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Deferring Section 106 and Community Infrastructure Levy payments for small and medium-sized (SME) builders must not impact upon affordable housing in England, trade bodies have warned. But the Federation of Master Builders (FMB) has welcomed the move. 

The government announced on Wednesday that it will support smaller housebuilders and developers struggling with cash flow by allowing them to defer Section 106 and Community Infrastructure Levy (CIL) obligations. 

Section 106 and CIL are planning obligations which aim to mitigate the impact of new housing on the local community and infrastructure. These are paid by developers and housebuilders to local authorities prior to a home being built, and are then used to help build affordable housing and local infrastructure projects.

Housing secretary Robert Jenrick confirmed that the measure has been introduced to support homebuilding during the coronavirus crisis. 

What the Guidance Says

Local authorities have been advised to take a pragmatic and proportionate approach to enforcing Section 106 and CIL obligations to help remove homebuilding barriers and minimise the stalling of sites.

Late CIL payments accrue interest of 2.5% above the Bank of England’s base rate, and local authorities which charge CIL can order building work to stop when payments are overdue, or impose surcharges. 

The new regulations will temporarily – the deferrals could be time-limited – allow payments to be deferred and late payment interest could be disapplied, or interest accrued during lockdown could be refunded. 

Support for Builders

Brian Berry, Chief Executive of the Federation of Master Builders (FMB), says the new guidance could have major benefits for SME builders. 

He said: “I’m pleased to see that local authorities are being encouraged to take a more flexible approach to community infrastructure levy (CIL) payments as house builders have been struggling with cash flow and need support to continue building.

“We must move towards a market which helps small builders bring forward quality local homes of all types, for local people.”

Ian Fletcher, director of real estate policy at the British Property Federation, added: “We await further details on what the government means by ‘smaller developers’ for the purposes of CIL payment deferral, but it’s positive to see builders receive this help to get back to building the homes that the country needs.

Affordable Housing Warning

However, trade bodies have warned that the guidelines must not lead to fewer affordable homes.

Section 106 delivered 49% of all new affordable housing in England in 2018/19, and Will Jeffwitz, head of policy at the National Housing Federation, says that these agreements are an “indispensable” means of providing affordable homes. 

“We agree that flexibility will help the sector weather a downturn caused by coronavirus, but it’s important that this doesn’t come at the expense of affordable housing or local infrastructure, which will be needed now more than ever.”

Sarah Davis, senior policy and practice officer at the the Chartered Institute of Housing (CIH), believes the government will need to increase grants for affordable housing if Section 106 contributions significantly decrease

“We appreciate there is a need to look at stimulating housing developments again, as recognised in the proposed flexibility to defer CIL payments. However, Section 106 is a critical route to deliver much-needed affordable homes, often on site rather than via deferred payments, helping to build mixed communities,” she said.

House moves and viewings have resumed in England, but the housing market could take up to a year to recover from the Covid-19 pandemic, the Royal Institute of Chartered Surveyors has warned.

The government eased lockdown restrictions this week, permitting house moves and viewings from Wednesday, providing social distancing measures are maintained.

Tradespeople on self build and renovation sites were also actively encouraged back to work on Wednesday, with the government issuing new workplace safety guidelines for builders to help restrict the spread of Covid-19.

House moves and viewings had been frozen since lockdown was first implemented on 23 March, with buyers and renters urged to delay moving. And the impact of the coronavirus crisis is to be felt for months to come, according to the Royal Institute of Chartered Surveyors (RICS), which anticipates house prices to be lower as the market begins to reopen. 

The latest RICS UK Residential Market Survey, which highlights the impact of lockdown on house sales, revealed that in April 80% of respondents saw people pull out of transactions.

Simon Rubinsohn, chief economist at RICS, said: “Not surprisingly, the latest survey shows that housing activity indicators collapsed in April reflecting the impact of the lockdown. Looking further out, there is a little more optimism but the numbers still suggest that it will be a struggle to get confidence back to where it was as recently as February. 

“Moreover, whether this can be realised will largely depend on how the pandemic pans out and what this means for the macroeconomic environment.”

