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UK Construction Sees Increase in Output Volumes

Output volumes for the UK’s construction have been rising steadily, according to statistics from IHS Markit.

The figures, which were released just before the weekend, showed that the rise in overall new orders was the fastest rise since September 2014. However, this was tempered by an increased rate of input cost inflation, now at its highest since April 1997.

Known as the IHS Markit/CIPS UK Construction PMI Total Activity Index, the output volumes were measured at 61.6 in April, which was slightly down from the previous month’s 61.7. Any figure above 50.0 indicates an overall expansion of construction output. The index has posted in growth territory in ten of the past eleven months, with January 2021 the exception.

In a statement, IHS Markit said that the recovery had been led by recoveries in civil engineering activity, commercial work, and house building.

Tim Moore, economics director at IHS Markit, said: “New orders surged higher in April as the end of lockdown spurred contract awards on previously delayed commercial development projects. This added to the spike in workloads from robust housing demand and the delivery of major infrastructure programmes such as HS2.”

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However, Moore sounded a less-optimistic note when talking about the problems the industry was facing. He said: “Shortages of construction materials and much longer wait times for deliveries from suppliers were a sting in the tail for the sector. Aggregates, timber, steel, cement and concrete products were all widely reported as in short supply by survey respondents.”

Of all the sector, commercial work was the best-performing in construction output through April, according to IHS Markit, even if its rate of expansion had eased from the previous month. The numbers for house building also showed something of a decline on the previous month. Civil engineering, however, showed its fastest speed of recovery since September 2014.

Mike Hedges, director at Beard, said that the resurgence was largely due to the notion that the coronavirus pandemic was starting its endgame, at least in the UK. He added: “Throughout the pandemic there has been understandable hesitancy from clients as they wait to see the direction we head in, however with light appearing at the end of the tunnel, clients are now ready to hit the green button.”

However, he said there were key challenges ahead. He added: “Positivity in the sector resulted in the fastest rise in overall new orders since September 2014. However, a key challenge for the industry is material shortages and delays in supply. These current delays are best navigated and planned for in new projects on a collaborative basis, leading to a very positive outlook for the construction sector overall. Client confidence appears to have returned, and as we head into the summer months, sunnier skies appear ahead.”


Source: Property Wire

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House completions fall as Persimmon puts quality over quantity

Housebuilder Persimmon saw the number of homes it completed fall by four per cent in the last year, as the company attempts to improve the quality of its building work following a scathing report into its work practices.

Bosses were told that they were focusing too much on building as many houses as possible – but failing to ensure the homes were habitable for the long term.

The fall means full-year revenues hit £3.65 billion in the 12 months to December 31, down 2.4 per cent compared with a year earlier. The average selling price was just £137 more than a year ago, at £215,700, the company added.

Persimmon has sites in the Black Country, Shropshire and Staffordshire, and its West Midlands office at Broadlands, Wolverhampton.

Dave Jenkinson, chief executive, said: “Delivering the maximum benefit to our customers from our quality and service improvement initiatives will continue to be my top priority for 2020.

“I am pleased with the progress we have made in 2019 and there is more to do.

“Action taken to maintain our increased levels of work in progress investment, the increase in quality assurance and customer service resources, and our plans for the implementation of the recommendations of the recent independent review, will all add to our momentum.”

Published in December and led by Stephanie Barwise QC, the report found Persimmon did not properly install fire barriers in homes.

The company was criticised for a series of failures and accused of focusing on achieving a five-star rating from the Home Builders Federation (HBF), rather than building high-quality and safe homes.


Persimmon is moving away from focusing on the HBF rating, which is based on customer reviews shortly after the house is completed, and is not “a measure of the true quality and safety of the build”.

Although Mr Jenkinson said: “While our plans for delivering a sustained improvement in quality go far beyond a focus on the criteria of the HBF customer satisfaction survey, our current rating, which is trending strongly ahead of the four star threshold, is tangible evidence of the improvement we are making.”

He added that more details and a fuller response to the independent report and an update on the UK housing market would follow in the next few months.

