Redrow blames lack of mortgage lending for tepid housing recovery

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The Independent Online

The chairman of one of Britain's biggest housebuilders yesterday warned that the industry has little chance of recovering unless the banks significantly increase mortgage lending.

Steve Morgan, who returned to the helm of Redrow last year after founding the company in 1974, said that first- and second-time buyers were struggling to establish themselves on the housing ladder because the banks are still unwilling to write new home loans. If the situation continues, the Government will miss its target of building three million new homes by 2020, he said. Recently he warned that a lack of housing could lead to social unrest. "The chronic shortage of mortgages means that this industry doesn't have a great hope of making inroads into this country's chronic housing shortfall," he said.

Mr Morgan's comments came as Royal Bank of Scotland admitted that the amount it lent in home loans last year was down 6 per cent on 2008 to £19.3bn. The bank, which is 84 per cent owned by the taxpayer, said loan repayments outstripped lending, with customers repaying debt faster than expected.

Redrow said that its revenues in the six months to the end of December increased by 25 per cent to £187.2m, after a 21.5 per cent rise in completions. The numbers represent a solid performance for the group, which suffered in the downturn in the housing market in the wake of the financial crisis. There was also cheer for homeowners after the group said its average selling price had crept up by 3.6 per cent, to £145,000.

Mr Morgan's ire was not solely reserved for the banks yesterday. He also blamed local authorities for choking the industry in red tape.

"Dealing with local planning authorities now verges on the comical," he said. "We now spend more money on planning-related issues than on bricks. That is a sad indictment of the current situation."

Mr Morgan wrestled back control of what had become a flagging company in March last year, after quietly building up a 28 per cent stake, and then leading a boardroom coup, replacing the chairman, Alan Bowkett, and chief executive, Neil Fitzsimmons.