Persimmon pulls out of house building in parts of south Wales valleys

One of Wales' biggest house builders says it is to stop building homes in parts of the south Wales valleys, saying the sites do not make money.

Persimmon Homes said it does not make enough profit on developments north of Pontypridd because of low sale prices.

It also blamed Welsh government red tape, which it claimed added £3,000 to the cost of building a house compared with many parts of England.

The Welsh government said it had relaxed some of these regulations.

Last year fellow developer Redrow said parts of the country risked becoming no-go areas if tougher building regulations were introduced in Wales.

Now, Persimmon, which builds around 1,000 homes a year in Wales, says its Coed Dyffryn development in Aberdare will be its last in the valleys.

It has introduced what it calls a "snowline" - the point at which nothing grows because of perpetual snow and ice - running across south Wales on a level with Pontypridd.

It said it had stopped buying any land in the area, saying the reason it cannot make any profits is because of the comparatively low sale price.

A three-bedroom site in the valleys will go on the market at £120,000, but a property of the same size will sell for £160,000 closer to Cardiff, Newport and Swansea.

The company also criticised the environmental regulations introduced by the Welsh government which it claims add £3,000 to the cost of building a house, compared with many parts of England.

And it said the conditions which are imposed by local authorities in south Wales and the length of time the planning process takes also makes it hard to make the necessary profit.

The company has written to the Welsh government, local authorities and held talks with the senior planning officers.

In the letter, Glyn Mabey, Persimmon's regional managing director, warned Wales was lagging behind England in terms of house building.

'Genuine long-term view'

"As a Welshman this situation is deeply disappointing for me and as a businessman in Wales hugely concerning," he said.

"I have the overview benefit of being responsible for businesses in both Wales and England and I can see with alarming clarity the difference in activity either side of the bridge due to the policy support, or lack of it, as appropriate.

"There is a major risk - actually it is already happening - of a flight of capital that would have gone into Wales going elsewhere.

"And that is criminal in a country where our relative economic standing is deteriorating, deprivation expanding and our housing stock is the oldest in the whole of Europe and one of the worst in terms of physical condition."

Keith Edwards, director of the Chartered Institute of Housing Cymru, told BBC Radio Wales: "Builders like boom, they're not so keen on bust. We've seen what happens when you overheat the market and there are real dangers that what's happening in England will lead to that again.

"What we're seeing in Wales is a genuine public private sector partnership, so a genuine long-term view needs to be taken here.

"The trouble, I think, with some of these decisions is that they're taken for shareholders in the very short term looking for quick returns, when actually Wales is doing business differently; it wants to have a long term sustainable strategy that's based on genuine partnership across all sectors."

'Removing barriers'

Housing Minister Carl Sargeant announced a major relaxation of the new regulations in July.

These included an 8% cut in carbon emissions rather than the planned 40%, saving £4,000 on the cost of building a house.

Plans to enforce the introduction of sprinklers in new properties will be phased in between 2014 and 2016, later than originally intended.

A new housing bill is also being prepared at the Welsh assembly with the intention of making the process more efficient to support the economy.

The Welsh government said Persimmon's letter predated July's changes to the housing regulations.

"The minister has also established a housing supply task force, including representatives from the house building sector, to advise on practicable and deliverable proposals for removing barriers to housing development in Wales," said a spokesman.

"We have advocated a flexible approach from local planning authorities ensuring that viability issues are fully understood when making planning decisions and the forthcoming Planning Reform Bill will offer an opportunity to further streamline the process.

"A consultation paper on the bill will be issued before Christmas."

He added the Welsh government was committed to supporting home buyers who are struggling to secure a mortgage or purchase an affordable family home and would be launching a shared equity scheme, Help to Buy - Wales.

Mr Mabey said that while these changes were welcome, they did not go far enough to redress the extra cost to build a property in Wales, compared with England.