The company said: “Looking ahead to the 2020 spring season, Persimmon is in a strong market position. The group has a nationwide outlet network and a range of attractive house types available at affordable prices across the UK regions, supported by high quality land holdings and a conservative balance sheet.”

Persimmon also announced non-executive director Claire Thomas, who joined the board in August last year, has decided to quit.

She said: “I have valued being part of the Persimmon board and the experience it presented but it has also made clear to me my preference for working in a large-scale complex global business environment.

“In my time on the board I have seen clear and determined efforts to transform the business and I wish Persimmon the best in their ongoing efforts.”

By James Pugh

Source: Express And Star

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Brexit uncertainty constrains construction sector optimism, says new RICS survey

The uncertain outlook for the UK economy has led to reduced optimism, according to the results of the Q3 2019 RICS UK Construction and Infrastructure Market Survey, with anecdotal evidence from respondents suggesting that the housing market slowdown, coupled with unrelenting Brexit and political uncertainty, is weighing on investment decisions.

With the country heading towards a third general election in five years, the survey found that the mood in the construction sector is downbeat in the face of financial constraints, skills shortages, and slim margins.

The survey’s key findings include:

  • Workloads fall across most construction sectors in the UK as Brexit impacts investment;
  • Despite a lack of new business enquiries and rising labour costs, firms continue to hire;
  • 40% believe that Build to Rent will be a game-changer in increasing housing supply within ten years;
  • 53% of respondents seeing modern methods of construction feature more prominently in projects over recent years.

The survey results point to a notable deceleration in workloads, this quarter, with only a net balance of +10% reporting an increase in total workloads, down on average from +33% between 2013 and Q2 2016.

Breaking this down, workloads in the commercial and industrial sectors are at a near standstill, with infrastructure reporting the strongest rise, a net balance of +18% more respondents citing an increase rather than a decrease in infrastructure workloads (compared to +20% in Q2).

Activity in both private and public housing has eased with net balances of +14% and +11%, respectively. (Down from +26% and +22% in Q2).

As this seems to suggest it will be difficult to fulfil the current government’s house building ambition, the survey found that 40% believe that build-to-rent will be a game-changer in increasing housing supply within ten years, and 53% of respondents said that modern methods of construction have featured more prominently in the projects they have evaluated or undertaken in the past three years.

Jeffrey Matsu, RICS chief economist, said: “As the country heads to its third general election in five years, the mood music across the sector is relatively downbeat. However, while the pace of construction activity has moderated since the referendum, order books remain full as surveyors work through a backlog of previous projects.

“The outlook has the potential to materially improve, depending on the amount of fiscal spending that is authorised by government in the next spending review. Such pump priming has disproportionately supported construction and infrastructure works in the past.”

Hew Edgar, RICS head of government affairs, said: “The UK’s construction sector has shown resilience in its contribution to the economy over a difficult decade. We are, however, at a national level seeing issues such as financial constraints, skills shortages, stagnant productivity, variable quality, output lagging behind target, and slim margins. Whilst not the panacea to resolve all these problems, off-site manufacture and modern methods of construction represent an opportunity to address many of these issues.”

By Rob O’Connor

Source: Infrastructure Intelligence

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How could development finance help tackle the housing crisis?

The ongoing Brexit saga has had a ripple effect on most, if not all, UK industries. If we are to narrow in on the finance sector, we have seen the economic and political uncertainty act as an incentive for investors to explore alternative markets that are not just safer, but also offer stronger returns.

Playing perhaps the most important role here are the low interest rates, which have remained at 0.75% since August 2018.

As a result, particular avenues of investment such as development finance have grown in popularity; not only can this form of investment typically offer reliable returns, but it also makes investors’ money work harder without requiring them to commit to long-term investments. But the benefits naturally extend beyond the investors themselves. Indeed, they have the potential to support housebuilding efforts across the country and ultimately help address the ongoing housing crisis.

With the real estate market feeling the strain of Brexit uncertainty, development finance could be the stabilising force needed to buoy the sector.

In saying this, however, there is still a distinct lack of awareness amongst investors and consumers alike, in terms of the potential returns on offer from development finance. So how, then, can development finance help support the ambitions of investors, whilst also offering a boost to the wider UK property market?

What does development finance have to offer?

