The housing white paper: Guardian nails it!

Not so long ago, the communities secretary, Sajid Javid, sounded like the scourge of the big housebuilders as he complained that current rates of housebuilding were “not good enough”. His white paper on housing upgraded the rhetoric to describe the market as “broken” but it would be hard to conclude the fix-it plan will make life uncomfortable for the likes of Barratt, Persimmon and Taylor Wimpey.

The stick that Javid has chosen to beat the big boys looks more like a twig. Developers will be forced to build on land within two years of gaining planning permission. That is a reduction from the current cut-off of three years but, given that most developers tell us they start building almost as soon they receive permission, the switch may be barely noticed.

At a push, one might say government assistance for small housebuilders could inject more competition. But, if the sight of profit margins at 20%-plus across the sector hasn’t brought forth a rush of new rivals, the problem may go deeper than a lack of official encouragement for the smaller brigades.

Javid’s greater focus seems to be funding more “affordable” homes, to be delivered chiefly by housing associations and local authorities. Since the big boys tend to be uninterested in the affordable end, they’ll be happy to let others get on with the job. Share prices across the sector rose gently, and one can understand why. The big boys can continue building at their current steady rate and their special dividends can keep flowing.”

https://www.theguardian.com/business/nils-pratley-on-finance/2017/feb/07/housing-white-paper-builders-sajid-javid