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Red tape rules
Housebuilder – June 2005

Housebuilders are faced with burgeoning regulatory red tape - a major cause of frustration and delay. Mark Smulian talks to the industry about why, when much of it is designed to help, good intentions are often subverted through poor implementation

Regulation is a persistent bugbear for housebuilders who are always ready to call for bonfires of troublesome red tape. There is just one problem. One of the main sources of pressure for more regulation is, er, housebuilders.

It is a question of balance. Too many regulations and the industry wastes time and money on bureaucracy; too few and it falls prey to cowboy firms and a collapse in consumer confidence.

Everyone involved sees regulation differently. To those who devise and enforce regulations they are a matter of protecting the public, the workforce and the environment from those who would cut corners to make money. But to those on the receiving end, regulation compliance can look like wasted time and money.

Regulators look at the effects across the country of, say, reducing the amount of demolition waste that is sent for landfill, and see a public benefit from devoting less land to this purpose.

By contrast builders see the expense of reusing waste materials, and wonder whether a few lorry loads of landfilled waste would really make much difference.

how regulators work

A former civil servant, for many years involved in regulation affecting the industry, agreed to explain anonymously to Housebuilder how regulators work. He says: "Some regulations are a matter of passing European directives into our laws. In other cases regulators will usually be reacting to pressure from an industry, from consumers, from trade unions or from their own experience of seeing how an existing regulation is working."

The building industry is well organised and in early on consultations about regulations, the former civil servant says. "The large organisations in the construction industry are very much on the inside track," he explains, "though involvement of smaller firms is patchier since their managers rarely have the time to devote to consultations. The construction industry tends to want regulations especially for itself, and there is a lot of special pleading when they might be covered by regulations that also embrace other industries."

This means that regulators feel under pressure for bespoke construction "versions" of general regulations and then feel somewhat aggrieved when the industry complains of excessive regulation. It can also be hard to tell whether representations from industry bodies are a considered view or the hobbyhorse of some individual," he says.

One major feature of industry lobbying is pressure in favour of regulations that will make it harder for cowboys to operate and also raise standards for consumers. Whether a regulation is sufficiently onerous to deter cowboys without being so onerous that it becomes a nuisance for reputable firms is a matter of judgement.

The former civil servant says: "Construction firms tend to want to squeeze out cowboys, and also tend to whinge about unnecessary regulations, yet when you ask them to produce an example of an unnecessary regulation they can rarely come up with one. They often request new regulations, whether for a level playing field with Europe, against cowboys or sometimes to confirm some commercial advantage."

A regulator familiar to many housebuilders is the building control arm of the National House-Building Council (NHBC), which competes with local authorities.

Its building control manager Neil Cooper believes the rate of change in the Building Regulations has got out hand. "The biggest feedback we get from housebuilders is about the pace of regulatory change," he says. "They are not against regulatory change, and recognise the need for updating, but the pace is something everyone has found difficult to keep up with."

To complicate matters, the regulations have not only changed but have started to cover subjects that would previously have been beyond their scope. Cooper says: "The driver at the moment is the sustainability agenda, which has extended Building Regulations to cover, for example, demolition, security, disabled access and reuse of materials, and that is quite a significant departure from their traditional role. Our experience is that the Building Regulations were changed at a steady pace for about 15 years but over the past five years there has been a flurry of activity."

There is unlikely to be any let up. "It is driven by the objectives of government," says Cooper. "The focus in the economy on housing as part of the political agenda to meet sustainability means regulations are used to drive standards up. We think the government is listening and we support the government's agenda, but there are clearly issues about the pace of change."

Clinton McCarthy, md of Churchill Retirement Living, says the biggest problem is that, "when there are changes to Building Regulations these do not get out early enough to us, there is insufficient time for consultation usually and things are sprung upon us".

He cites the Landfill Directive as a regulation whose effects took the industry by surprise. It affects all industries and forbids disposal of contaminated waste with other wastes, and very few sites are licensed for contaminated spoil. "The lack of availability is such that we are in talks with one company to take contaminated material from us and then send it back to use as clean fill or for roads," he says. "That directive took us quite by surprise in its effects."

McCarthy predicts that tougher regulations on sound and heat insulation from 2008 will pose "major challenges, and it will cost us a lot to find ways forward." These regulations may have the unintended effect, he says, of boosting timber frame building "because it offers good insulation, sound proofing and eco-friendliness".

Westbury Partnerships director Ashley Lane says: "Regulations have got to be there to give confidence in the products." He gives the example of the rise of modern methods of construction, where, he says, "we need something to give integrity so we can demonstrate that to the insurance and finance industries."

Lane says the industry needs "some bigger and better forum for debate on changes to regulations just to keep pace with what is going on."

Self regulation could be an answer to some of these problems, and is being tried out with sound insulation. Dave Baker, chief executive of Robust Details, the company set up by the industry to oversee this, thinks the approach could be extended.

Robust Details arose from the change to Part E of the Building Regulations on testing of sound insulation. Completed homes would have had to be sound tested, and the industry saw problems if a costly fault was found that needed to be put right at such a late stage. Baker explains: "The industry offered to design to a standard that was higher than the Building Regulations and for that to be taken as evidence of compliance. The government agreed this would be an exemption so long as a procedure was in place to ensure compliance.

"It is possible to extend the test principle, possibly to thermal insulation. It is a different science but the same problem in that it would require a test at the end of the job, so we could use the same approach.

"It is anybody's guess where self regulation could go next, that is the government's call. It may say it wants to wait longer so we have more evidence with which to prove ourselves."

The other big regulatory issue for housebuilders, which presents one classic case of the law of unintended consequences. Exasperated by delays in decisions, the industry successfully lobbied the government to give councils a financial incentive to decide applications within 13 weeks.

The problem is that if a council rejects an application within 13 weeks, that counts as a decision and it gets the extra money. But if it negotiates with a builder about what would be acceptable and then grants the application within, say, 15 weeks, it does not meet the target and is penalised. This has had the perverse effect of applications being rejected to keep within the 13-week limit, and then being accepted later when the builder has been put to the expense of a second application.

Andrew Whitaker, planning director of the Home Builders Federation, explains: "Councils now have performance targets that were intended to help applicants, but often they hinder rather than facilitate development. They are refusing applications within the 13-week decision target period, rather than negotiating with applicants over something that might be acceptable, just so they can say they have taken a decision."

Whitaker calls this trend, "a perverse result from changes intended to help us," and suggests that targets should be more flexible with provision for agreed extensions for negotiations.

13-week limit

Similar planning issues annoy Jane Crass, planning director of Churchill Retirement Homes' internal consultancy Planning Issues. "The 13-week limit is one the industry pressed for but which has backfired," says Crass. "Once we put in an application the local authorities will not talk to us in case it goes over the time limit, and one has to treat the first application almost as a taster with no negotiations, then submit a second based on their reaction to the first."

But do planning and other Building Regulation issues tie together? This is the perhaps controversial view taken by Piers Banfield, sales and marketing director at Banner Homes.

He argues that consumer pressure for extra regulations results from builders working in a sellers' market created by the lack of land for development. Were there enough land, he argues, supply and demand would not be so out of kilter and competition would drive out poor performers without the need for regulations to control them. He says: "Regulations make us more professional and improve the products we should be building to benefit the industry, and I do not have too many problems with that."

Banfield's theory is that if enough homes were built to meet demand, the consumer would be king, quality would rise, and market forces would make many regulations less necessary.

The balance between necessary and unnecessary regulation is difficult, perhaps impossible, to strike. But builders tempted to rail against red tape might pause to consider that at least some of it is there to help them.