As the term suggests, property development finance describes a form of loan used for property development – whether this is refurbishing an existing house or building a new development from the ground up. In general, such loans are typically offered on a short-term basis and have a pre-defined exit strategy. One type of development finance in particular that is quickly growing in popularity is debt investment.

At FJP Investment, we’ve witnessed first-hand the increasing number of people moving to debt investment as a means of achieving regular, fixed returns. Indeed, 30% of the 950 UK investors we recently surveyed said that it was precisely these characteristics that they considered the main strength of debt investment.

To offer some more insight, loan notes (the instrument by which debt investments are agreed) have a predetermined date of maturity, meaning that investors don’t have to worry about a sophisticated exit strategy. Rather, the capital is provided to the developer upfront and the principal is repaid, with interest, by a set date. This means that investors can expect reliable returns and a clearly defined exit strategy.

What is the role of development finance in solving the housing crisis?
While Brexit has naturally dominated the headlines in recent years, the unresolved issue of the housing crisis remains festering beneath the surface. According to current forecasts, the UK needs to build approximately 300,000 new homes a year by the mid-2020’s if we hope to address the chronic undersupply of housing.

One of the most pervasive reasons why demand continues to outstrip supply is that developers – particularly SME developers – cannot access the finance required to drive housebuilding projects. According to a recent survey, 57% of small developers identified access to finance as the biggest obstacle they currently face. This comes in amidst a climate where many traditional lenders like banks and other high street lenders are reticent to loan money, with developers like these unable to get the funding they need to carry out these vital construction efforts.

This shortfall in investment for construction projects and property developments suggests that the market is yearning for alternative sources of finance – a gap that development finance is primed to fill. This financial instrument allows developers to access private finance, using it to construct more homes and scale their operations to the benefit of the wider public.

At the same time, development finance can be employed to utilise existing housing stock and make the most of homes that would otherwise sit empty.

Development finance is commonly used for refurbishment purposes in order to repair properties that sit in a derelict state – with the hopes of then putting them back onto the market to resell at profit. The incentive for investors is clear, but it also represents a way to make use of existing housing without having to rely solely on the completion of new-builds to meet targets.

Development finance shows real promise in terms of its potential to stabilise the real estate sector. It’s positive to note, therefore, that its popularity is growing steadily; according to the aforementioned FJP Investment research, 9% of UK investors currently hold some form of debt investment, with 20% considering doing so in the coming 12 months. Could this offer some much-needed relief to the property sector and ultimately work to support nationwide housebuilding efforts?

By Jamie Johnson

Source: The Armchair Trader

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New planning application submitted for houses at Pheasant Inn at Welland

AN Application to build four houses and re-open a pub near Malvern is being considered by the district council.

The application is for four new dwellings and to form a new pub on the site of the Pheasant Inn at Welland along with access, parking and landscaping.

Attached to the application is a heritage statement detailing how the development will impact on the local area.

In the statement, Dr Peter Wardle says: “The proposals must be seen in perspective and in particular public benefit from the restoration of a community asset.

“All increases in the number of dwellings will increase the number of people who use the Church.

“Public Houses near or next to Parish Churches are extremely common.

“The church has always been near to the public house and thus any impact in noise will be a neutral


In 2017, a group of residents announced their intentions to buy the pub, which had stood empty since 2010.

At the time the pub closed down, freeholder Peter Bailey said the Pheasant had seen no less than five tenants come and go since 1998.

The site has been the subject of numerous applications from developers since it closed down, with applications to build various numbers of houses in the area around its Drake Lane location.

Several residents have submitted responses to the application, with one, Ray Biggs, saying: “The pheasant site at present is an eyesore at the centre of the village.

To develop the Pub with additional accommodation can only be beneficial to the village.

“With all the new development within the village it would be good to have a Pub to walk to without having to consider driving.

“It would be good to have a place in the heart of the village where people could meet and greet.”

Another resident, Ronald Barker, applauded the application, saying: “The designs proposed here are better by a strong margin than any previous propositions.

“It fully utilises the current building (which will provide serious commercial underpinning) and then adds an innovative extension to provide a facility of local value.