(MORE: £82bn Worth of House Sales Suspended Due to Lockdown, Zoopla Reports)

House Prices To Fall

House prices soared at the start of the year in the wake of Britain exiting the EU, but the Covid-19 pandemic could lead to a decline in house prices by the end of 2020, although experts disagree on by how much. 

The RICS says the feedback from its market survey suggests that house prices could take between nine and eleven months to recover to previous levels.

One potential measure to speed up the housing market’s recovery is a stamp duty holiday. Around 62% of RICS respondents believe a stamp duty holiday would help sales recover following the pandemic, lifting sales and leaving prices relatively unchanged. 

Hew Edgar, head of UK Government Relations, said “RICS last month called on the UK government to explore confidence-boosting measures for the residential market as it reopens, and the data suggests that a proposal for a stamp duty holiday would be a successful change that would boost transactional activity, helping people move home. 

“There are, of course, other options available to the government as they reopen the market, notwithstanding stamp duty options such as reducing or removing stamp duty for downsizers that would kickstart market fluidity.”

(MORE: Rightmove Cancels Monthly Report on Asking Prices Due to Covid-19)

Housing secretary Robert Jenrick has announced “radical” government plans which he says will be crucial to kick-starting the housing market.

Jenrick was speaking in Parliament on Wednesday afternoon after the government resumed house moves and viewings in England, and tradespeople were actively encouraged to go back to work. 

The majority of house moves have been on hold since March 23, which is believed to have affected more than 450,000 people. Those in the middle of buying a house have only been allowed to move if “reasonably necessary” during the Covid-19 lockdown.

The government eased those restrictions this week, and has published new guidelines permitting house moves and viewings, providing social distancing measures are maintained.

“Today I am announcing a comprehensive, clear and coherent plan to reopen the housing market and to restart the construction industry,” Jenrick told MPs. 

“This is the most radical re-starting of an industry in the first phase of our national recovery roadmap. This was not an easy decision to make. I do know that in every economic recovery in modern British history, the housing market has been key.”

Today I am announcing our comprehensive plan to restart, reopen and renew the #housingmarket – safely.

You are now free again to move home whenever you wish. This unblocks 450,000 transactions that were paused due to #COVID19 1/4 pic.twitter.com/yOk0SDFgJL

— Robert Jenrick (@RobertJenrick) May 13, 2020

What Are The Plans?

Buyers and renters will be able to view properties in person. Additionally, show homes can open and removal firms can return to work, as long as social distancing guidelines are followed. 

To ensure tradespeople’s safety on construction sites, Jenrick confirmed that several steps will be taken. These include builders working more flexible site hours, with arrival times staggered to ease pressure on public transport. 

The government has also published workplace safety guidelines for builders to help restrict the spread of Covid-19.

Moreover, rules will be eased on how local authorities publicise planning applications, a decision welcomed by the Federation of Master Builders (FMB).

Brian Berry, Chief Executive of the FMB, said: “Speeding up the planning system will be welcome news for many smaller house builders who struggle to negotiate what has typically been an unwieldy process. 

“I hope that digitisation will mean greater access and transparency in planning decisions for all those involved. We must move towards a market which helps small builders bring forward quality local homes of all types, for local people.”

The government also announced that it will support smaller housebuilders struggling with cash flow by taking a more flexible approach to Community Infrastructure Levy (CIL) payments, allowing them to defer payments to local authorities.

Common sense will be key to ensuring builders’ safety on self build and renovation sites, and adhere to new workplace guidelines, according to homebuilding firms. 

Prime Minister Boris Johnson told the construction sector in England to “go to work” this week, with construction workers among those being actively encouraged to return to work on Wednesday. 

By extension, those involved in the supply chain and manufacturing of self build and renovation services and cannot work from home (such as oak frame manufacturers), are too being encouraged to return to work providing it’s safe to do so.

To ensure builders’ safety, the government released its new workplace safety guidelines this week, with a specific set of recommendations for the construction sector.

