Developers go to war with Michael Gove over his housing reforms
DEVELOPERS last night poured scorn on housing reforms announced by Michael Gove, saying they would not reverse his previous “extremely damaging” changes.
Housing Secretary Mr Gove yesterday vowed to take on Nimby town halls, in an attempt to present himself as being on the side of developers.
He said he would name and shame local councils who block and delay development in “robust league tables” of their planning systems.
But building chiefs said Mr Gove’s plan would do nothing to correct the damage done by his move last January to water down local housing targets.
Since then, councils have halted at least 60 house-building projects.
Analysts reckon the number of new homes could slump by 77,000 each year, making the UK’s acute housing shortage even worse.
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Stewart Baseley, executive chairman at the Home Builders Federation, said: “The removal of housing targets for local authorities — one of the key principles of the planning system — will be extremely damaging for the delivery of new homes.
"Amidst a deepening housing crisis, putting party politics and electioneering above the interests of those in need of a decent home will have devastating long-term consequences for the economy and society.”
The Institute of Economic Affairs said Mr Gove was “tinkering around the margins”.
The Government is already far behind its goal of building 300,000 new homes a year.
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Housebuilders from Barratt Homes to Taylor Wimpey have all lowered construction forecasts for next year because higher mortgage rates have dampened buyer demand.
In a sign investors are sceptical Mr Gove’s tough words would make a difference, the share prices of the biggest housebuilders barely moved yesterday.
The shortage of houses and expensive mortgages has also made the rental market worse, due to demand and landlords passing on higher mortgage costs to tenants.
AUTUMN LEAVES SUPERDRY COLD
A MILD autumn made it hard for Superdry to shift warm winter clothing, sparking another profit warning.
It revealed retail sales had tumbled 13 per cent in the last six months, which was “significantly below management expectations”.
It also suffered a 41 per cent drop in wholesale revenues after pulling out of US department stores.
Shares fell 16 per cent to 34.95p yesterday, valuing Superdry at £35million, two-thirds down in the past year.
Founder Julian Dunkerton said: “The unseasonal weather in early autumn delayed uptake of our autumn range.”
BOND VILLAINS BET AGAINST UK
THE economy is at risk of a serious downturn next year because of the pain from higher interest rates, one of the biggest bond investors has warned.
Daniel Ivascyn, the chief investment officer at PIMCO, said his fund was taking even bigger bets against UK government bonds because he believed there was a “hard landing risk”.
Mr Ivascyn said that there was a “higher probability of more significant deterioration” in the UK economy, because it is smaller compared with the US and feels the impact from the Bank of England’s rate rises more keenly.
The stability of British government bonds has been in focus ever since the mini Budget in September last year, which caused a market meltdown that almost upended the entire financial system.
The warning by the investment firm comes after the economy unexpectedly shrank in October and wage growth fell, as the toll of 15-year high interest rates rippled across industries and households.
Mr Ivascyn told the Financial Times that the UK would suffer more strain than the US economy next year.
The Bank of England has tried to steer markets towards interest rates staying high for longer, but money markets are still betting that they will fall from 5.25 per cent to 4.25 per cent by next December.
High interest rates mean more expensive borrowing costs for companies and hefty mortgage bills for homeowners.
A STUCK RECORD
A MUSIC fund that offers the chance to make money from Beyonce and Guns N’ Roses royalties has hit another wrong note after delaying its results.
Hipgnosis stalled on its reporting after a row over the valuation of its US songs fund.
In October, it tried to sell a catalogue of songs to another firm owned by founder Merck Mercuriadis.
But investors said it was done on the cheap.
The board is now concerned the founder’s valuation came “heavily caveated”.
NEW DEBT BURDEN FOR ASDA
THE owner of Asda has revealed the supermarket has to pay £30million extra to service its debts as a result of higher interest rates.
Mohsin Issa was hauled before MPs yesterday who grilled the billionaire on the debt loaded on to the UK’s third biggest supermarket.
Mr Issa bought Asda with his brother Zuber and private equity firm TDR CAPITAL in a £6.8billion deal in 2020.
Asda now has £4.2billion of debt on its balance sheet, with £500million of it due in February, when it will come off a fixed-rate deal and cost at least £30million more.
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Mr Issa said that since buying the business he had invested £140million in price cuts and £324million in increasing wages for staff.
Mr Issa claimed that credit rating agencies had downgraded the supermarket “because we chose to invest”, reducing Asda’s profits, rather than because of concerns about its debt pile.