“The proposed structure is totally in keeping with the rural setting whilst using a striking modern design and approach that will be attractive to visitors and locals alike.”

By Gary Bills-Geddes

Source: Hereford Times

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Construction growth slows as Brexit delays building projects

Output in Britain’s construction sector grew at the slowest pace for three months in December as Brexit worries continue to hold the industry back.

The Markit/CIPS UK Construction purchasing managers’ index (PMI) fell to 52.8 in December, down from 53.4 the previous month.

A reading above 50 indicates growth but economists had been expecting a reading of 52.9.

December’s modest rate of expansion was the slowest seen since September 2018.

Tim Moore, of IHS Markit, which compiles the survey, said: “UK construction firms signalled a slowdown in housing and commercial activity growth during December, which more than offset a strong performance for civil engineering at the end of 2018.

“Subdued domestic economic conditions and an intense headwind from political uncertainty resulted in the weakest upturn in commercial work for seven months.”

Commercial building was the worst performing category, while work on civil engineering projects was the strongest area of construction activity.

Construction companies cited “heightened political uncertainty” resulting in delays to spending decisions among clients, especially in relation to commercial development projects.

Duncan Brock, group director at the Chartered Institute of Procurement and Supply, added: “With a slight rise in new orders and a softening in overall activity growth, firms continued to be impacted by Brexit-related uncertainty and reluctance by clients to place orders especially for commercial projects.”

However, business confidence was the highest since last April and well above the near six-year low seen in October.

Survey respondents were buoyed by a boost to growth from work on big-ticket transport and energy infrastructure projects in 2019.

Source: BT

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Theresa May calls for end to social housing ‘stigma’ as she pledges £2bn for new homes

Theresa May is pledging a £2bn handout to housing associations in a bid to provide tens of thousands of new affordable homes.

Claiming it is her personal mission to get more people on the housing ladder, the Prime Minister is promising long-term funding for housing associations.

In a speech at a National Housing Federation summit, Mrs May will say housing associations have a central role to play in building homes and challenging attitudes about social housing.

“You said that if you were going to take a serious role in not just managing but building the homes this country needs, you had to have the stability provided by long-term funding deals,” she will say.

“Well, eight housing associations have already been given such deals, worth almost £600m and paving the way for almost 15,000 new affordable homes.

“And today, I can announce that new longer-term partnerships will be opened up to the most ambitious housing associations through a ground-breaking £2bn initiative.

“Under the scheme, associations will be able to apply for funding stretching as far ahead as 2028/29 – the first time any government has offered housing associations such long-term certainty.

“Doing so will give you the stability you need to get tens of thousands of affordable and social homes built where they are needed most, and make it easier for you to leverage the private finance you need to build many more.”

The £2bn programme will be available from 2022, Mrs May will say.

Calling for a change in attitudes towards affordable and social housing, the Prime Minister will also say: “For many people, a certain stigma still clings to social housing.

“Some residents feel marginalised and overlooked, and are ashamed to share the fact that their home belongs to a housing association or local authority.

“And on the outside, many people in society – including too many politicians – continue to look down on social housing and, by extension, the people who call it their home.

“I want to see social housing that is so good people are proud to call it their home… Our friends and neighbours who live in social housing are not second-rate citizens.”

Labour’s shadow housing secretary John Healey said Mrs May’s promises “fall far short of what’s needed”.

He said: “The reality is spending on new affordable homes has been slashed so the number of new social rented homes built last year fell to the lowest level since records began.

“If Conservative ministers are serious about fixing the housing crisis they should back Labour’s plans to build a million genuinely affordable homes, including the biggest council house-building programme for over 30 years.”

The National Housing Federation’s chief executive David Orr welcomed the Prime Minister’s pledge.

He said: “The announcement of £2bn of new money for social housing is extremely welcome.

“But the really big news here is the Prime Minister’s long-term commitment to funding new affordable homes. This represents a total step change. For years, the way that money was allocated meant housing associations couldn’t be sure of long-term funding to build much-needed affordable housing.

“Now, by changing the way in which they allocate funding, ministers have given long-term confidence and confirmed that we are trusted partners in solving the housing crisis, building new homes and communities.

