The number of housebuilders accused of ‘cynical ploy’ as development takes off is falling sharply

New government figures showing a sharp fall in the number of new housing sites breaking ground have prompted accusations against developers of restricting supply to maintain high profit margins.

Data from the Department for Leveling Up, Housing and Communities, led by Michael Gove, showed that the number of sites where construction work started on site was 21,300, down 68 per cent between July 1 and September 30, compared to the same point a year ago .

In the year to September 30, the number of construction sites fell compared to the previous year in six of the nine regions. The number of deliveries decreased in seven of the nine regions compared to the previous year.

In the quarter ending September 2023, 58,810 energy performance certificates (EPC) were submitted for new homes, representing a decline of 6 percent compared to the same quarter last year.

Charles Breen, owner of mortgage broker Montgomery Financial, told the agency Newspage that the decline in housing construction was “a cynical ploy by developers to limit supply to keep prices high and their profit margins high, and ultimately to serve their shareholders .’

Speaking to This is Money, Stewart Baseley, executive chairman of the Home Builders Federation, said: ‘We have been warning for some time that if the Government did not change its approach to housing policy we would see a sharp decline in supply and all indicators . confirm this now.

‘In recent years the policy environment has become increasingly anti-development and the implications are now becoming clear.

‘Falling housing supply, amid an already acute housing crisis, has enormous social and economic consequences and should prompt politicians to seriously consider their approach.

‘If we are to prevent further falls, we need urgent action to help buyers and reverse ministers’ misleading decisions on planning and nutrient policy.’

Earlier this week, the Home Builders Federation claimed planning delays remain the “biggest obstacle” for developers.

In the year ending September 2023, 237,030 EPCs for new homes were submitted. This is a decrease of 4 percent compared to the previous year, according to data from the Department for Leveling Up, Housing and Communities.

The largest percentage decline in new build completions was seen in the North West, where completions fell by 12 per cent on the previous year.

Completions increased year-on-year in the East of England and London, with London seeing the largest increase of 17 percent.

Notably, June marked the end of the transition period to new building regulation standards in England regarding energy performance and electric vehicle charging points, which may have skewed the quarterly comparisons.

“It’s no surprise that builders are scaling back operations,” said Stephen Perkins, director of Yellow Brick Mortgages.

The Department for Leveling Up, Housing and Communities said: ‘Many housebuilders may have chosen to bring forward the start of project work to avoid the costs of meeting these new standards, and this has seen an unusually high spike in the number starts caused in the second half of the year. quarter of 2023, and a corresponding low in the third quarter of 2023.”

It added: ‘It is difficult to assess the underlying trend in this quarter and therefore it is not recommended to draw conclusions from a direct comparison of this quarter with other quarters.’

However, Stephen Perkins, director of Yellow Brick Mortgages, told Newspage: ‘In a market with rising construction costs and falling or static house prices, it is no surprise that builders are scaling back activity.

“While they will complete the agreed lots, many new sites will be delayed as builders sit on their land banks waiting for better market conditions to build and sell new homes for maximum margins for shareholders.”

Rohit Kohli, managing director of The Mortgage Shop, told Newspage: ‘Given the cost of borrowing in 2023 and the collapse in buyer demand, it is not surprising that builders have halted or scrapped their plans in the second half of the year.

‘With reduced inventory, this will increase the problems people face, driving prices up as mortgage costs fall and more buyers enter the market.

‘If the 1 percent deposit scheme is introduced, it will only increase demand and drive up prices again and make homes even more unaffordable for the people who need the system.

“The government needs to wake up and take housing seriously. Every area is in crisis, from rental and social housing to construction.’

The government’s goal is to build 300,000 homes in England every year.

After rising rapidly last year, mortgage interest rates are starting to fall, leading developers to hope the market will pick up.

On Tuesday, Nationwide jumped into the mortgage price war with a wave of rate cuts on its fixed rate and tracker deals. It revealed cuts of up to 0.81 percentage points.

The cheapest deal for people taking out a new mortgage and having built up at least 40 per cent equity in their home is 3.88 per cent, with a fee of £999, making it a new best buy.

Reports emerged this week suggesting that the concept of government-backed mortgages for 99 per cent of a property’s value could be announced in Jeremy Hunt’s spring budget.