Redrow: planning burden holding builders back

Simon Donohue

The regulatory burden relating to detailed planning consent is the biggest obstacle to growth in the house building sector, Redrow claimed today.

Providing an interim management statement for the first 19 weeks of its current financial year, Redrow said its performance had been buoyed by the increased availability of first time buyer mortgages as a result of the Help to Buy scheme.

But in a statement prepared for the builder's annual general meeting today, chairman Steve Morgan said that over 5,000 plots, a third of Redrow's entire land bank, are in the planning system awaiting reserved matters approval or clearance of pre-start conditions.

"We have operated from an average of 94 outlets so far this year, an increase of 13% over the same period last year," he said. "Whilst the growth in outlets represents good progress, given the size of our land bank it could be better.

"The regulatory burden involved in obtaining detailed permission and clearing conditions is the biggest constraint to the industry increasing production."

Redrow said that it had added 2,000 plots across 15 sites to its land bank since the start of the financial year.

Redrow schemes in the North West include a development site acquired from South Cheshire College in Crewe this month. Harrow Estates, Redrow Homes and Avro Heritage also submitted an outline planning application to Stockport Council to build 950 homes on the site of Woodford Aerodrome last month.

Morgan said Redrow has continued to make good progress in a strengthened market, with private reservations for the financial year to date, at 1,400 homes, up 52% on last year. Cancellation rates have reduced to 12%. Help to Buy reservations represented 35% of total private sales over the period.

The average selling price of private reservations in the year to date is 11% ahead of the same period last year, at £271,000. This is predominantly due to change in geographical mix, including an increase in London sales, together with a small element of house price inflation.

The total current land bank, land with a planning permission, both owned and contracted, now stands at just over 15,000 plots. The growth in the land bank over the last two years has been helped by the changes in the planning system, brought about by the National Planning Policy Framework, Morgan said.

He said ongoing investment in land has resulted in net debt increasing from £91m in June to £120m now, representing gearing of 20%.

He added: "Our balance sheet remains strong, leaving us well placed to acquire appropriate sites as they become available."

The next scheduled update will be Redrow's half-yearly results for the six months ending 31 December 2013, which are due to be announced on Thursday 27 February 2014.

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Mr Morgan, The regulatory burden relating to detailed planning consent exists precisely to stop people like you buying a field and assuming you can build a housing estate on it

By Mike the Boss