Housing sector

Michael Gove continues a frosty relationship with the housing sector

The enduring love affair between the Conservative Party and the homebuilding industry 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 Leveling Up, Housing and Communities said he was “not particularly popular with developers at the moment”, attributing his alleged unpopularity to “some some of the steps we’ve taken around building safety and some of the other changes we want to make as well.”

Gove said there were “101 changes we want to make” and accused the homebuilders of being essentially a business cartel, which is illegal in Britain.

Gove said any incentives (introduced by successive governments) are aimed at getting big house builders to build on ‘greenfield’, while Gove said he wanted them to ‘think seriously about regeneration’ .

“All their incentives are to leave it up to someone else to worry about environmental externalities of any kind, rather than including them in the way they think about development, Gove said, according to a report from the Daily Telegraph.

Since taking over housing responsibility, Gove has taken a tougher line on homebuilders than his predecessor, Robert Jenrick – best known for his role in trying to rush approval of a development in east London which meant millionaire pornographer and Conservative Party donor Richard Desmond would avoid a £45million tax bill on the project.

Jenrick was the minister responsible for housing at the time of the Grenfell Tower tragedy in 2017 in which 72 people died. He proposed a new security regime that would be designed to prevent any repeat of the disaster, which was caused by the developers cutting costs on the cladding used on the tower, and he also proposed increasing government funding. to pay for removal and replacement. covering for all tenants in buildings 18 meters or more.

Jenrick, however, drew criticism for his decision to limit government support to those in low-rise buildings seeking to remove hazardous coatings; this support would take the form of offering interest-free loans for the removal of siding on small buildings.

On becoming housing minister, Gove sought to reset the government’s approach to the scandal and said he was ‘unhappy with the principle that tenants must pay at all’ for the removal of dangerous coatings on the towers.

A residential developer tax is due to come into force in April and has generally been accepted by homebuilders such as Persimmon PLC (LSE:PSN), which is expected to be active from April.

READ Persimmon in favor of UK government siding plans

The government and developers remain locked in talks over who should pay what and how much, and it has cast a cloud over the housing construction sector this year.

The FTSE All-Share Household Goods and Home Construction Index is down 19.1% year-to-date, compared to a 1.4% decline for the FTSE All-Share.

Gove’s comments don’t appear to have scared 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) were down 1.1%. % and 0.7% respectively, while Persimmon PLC is unchanged.