Government says national affordable housing policy requires a minimum discount of 20% for affordable private rent homes compared to local market rents.

Am I eligible for affordable Built to Rent?

Eligibility should be agreed locally between the local authority and the Build to Rent scheme operator, but taking into account criteria set out in planning guidance. So contact the developer for more information on this.

Will Build to Rent make things better for renters?

Our research suggests the benefits if you rent a new build through this scheme could be significant. Some 40% of respondents to our recent YouGov study said they would appreciate renting directly from a responsible company or housing provider rather than a private landlord or lettings agent.

Over a third said renting a high-quality home would significantly improve their rental experience.

Build to Rent developers

There are a number of Build to Rent developers, some of which include:

• Simple Life Homes
• Quintain Living
• Allsop Letting and Management

• Essential Living
• Dandara Living
• Moda Living
• Legal & General, urbanbubble
• Touchstone
• Way of Life
• Get Living

Construction industry bears brunt of cooling UK labour market

 

Construction industry bears brunt of cooling UK labour market

The wider impact of the slowdown on employment is mitigated by an already depleted workforce

The construction sector is bearing the brunt of a wider labour market slowdown © Simon Dawson/Bloomberg

A year ago, UK brickmakers could not produce enough to keep up with racing demand. Now, they have the opposite problem: brickyards are not big enough to hold the mounting stacks of unsold stock.

With high interest rates putting many housebuilding projects on hold “for the foreseeable future”, Forterra, a listed brickmaker, is cutting manpower and mothballing sites — including one, in Lancashire, where a gravity-fed ropeway has carried clay to the kilns for a century.

“These are good, well-paid, unionised jobs,” said Charlotte Childs, a national officer at the GMB union. About 200 staff will be affected, including many in roles such as kiln or machine operators that would typically attract salaries above £35,000. 

The construction sector — hit by the housing market downturn, squeezed mortgage holders scrapping home extensions and the potential scaling- back of big public projects such as the HS2 rail line — is bearing the brunt of a wider labour market slowdown.

Vacancies, which rocketed in the post-coronavirus pandemic upswing, have been falling for more than a year. The latest official data showed unemployment up sharply from 3.8 per cent on the quarter to 4.3 per cent and employment down, even though average wages were still rising at a record pace. 

But these figures only cover the period up to July and analysts have questioned whether they can be relied on — as the Office for National Statistics is in the process of overhauling its labour market survey following a sharp drop in response rates since the pandemic. 

Gauging just how much the jobs market has weakened since the summer is crucial for policymakers at the Bank of England as they assess how long to keep interest rates high. The monetary policy committee thinks unemployment will have to rise, and wage growth slow, for inflation to return sustainably to its 2 per cent target. But if it keeps policy too tight for too long, it could trigger unnecessary and painful job losses. 

With banks, law firms and consultancies seeing a drop in mergers and acquisitions; big tech companies scaling back their presence in the UK and consumer-facing industries feeling the effects of squeezed household budgets, jobseekers are now in a very different environment than in 2021 and 2022, when employers entered bidding wars to fill gaps. 

“People coming back from the holidays are putting their heads down, staying put and are just thankful they have a job,” said Yael Selfin, chief economist at KPMG, who has found employers around the UK to be much less concerned about staff churn and wage pressures.

Others also said the labour market could now be weaker — and wage growth slower — than the official data suggested.

“We are in a different place from 12 months ago . . . [Employees feel that] if you have a record and tenure, maybe it’s better to stay where you are,” said Chris Gray, director at the recruiter ManpowerGroup UK, describing the overall jobs market as mixed, with variation between sectors, but “probably more ebb than flow”.

However, most analysts think that while wage growth is slowing, job losses are likely to be more limited than in previous downturns — because the UK workforce is already depleted by demographics, the departure of EU workers and high rates of long-term sickness. 

Neil Carberry, chief executive of the Recruitment & Employment Confederation, said that although employers were taking longer to commit to new hires, confidence was nevertheless improving. “The impact of a long period of slow growth is less than it would have been in the past,” he said, adding that many companies would be able to attract candidates on lower salaries if they were willing to continue offering flexibility on homeworking. 

The benign overall picture masks big differences between sectors, with construction and retail suffering, while areas such as social care still struggle to recruit. But even in sectors that have seen high-profile lay-offs, recruiters say there are still pockets of strong demand. 

Rhona Carmichael, chief commercial officer at the specialist tech recruiter Nash Squared, said many regional companies had been unable to compete on pay at the height of the post-Covid hiring frenzy, as remote working allowed the US groups to recruit from a wider pool. 

“They were getting gazumped when the market was out of control . . . Now there is a degree of normality,” she said, adding that more than half of companies still aimed to expand IT teams. 

As workers become more wary of leaving a secure job, some recruiters say they are in a paradoxical situation where employers are not looking to add to headcount, but are still struggling to keep staffing at full strength. 

Gray said that although job ads were now attracting more applicants, it was “like walking through treacle”, with businesses constantly recruiting to replace staff who left or fell ill, rather than to expand. 

Even in the sectors hardest hit, industry figures worry more about struggling to recruit when demand bounces back than they do about job losses now.

Greg Shaw, a regional director for Randstad’s construction team, said the recruitment agency was looking to fill just 1,350 vacancies in the sector, down from 1,850 a year ago, and that there was a big risk skilled workers would “melt away into the rest of the UK economy” during the downturn. 

“The government has to act now before people start drifting away into different industries,” he said, arguing that work to fix unsafe school buildings could help use slack in the sector.