“Ultimately, this will have a huge impact on building the affordable homes that thousands of people across the country desperately need.”

Source: Yahoo News UK

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New £1bn housing development fund ‘will help smaller builders access finance’

A £1 billion fund to help boost house building across England and give smaller builders more access to finance has been announced.

Barclays is providing £875 million of the fund and Homes England, the Government’s housing agency, will contribute £125 million.

The money will be used as development finance to help build thousands of new homes across England to help increase the pace and number of homes being built, Barclays said.

Loans ranging from £5 million to £100 million are being made available for developers and house builders.

Barclays said funding is open to new and existing clients and will help diversify the housing market, as at present, nearly two-thirds of homes are built by just 10 companies.

Those behind the initiative said a key priority was supporting small and medium-sized businesses to develop homes for rent or sale, including social housing, retirement living and the private rented sector, while also helping innovation.

John McFarlane, Barclays’ chairman, said: “There is a vital need to build more good quality homes across the country.

“This £1 billion fund is about helping to do exactly that by showing firms in the business of house building that the right finance is available for projects that help meet this urgent need.

“We are very pleased to be working with government to get the country building more homes, more quickly.”

Housing Secretary James Brokenshire said: “This new fund, partnering Homes England with Barclays, is a further important step by giving smaller builders access to the finance they need to get housing developments off the ground.”

Chairman of Homes England, Sir Ed Lister, said the Housing Delivery Fund “will provide a new funding stream for SME developers to help progress sites and deliver more affordable homes across England”.

The agreement with Barclays forms part of the Government’s aim to achieve 300,000 new homes a year by the mid-2020s, following 217,000 homes built last year.

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Plans revealed for 2,700 new homes in Rushcliffe

Some 2,700 new homes are set to built in the Nottinghamshire borough of Rushcliffe.

The plans are part of an effort to build 13,150 new homes by 2028. Rushcliffe Borough Council has submitted its Local Plan Part 2 that outlines key housing allocations in the borough over the next decade.

The Plan includes policies and proposals for housing, Green Belt, employment, retail, open spaces and nature conservation.

The sites could deliver 2,700 of the new homes in Bunny, Cotgrave, Cropwell Bishop, East Bridgford, Gotham, Keyworth, Radcliffe-on-Trent, Ruddington and Sutton Bonington.

The Council’s Cabinet Portfolio Holder for Housing, Planning and Waste Management, councillor Roger Upton said: “The recently submitted Local Plan Part 2 has been produced to provide new housing, employment and other development opportunities across the Borough.

“In the autumn we anticipate an examination hearing and this will be an opportunity for all interested parties to be involved and present individual concerns for consideration by the Inspector.

“Following examination the Council will consider any required modifications and if the Inspector then determines the plan is sound and legally compliant, it could be adopted by the end of the year.

“Also addressed in the plan is the importance of trees in the borough, with policies in place to protect against the loss of mature trees and woodland from development.

“There are other policies within the plan that relate to the natural and built environments. In particular the plan seeks to ensure that new development contributes to the enhancement of the green infrastructure and biodiversity network across the Borough.”

Source: The Business Desk

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Average size of development finance loan applications down 9%

The average size of development finance loan applications fell by 9% from Q1 to Q2, specialist packager, Thistle Finance has found.

But while average loan sizes were down in Q2, the number of applications submitted to Thistle Finance between April and June was up 15% on the first three months of the year.

This reflects not just increased development activity but the growing number of SME firms entering the market and taking on smaller projects.

Mark Dyason, managing director, Thistle Finance, said: “It’s happening slowly but we’re seeing a fundamental shift in the development sector.

“A long tail of smaller developers is emerging and gradually increasing its market share, empowered by the proliferation of specialist lenders offering better rates.

“The supply deficit represents a major commercial opportunity and regional start-up and SME developers, with lower level schemes, are highly active.

“The new wave of developers is increasingly aware that consumer demand is moving away from undifferentiated developments to more bespoke projects that better reflect the character of the areas they are in. The monopoly of the major developers is gradually being eroded.”

Applications for development projects outside London and the South East rose by 18% during April to June, with the South West and North West particularly active.

Source: Mortgage Introducer