The enduring love affair between the Conservative Party and the housebuilding sector may be on the rocks, judging by comments from government minister Michael Gove.
Speaking at the Conservative Environment Network forum, the Secretary of State for Levelling Up, Housing and Communities said he was “not particularly popular with developers at the moment”, attributing his alleged unpopularity to “some of the steps we’ve taken in respect of building safety and some of the other changes we want to make as well”.
Gove said there are “101 changes we want to make” and accused the housebuilders of essentially being a commercial cartel, which is illegal in Britain.
Gove said all of the incentives (introduced by successive governments) are aimed at getting the big housebuilders to build on “virgin greenfields”, whereas Gove indicated he wanted them to “think hard about regeneration”.
“All of their incentives are to leave it to someone else to worry about environmental externalities of any kind, rather than to include them in the way in which they think about development,” Gove said, according to a report in The Daily Telegraph.
Since taking over responsibility for housing, Gove has taken a harder line on the housebuilders than his predecessor, Robert Jenrick – best known for his part in trying to rush through approval of a development in east London that meant millionaire pornographer and Conservative Party donor Richard Desmond would avoid a £45mln tax bill on the project.
Jenrick was the minister in charge of housing at the time of the Grenfell Tower tragedy of 2017 in which 72 people died. He proposed a new safety regime that would be designed to prevent any repetition of the disaster, which was caused by cost-cutting by developers on the cladding used on the tower block, and he also proposed increasing government funding to pay for the removal and replacement of cladding for all leaseholders in buildings 18 metres and higher.
Jenrick attracted criticism, however, for his decision to limit government support to those in lower-rise blocks seeking to remove unsafe cladding; that support would come in the form of offering interest-free loans for the removal of cladding on smaller buildings.
Upon becoming housing minister Gove sought to reset the government’s approach to the scandal and said he was "unhappy with the principle of leaseholders having to pay at all" towards the removal of dangerous cladding on tower blocks.
A Residential Property Developer Tax is set to come into force in April and has generally been accepted by housebuilders such as Persimmon PLC (LSE:PSN), which is set to be active from April.
READ Persimmon sympathetic to UK government's cladding plans
The Government and developers remain locked in talks over who should pay what and how much and this has cast a cloud over the housebuilding sector this year.
The FTSE All-Share Household Goods and Home Construction sector index is down 19.1% year-to-date, compared to a 1.4% fall for the FTSE All-Share.
Gove’s comments don’t seem to have frightened investors much, however, with Barratt Developments PLC (LSE:BDEV) up 1.1%, although Taylor Wimpey PLC (LSE:TW.) and Berkeley Group Holdings PLC (LSE:BKG) are down 1.1% and 0.7% respectively, while Persimmon PLC is unchanged.