Redrow says 'bureaucratic mess' behind housing shortage

Reuters
A for sale sign is seen on a house on a Redrow housing development in Church Greasly, central England
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A for sale sign is seen on a house on a Redrow housing development in Church Greasly, central England, September 9, 2008. REUTERS/Darren Staples

LONDON (Reuters) - British housebuilder Redrow dismissed debate that government mortgage schemes were fuelling a housing boom and said the country's "bureaucratic mess" of a planning system was the main cause of the housing shortage.

The coalition government has been criticised by economists and industry players for its launch of the Help to Buy scheme in March, the first part of which provides equity loans to help Britons buy homes with small deposits.

Business Secretary Vince Cable entered the debate this week, warning of the risk of a house price bubble and suggesting that the second part of the scheme, due to take effect in January, be rethought.

"I've seen some pretty silly things written in the last week or two and stated by certain politicians," Chief Executive Steve Morgan told reporters on Wednesday, declining to name who he was referring to.

"The real issue is not whether Help to Buy is fuelling a new boom, the real issue is that we're not building enough houses, and we're not building enough houses because we've got an antiquated planning system that's so bureaucratic."

Acknowledging the problem, the government has tried to speed up planning approvals by giving local authorities more decision-making powers but Morgan said the process had to be further streamlined, and give councils time limits on making decisions.

"We had one site in the north west, we built several hundred houses a few years ago and had 9 conditions. We just had a site on the opposite side of the road recommended for approval with 103 conditions. They just take such a long time to clear these conditions before you can start," he said.

Economists say Britain needs 250,000 homes a year to keep up with population growth, with demand far exceeding supply. Private housebuilders completed 88,000 homes last year, data from Savills showed.

Redrow, which reported a 63 percent jump in full year profit on Wednesday and reinstated its full year dividend of 1 pence per share, said Help to Buy had made a significant contribution to forward sales.

Morgan said it might take another two years for the housebuilder to reach normalised profit levels, as about a third of its completions were from low margin land. A normal level was an operating margin of between 16-17 percent, compared to the current 12.2 percent level, he said.

At 0933 GMT, shares in Redrow were up 2.25 percent, valuing the company at 853.5 million pounds. ($1 = 0.6288 British pounds)

(Reporting by Brenda Goh; editing by James Davey and Louise Heavens)

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