Thursday, 7 August 2008

Housing crisis 'hits cash for roads and schools'

Developers want to build only individual homes
Published Date: 07 August 2008
By Tom Smithard Political Correspondent

ROADS, playgrounds and schools could fall victim to the housing crisis as developers in Yorkshire become increasingly powerful, an influential report warns.
Money currently extracted from developers to pay for new infrastructure could soon dry up with councils desperate to fulfil the Government demands that more than 22,000 new homes are built the region each year.

Local authorities had planned on forcing developers to build high-density apartment complexes within town centres in order to meet the targets. But the bottom has now fallen out of that market and developers are unwilling – or unable – to build high-rise flats.

Instead, they are expected to tell local authorities that they are only prepared to build individual houses on desirable, greenfield land – and that they are no longer prepared to stump up for new infrastructure, known as Section 106 funding, as they look to maximize profits.

That could lead to Yorkshire seeing more houses built on greenbelt, without any additional rise in roads and schools, with councils too scared of missing Government targets to refuse developers' demands.

The fears emerged in a comprehensive report into the current housing crisis, put together by officials at the Yorkshire and Humber Regional Assembly.

It reveals that:

Work started on 21 per cent fewer homes in the first quarter of 2008 than the last quarter in 2007, and starts were 24 per cent down on a year earlier. Completions fell by 12 and 18 per cent respectively.

The Government's housing market renewal areas, flagship schemes to regenerate deprived parts of South Yorkshire and Hull, are in danger of relapsing due to the credit crunch and slowing down of the market.

Housing associations in Yorkshire have at least 300 homes that they haven't been able to sell for at least three months.

The average house price in Yorkshire is now £163,500 – a 4.51 per cent increase on last year – and a 44.16 per cent increase on four years ago.

For the first time since 1996, more new homes are being completed by builders than are being started.

Developers, desperate to get new flats off their books are offering discounts of at least 20 per cent to housing associations. But they are unsuitable for family housing.

Estate agents are in the process of closing offices in Yorkshire or laying off significant numbers of staff; small building firms are in danger of collapsing, and manufacturers of building materials are suspending production in the region.

The report states that the amount of money developers can get from apartment complexes has fallen from 37 per cent of the build costs in 2003 to nine per cent last year, and that there is no appetite to build more.

Last night a spokesman for the Department for Communities and Local Government, which sets housebuilding targets, said: "There is an overwhelming case for building more housing and we must remain as ambitious as possible but there is no question of greenfield land becoming up for grabs.

"Councils can insist that new homes are in suitable locations thanks to our tough brownfield first policy. We have also just announced a £6.4m incentive grant for councils in Yorkshire and Humberside who ensure that there is a 10-year supply of suitable brownfield sites for development."

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