Among the recommendations:

• Construction firms must consider which staff they need on site, and support staff should be told to work from home where possible
• Building site access should be restricted to encourage social distancing, while jobs and equipment rotation should be reduced
• Break times, arrival times and shift patterns should be staggered
• Hand sanitiser and cleaning should be available, especially for cleaning shared tools or vehicles, such as forklift trucks and pallet trucks.

Ben Albright, sales director of oak frame self build specialist Border Oak, said of the guidelines: “To try and write a one-size-fits-all document is not easy, but the guidelines mostly reiterate what we already know. If firms use common sense then it shouldn’t be difficult to implement and for workers to feel safe.”

Ian McCarthy, sales director at timber frame manufacturers Timber Innovations, believes that the onus is now on homebuilding and construction companies to abide by the guidelines.

“The guidelines try to address the major concerns,” McCarthy told Homebuilding & Renovating. “The guidance is still fairly clear, keep a safe distance and make it safe to operate, and think about the individuals involved in the task. While this makes things more complicated, firms need to consider what can and can’t be done in regards to meeting the guidelines.”

(MORE: New Construction Guidelines Welcomed by NaCSBA, Providing Workers are Safe)

Implementing Safety Measures

Albright added that for construction workers to feel safe, firms need to assess whether they can effectively implement the safety measures. If not, then firms should deliberate on whether it’s safe for workers to be on building sites, in offices or in manufacturing factories. 

“If you can’t do things safely then you have to assess whether it’s critical that your company continues to operate. If it is critical then you need to do a further risk assessment and work out how you can do it within an acceptable level of risk. It’s like all health and safety, we need to be sensible.”

The government this week urged that face-covering masks should be worn in enclosed spaces where social distancing is not always possible, and Albright stresses that common sense again needs to prevail in case of doubt on building sites. 

“If you’re outside fitting some boarding and you’re the only person on site, then you probably don’t need to wear a mask; if you’re in the property and there are 10 other people working then you should probably wear one. But, ultimately, if it makes you feel more comfortable then firms should supply masks. It’s just common sense.”

(MORE: How is the Covid-19 Pandemic Affecting Building Projects?)

Furlough Scheme Extended

Many construction workers and manufacturers have been working during lockdown, while some will be returning on Wednesday, but for those furloughed workers the government on Tuesday confirmed that the state will continue to pay their wages until October.

Chancellor Rishi Sunak revealed that employees will continue to receive 80% of their monthly wages up to £2,500, but added that the government will ask companies to start sharing the cost of the scheme from August.

The Construction Leadership Council (CLC) had called for the scheme to be extended – it was set to expire at the end of the month – and stressed that it should phased out rather than completely stopped.

The CLC says that more than eight out of 10 firms in the construction industry have used the scheme, which now covers around 7.5 million workers.

The National Custom and Self Build Association (NaCSBA) has welcomed the government’s easing of lockdown restrictions which could see increased construction work on self build sites in England, but insists the priority remains workers’ and homeowners’ safety.

The government published a 50-page document on Monday seeking to clarify comments made by Prime Minister Boris Johnson on Sunday evening, who said that workers unable to work from home, such as construction workers, should go back to work.

Initially it was believed that this recommendation would apply from Monday, but foreign secretary Dominic Raab confirmed on Monday morning that these measures will apply from Wednesday. Mr Raab added that workplaces will receive guidance on how to become “Covid secure” in a document that will be released on Tuesday. 

Andrew Baddeley-Chapell, chief executive of NaCSBA, told Homebuilding & Renovating: “The priority on any self or custom build site is people’s safety. This should guide all activity that is undertaken (as was the case before Covid-19). With this in mind NaCSBA believes that work can continue on many custom and self build sites, and we are keen to see this happen where it is safe to do so.”

The government’s guidelines apply only in England, with the devolved governments of Wales, Scotland and Northern Ireland all sticking with their existing lockdown guidance. In Scotland, all non-essential construction work has been stopped since April. 

“The position on construction is clearly different in Scotland and we respect the right of all regional governments to do what they believe to be right, but would welcome a return work on smaller sites, in particular, when they consider that appropriate,” said Baddeley-Chappell.

