Posted by: westlancashirerecord | November 30, 2016

Builders Make Billions As Affordable Housing Crisis Escalates

The phrase “affordable housing” is becoming a myth. The Bureau of Investigative Journalism bureaulogo has published a report about affordable housing by stating that some planning documents are kept secret by council officers. The Bureau highlighted how the UK’s planning system allows developers to reduce their affordable homes targets while keeping their justifications secret.

Developers carry out financial viability assessments for their proposed developments, which often conclude that meeting the affordable housing targets set by local authorities would reduce their profits to a point that the scheme would be worth their while. However some of those assessments are kept confidential, with even councillors unable to see them.

In order to make sure schemes goes ahead the local authorities typically reduce their targets or accept payment from the developer in lieu of the affordable homes. That money is supposed to be invested into social and community projects, or the council’s own affordable housing schemes.

Britain’s biggest house building firms and their executives have pocketed billions of pounds as the country’s housing crisis escalates and affordable homes targets are missed. The four most powerful companies, Persimmon, Taylor Wimpey, Barratt and Berkeley Group, are making so much money they are planning to give £6.6bn extra in dividends to shareholders by 2021, the Bureau has found. Meanwhile the number of affordable homes built fell to a 24-year low this year. House builders routinely argue that affordable housing targets are financially unviable.

House prices have risen five times more than average wages in the last five years, making it impossible for many people to buy their own homes. Those prices have translated into handsome profits for the industry, the four biggest firms together made more than £2bn in pre-tax profits last year.

The Bureau calculations show that just eight directors working for major house builders together earned £230m in the last five years. Two housing executives, Tony Pidgley borisbuilder seen in the picture with Boris Johnson, and Rob Perrins who run industry giant Berkeley, have received £141m from their pay packets and the cashing in of shares since 2011. Low supply and high demand means house building firms are able to charge substantial mark-ups on homes they sell, in some cases making an average profit of £127,000 per house, analysis found.

Taylor Wimpey CEO Peter Redfern has been paid more than £24m in the past five years. Redfern was commissioned this year by the Labour Party to carry out a review into the decline in home ownership. He concluded that increasing housing supply alone would not solve the crisis, arguing the lack of access to mortgages was the primary driver of the drop. He should worry, being paid an average salary of nearly £5million a year?

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