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Brickmaker says planning delays have reduced brick demand Brickmaker says planning delays have reduced brick demand
(35 minutes later)
A planning logjam has contributed to weakened demand for bricks for housebuilding in the last few months, according to Michelmersh Brick Holdings, the largest maker of specialist bricks.A planning logjam has contributed to weakened demand for bricks for housebuilding in the last few months, according to Michelmersh Brick Holdings, the largest maker of specialist bricks.
Michelmersh’s chief executive, Martin Warner, said the general election in May and increases to stamp duty for expensive homes had put some projects on hold but that delays caused by the planning process were the main reason.Michelmersh’s chief executive, Martin Warner, said the general election in May and increases to stamp duty for expensive homes had put some projects on hold but that delays caused by the planning process were the main reason.
“Construction is down. We have seen it over the summer. If you talk to developers, one of the biggest problems is planning. The planning process is getting worse and worse rather than better,” he said.“Construction is down. We have seen it over the summer. If you talk to developers, one of the biggest problems is planning. The planning process is getting worse and worse rather than better,” he said.
Related: Housebuilding drives UK construction sector growth in SeptemberRelated: Housebuilding drives UK construction sector growth in September
In a trading update, Michelmersh said the company delivered fewer bricks than expected for the second half of the year but that prices were higher than budgeted.In a trading update, Michelmersh said the company delivered fewer bricks than expected for the second half of the year but that prices were higher than budgeted.
Michelmersh is supplying millions of bricks to match original Victorian bricks for the redevelopment of Elephant & Castle in south London, while its Hathern Terra Cotta arm supplies materials for restoration at the New Bond Street flagship store of upmarket designer Jimmy Choo. Michelmersh is supplying millions of bricks to match original Victorian bricks for the redevelopment of Elephant & Castle in south London, while its Hathern Terra Cotta arm supplies materials for restoration at the New Bond Street flagship store of designer fashion label Jimmy Choo.
Britain suffered a brick shortage in the last two years as a rise in housebuilding absorbed bricks stockpiled during the construction downturn following the financial crisis.Britain suffered a brick shortage in the last two years as a rise in housebuilding absorbed bricks stockpiled during the construction downturn following the financial crisis.
Lack of bricks and bricklayers threatened to thwart government housebuilding proposals but Warner said planning is now the bigger obstacle because the mothballed brickworks have reopened.Lack of bricks and bricklayers threatened to thwart government housebuilding proposals but Warner said planning is now the bigger obstacle because the mothballed brickworks have reopened.
“It doesn’t do us too much harm to have a few more bricks in stock. We should be happy with where we are.”“It doesn’t do us too much harm to have a few more bricks in stock. We should be happy with where we are.”
Warner said he expected demand to pick up again after the first quarter of next year as projects receive planning approval and plans put on hold before the election take shape.Warner said he expected demand to pick up again after the first quarter of next year as projects receive planning approval and plans put on hold before the election take shape.
“People do get through planning eventually and the fundamental demand is there,” he said.“People do get through planning eventually and the fundamental demand is there,” he said.
The government has pledged to relax planning requirements to encourage the construction of 200,000 starter homes for sale each year. In his party conference speech this month, the UK prime minister, David Cameron, said he would scrap rules that require developers to build affordable homes for rent.The government has pledged to relax planning requirements to encourage the construction of 200,000 starter homes for sale each year. In his party conference speech this month, the UK prime minister, David Cameron, said he would scrap rules that require developers to build affordable homes for rent.
Warner said brick prices had increased despite the reduction in demand. Along with cost efficiencies, this means Michelmersh’s profit for the year ending on 30 December is likely to exceed forecasts. Warner said brick prices had increased despite the reduction in demand. Along with cost efficiencies, this means Michelmersh’s profit for the year ending 30 December is likely to exceed forecasts.
“We price ahead of the game and bricks are still very cheap in the grand scheme of things. The average price of a brick is 32p which is less than the price of a Mars bar.”“We price ahead of the game and bricks are still very cheap in the grand scheme of things. The average price of a brick is 32p which is less than the price of a Mars bar.”
Analysts at Cenkos Securities increased their forecast for annual profit at Michelmersh to £4.2m from £3.8m but the brickmaker’s comments on weakened demand sent the share price down 7.5% to 95p.Analysts at Cenkos Securities increased their forecast for annual profit at Michelmersh to £4.2m from £3.8m but the brickmaker’s comments on weakened demand sent the share price down 7.5% to 95p.