New Safety Guidelines

Safety concerns were a paramount reason behind some construction firms closing, and builders and trades putting a pause on jobs, once lockdown was announced in March. But major builders’ merchants have begun reopening stores in recent weeks, and self build projects, as well as those renovating a house, are able to continue providing safety measures are implemented.

While some construction firms have remained operational during lockdown, those returning to work on Wednesday are now being encouraged by the government not to travel by public transport, and to wear a face-covering mask when social distancing is not possible. 

Brian Berry, chief executive of the Federation of Master Builders (FMB), said: “Builders have been calling for clear direction from the government and the Prime Minister has now made it plain that he wants a return to work. However, the virus remains a very real risk that needs to be effectively managed. More clarity is needed about the provision of PPE to ensure that all workers that need it can get it. 

“The forthcoming government workplace guidance needs to address this issue as soon as possible because builders who work inside people’s homes face a more tricky situation than those who work outside.”

Fighting for the Future

Construction is among the industries which has endured perilous challenges during the coronavirus pandemic, with some firms reportedly facing going bust.  

NaCSBA hopes the easing of lockdown measures will be able to kick-start growing activity in the homebuilding sector. “This is important as the sector has a big role to play in the economic recovery, in particular if the government delivers the commitments it made in its manifesto about supporting custom and self build,” said Baddeley-Chappell. 

NaCSBA has compiled guidance for workers on self build sites which it is updating regularly to reflect the latest government and industry guidance, and hopes to see the self build and custom build sector recover following a challenging few months. 

Furthermore, the FMB has created a guide for people deciding whether to undertake building work during the Covid-19 pandemic, while these essential resources will help you plan your project during lockdown.

Prime Minister Boris Johnson has urged the construction industry to return to work today, although lockdown measures will continue until July at the earliest.

Mr Johnson addressed the nation live on Sunday night to unveil the government’s new guidance on the coronavirus pandemic, and “actively encouraged” those who cannot work from home to return to work.

But Mr Johnson said that construction workers should avoid using public transport to get to build sites if possible. 

Workplaces will receive guidance on how to become “Covid secure”, the Prime Minister confirmed, but it is unclear as to when this will be, and what this guidance will contain. 

A notable impact of this announcement is that it could help to remove barriers facing those in the midst of, or planning, self build or renovation projects.

(MORE: How is the Covid-19 Pandemic Affecting Building Projects?)

Mr Johnson mentioned construction and manufacturing as examples of the types of industries where getting back to work will be explicitly encouraged. 

“We said that you should work from home if you can, and only go to work if you must. We now need to stress that anyone who can’t work from home, for instance those in construction or manufacturing, should be actively encouraged to go to work.”

“We want it to be safe for you to get to work so you should avoid public transport if at all possible – because we must and will maintain social distancing, and capacity will therefore be limited.”

? https://t.co/YE28ypVuVm

— Robert Jenrick (@RobertJenrick) May 10, 2020

No Clear Plan for Safety

Construction was declared an essential service when lockdown was announced on 23 March, but some construction firms closed to protect the safety of its workers and customers. 

In the week prior to Mr Johnson’s speech on Sunday, new data released by Housing Today showed that a further 237 sites opened in the week to 6 May, despite lockdown measures.

Construction work has reportedly now restarted on nearly one in five of all residential construction projects, or nearly 600 sites, which were previously closed following lockdown. 

This new government announcement illustrates the government’s ambitions for the construction industry to return to a position resembling normalcy, even in these most abnormal times. 

But the statement has come under fire from Labour leader Keir Starmer, who says not enough detail has been provided on how construction workers can return to build sites safely. 

“The prime minister appears to be effectively telling millions of people to go back to work without a clear plan for safety or clear guidance as to how to get there without using public transport.”

Scotland has banned all non-essential construction, and extended its lockdown measures on Friday. Mr Starmer added: “This statement raises more questions than it answers, and we see the prospect of England, Scotland, Wales and Northern Ireland pulling in different directions.”

(MORE: Construction Firms Face Bankruptcy Because of Coronavirus Pandemic)

A 50-page document outlining the government’s easing of the lockdown restrictions is expected to be published on Monday at 2pm.