Removal of affordable housing won't work

Graham_Devon

Was listening to a piece on the radio today, discussing the planning changes. They discussed the removal of affordable homes from developers, in order to get developers building more.....alongside the pointless extending planning reg removals.

However, this isn't the case it seems, as one builder has already seen the removal of affordable homes as a profit generator. Basically suggesting they will build bigger homes with bigger gardens. Basically the space taken up by affordable homes won't be used to build more homes, but will be used to build less, but larger homes with larger plots, increasing the price of all the homes on the plot for less materials and less labour.

Can't find the sources online, but they also suggested they will drop 2 beds altogether as the buyers these are aimed at cannot raise the funds to buy them.

So seems that already the plans last week are being used to build even less homes then would have been built, but at higher profits to the builders.

Seems to me we'll have more plans and schemes very very soon!!

CLAPTON

Removing a levy (tax) on house building will change the profit/loss and building mix and the number built too.

Social housing should be funded by tax payers and not the buyer (often FTB) of new build homes.

Idiophreak

Err...what do you mean by "won't work"? It seems that builders want to build, and sell, developments without affordable housing. If they build them, and sell them, I think they'll have achieved "get developers building more" - which you state as the aim, here.

If you mean it won't work to drive prices down, what here breaks the basic principle of supply and demand?

PasturesNew

I saw a little plot, for a little 2-bed house, advertised.... and I thought "I could stretch to that just" ..... then it said I'd have to pay the affordable housing amount. And that meant I couldn't even dream of it. After buying the plot I'd have only had £40k for the build..... so I'd have already been in la-la land.

Eellogofusciouhipoppokunu

Given that most new builds are those cookie cutter 'executive' homes built on a postage stamp plot, this might be a step in the right direction. Builders in the past have been able to get away with piling homes cheek by jowel on a tiny plot of land, maximising the number of houses and maximising their profits. If they are now having to provide better sized family homes with more reasonable sized gardens in order to garner a profit from an increasingly discerning customer base, then this is great.

I appreciate the point about affordable housing, but it doesn't help anyone if the houses that are built aren't saleable because the only people with any money right now are sitting back and demamnding a better product.

Loughton_Monkey

Graham_Devon wrote: »

......However, this isn't the case it seems, as one builder has already seen the removal of affordable homes as a profit generator. Basically suggesting they will build bigger homes with bigger gardens. Basically the space taken up by affordable homes won't be used to build more homes, but will be used to build less, but larger homes with larger plots, increasing the price of all the homes on the plot for less materials and less labour.

Can't find the sources online, but they also suggested they will drop 2 beds altogether as the buyers these are aimed at cannot raise the funds to buy them.

This is wonderful news, as long as it's followed through.

The less interference the better. Let market forces prevail. Every large 'executive' home - providing there's a market - gives the rich what they want, gives the developer/builder oodles of profit, and puts a few shillings in the pockets of the Polish building workers to send home to their families.

Eventually (although it will take a while - at least until 'Universal Credits' work through) it will occur to some people that they can earn a few more shillings 'working' on such building sites. In turn this will work through to enriching the [currently] 'poor', plus teaching them how to 'build' as opposed to sit at home watching Jeremy Kyle. They may even - eventually - be able to afford a 1 or 2 bedroom home.

Bring it on!

Large gin & tonics all round........

Graham_Devon

Idiophreak wrote: »

Err...what do you mean by "won't work"? It seems that builders want to build, and sell, developments without affordable housing. If they build them, and sell them, I think they'll have achieved "get developers building more" - which you state as the aim, here.

If you mean it won't work to drive prices down, what here breaks the basic principle of supply and demand?

The aim of this plan was to remove the risk for builders so that they can build more. Not build fewer houses and whack up the prices of the ones they build.

Meanwhile, it's reported today that Cala, the Scottish house building company has seen it's profit rise 500% in the past year, while the number of houses built has risen 24%.

Construction companies are one of the areas who are doing extremely well right now and it seems every bit of aid they are given by the government, they bend to create even more profit, while at the same time screaming for more intervention.

Another example is Bovis shares being up 40% in the last year alone.

chewmylegoff

Bovis shares look to be about 25% up on the year to me, and are roughly at the same level they were at in 2004. Not exactly spectacular. They touched their current level in 2009, 2010, 2011. The fact that they are up 25% on the year is more a function of market volatility than the success of the company over that period if you ask me.

CLAPTON

Graham_Devon wrote: »

The aim of this plan was to remove the risk for builders so that they can build more. Not build fewer houses and whack up the prices of the ones they build.

Meanwhile, it's reported today that Cala, the Scottish house building company has seen it's profit rise 500% in the past year, while the number of houses built has risen 24%.

Construction companies are one of the areas who are doing extremely well right now and it seems every bit of aid they are given by the government, they bend to create even more profit, while at the same time screaming for more intervention.

Another example is Bovis shares being up 40% in the last year alone.

whilst we will always disagree about the merits of people deciding for themselves rather than the state deciding for them, I'm very disappointed with the somewhat dishonest reporting of these figures.

chewmylegoff

And cala made a profit of £11m from a turnover of £250 million, a margin of 4%. The year before it managed £2 million off a turnover of £210 million, a margin of less than 1%. Whilst their profit is up by 500% it's hardly stellar stuff. They made a loss of nearly £30 million in 2010...

michaels

Also Cala claimed their profits came from moving pmarket so another example of how letting builders build bigger homes will be more profitable...