Last winter, we published our white paper, ‘Solving the UK’s Housing Shortage’, examining the issues contributing to the UK’s estimated deficit of 4.75mn homes.
We analysed the government’s housing policies and examined key barriers to housebuilding, including planning, land supply, funding, development incentives, supply chain, environmental demands and affordability.
Following input from industry leaders, such as Knight Frank and PwC, we published a series of recommendations to help politicians address the housing crisis.
The planning system needs systemic reform, rather than sporadic funding.These include: more planning department funding, clarity on household projections, the introduction of a public sector land database, development of a robust energy and water infrastructure strategy and measures to help buyer affordability.
Sadly, most of our recommendations were overlooked by Jeremy Hunt in his Autumn Statement.
Initiatives to boost housing development will do little to overcome the impact of multiple failed policies, chronic austerity-driven underfunding of planning departments, NIMBY backbench pressure, see-sawing housing targets and a merry-go-round of housing ministers.
Planning
Some £32mn was committed to clear the planning backlog and develop new housing quarters in Cambridge, London, and Leeds.
A further £450mn was allocated to local authority housing funds to deliver 2,400 new homes across the UK.
To incentivise Local Planning Authorities to speed up the system, the government will allow them to keep the planning fees from major applications in return for meeting faster timelines.
Any council failing to do so would be forced to refund fees automatically and process the application free of charge, creating ‘a prompt service or your money back'.
Financially incentivising councils to meet targets for processing planning applications fails to address why applications are taking so long – the severe shortage of planning officers and lack of investment in technology.
Penalising councils who simply don’t have the manpower to process applications on time exacerbates the problems and leads to councils potentially rejecting applications to meet timelines.
Hunt also announced:
- £5mn for the Department of Levelling Up, Housing and Communities’ Planning Skills Delivery Fund – enabling LPAs to target development application backlogs
- £5mn to incentivise greater use of local development orders in England, securing commercial project planning permission faster
- £3bn extension to the existing Affordable Homes Guarantee Scheme to help deliver 20,000 new homes and improve the quality and efficiency of thousands more
- £3mn to improve the home-buying and selling process. In our white paper, we advocate digitising the buying and selling of homes, and removing the archaic paper-based conveyancing process to speed up the buying and selling process, releasing more properties to market.
The planning system needs systemic reform, rather than sporadic funding.
While funding can help alleviate staff shortages and upskilling, chronic underfunding since 2009 means £32mn is unlikely to have much impact.
As we state in our white paper, a national framework is needed to eliminate decisions based on ulterior motives/opinion.
For example, where a local MP’s seat is marginal, evidence suggests developers are more likely to have their plans rejected.
Devolving mayoral powers will equally have little effect on housebuilding and property development – we need a central government policy that mandates local plans and dictates clear, long-term housing goals.
The problems can’t be solved at a local level, as evidenced by the number of councils ditching local plans.
Nutrient neutrality and planning
Hunt committed £110mn to help LPAs ‘deliver high-quality nutrient mitigation schemes’ unlocking 40,000 homes that are otherwise stalled.
Earlier this year, the government attempted to scrap laws on nutrient neutrality which stop new developments being built if they lead to higher levels of phosphates and nitrates in waterways.
However, this amendment was vetoed in parliament because the terms were too loose. We recommended a far more nuanced approach as well as addressing the main source of river pollution: agriculture and water companies.
If buyers can’t afford to buy houses, developers can’t afford to build them.There’s a disappointing absence of any definitive climate action. Energy efficiency in homes is a quick win to improving people’s lives by creating warmer homes and cheaper energy bills.
A long-term investment in energy-efficiency and broad-spectrum retro-fits of existing housing stock also reduces our reliance on the volatile gas market, reduces expensive upgrades to our energy grid, creates jobs across the country and helps control carbon emissions.
Decarbonising the built environment sector is crucial for making net-zero progress and a lack of support in this area means it’s left to the private sector. Tax relief on machinery and tech may not be enough of an incentive.
Permitted development
Consultation will begin on new permitted development rights to allow any house to be converted into two flats, provided the exterior remains unaffected.
In July, the government also proposed more leniency in planning permission for
- Converting empty retail units into homes
- Barn conversions
- Repurposing agricultural buildings and warehouses
- Home extensions, loft conversions and renovations.
This will make better use of existing buildings and infrastructure, as well as boost housing availability. However, the concern is the quality of these conversions and potentially adding more cramped, sub-standard spaces that lack ventilation and decent insulation.
Mortgage guarantee extension
The scheme enabling buyers to take out a mortgage worth 95% loan to value (LTV), requiring only a 5 per cent deposit, is extended until June 2025.
Current affordability constraints mean the effectiveness of the mortgage guarantee scheme depends on the availability of eligible properties.
Most first-time buyers’ primary concerns are repayment affordability, preferring to save for a larger deposit where possible. Few will therefore take out the highest LTV mortgage.
A damp squib
This was a real missed opportunity by the government.
The construction industry contributes approximately 8 per cent of UK GDP, and due to lead times to deliver the end product to market, the sector is also counter-cyclical.
A proper, well thought-out approach now, would have helped boost the economy ahead of next year’s general election.
Knight Frank’s most recent Residential Land Index Report, shows the falls in house prices have lead to drops in the average greenfield and urban brownfield land values.
As our white paper points out, the issues hindering housebuilding are so intertwined and interdependent that there’s no single fix to solve the housing crisis.
If buyers can’t afford to buy houses, developers can’t afford to build them and the shortage perpetuates. Solutions have to be holistic and long-term, with joined-up thinking and strategies across all parties.
Ian Humphreys is chief executive and co-founder of Brickflow
