Percy Williams gives the Developer Perspective on the Current Housing Market

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Thursday, 02 June 2011 14:55
As our last blog post describes, the situation for first time buyers is looking rather bleak, with the majority fearing that they will never achieve their ambition of becoming a homeowner. At Percy Willliams we are keen to help where we can, but the market is not favourable for developers either.

We have, in a few cases (as have some of our competitors) effectively shared the equity of new property by loaning a new purchaser 10% or even 15% of the value. This can be at a nominal, or zero interest basis, over a maximum periods for 10 years, where we would then gain from any increase in the value of the property over that period.

Whilst this can help with the initial deposit problem, the affordability issue is still in the air, and is still subject to the same dilemma of the banks and mortgage companies simply not being willing to lend.

The increased specification of the Building Regulations is another double edged sword.  As we are now committed to building homes which are more energy-efficient, quieter and more user friendly to those with mobility issues, this all comes at a cost. Contaminated land considerations require the top 600mm of topsoil to be removed and disposed of and replaced with ‘certified clean’ topsoil.

The cost of the build is still only part of the cost of building new homes, the provision of affordable housing, education contributions and off-site community contributions, and ‘clean air’ contributions can all contribute to raising the cost of a build by significant amounts.

For example, our development for 8 houses at Redruth Urban Village had fees for Cornwall County Council for the roads of approximately £15,000, and other contributions of £36,000. This is an addition of £6000 to the cost of each house instantly. Had there been a requirement to provide affordable housing, this would have raised the cost by another £3000 approximately.

Whilst we endeavour to do our best for the first time buyers in these difficult times, we must still operate under the constraints imposed on the industry, and aim to provide a high quality, good value service to our customers.

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