Downgrading housebuilding targets is a bold move that could come at a cost in the midst of the UK housing crisis, says Claire Fallows, partner in the real estate team at Charles Russell Speechlys
At the end of last year, newly appointed Prime Minister Rishi Sunak announced that the government would be dropping plans for firmer housebuilding targets, in order to give councils more room for manoeuvre in planning for new homes.
A consultation document released before Christmas confirmed the government’s thinking. While the targets are not currently compulsory, it proposes to clarify that they are merely “advisory”.
Changes to housebuilding targets
Specifically, councils may be able to build fewer homes if they can show that reaching the target would significantly change the character of an area – an exemption expected to particularly apply to rural and suburban communities. Also, councils will not have to review green belt boundaries solely to meet housing need – this may lead to councils reconsidering emerging plans in green belt areas.
For residential developers, currently facing a whole host of challenges including double-digit inflation, rising interest rates and labour shortages, this looks to be a major setback.
Critics argue that the move is political, while supporters say that it puts communities at the heart of planning. But what does this mean for the country’s worsening housing crisis and the future of levelling up?
UK housing crisis at tipping point
The UK housing crisis is one of the biggest challenges the country faces. The government says that it remains committed to building 300,000 new homes every year by the mid-2020s, but fewer than 250,000 were built in 2021.
The downgrading of housebuilding targets, alongside other proposals of the government, does beg the question: does the government really care about prioritising solutions to the UK housing crisis?
The latest proposals would hand new levels of flexibility in plan making and decision taking to councils. They would also make it more difficult for government inspectors assessing plans or considering planning appeals to challenge councils on their plans for, and track record on, delivering housing. There is no doubt that the move will lead to fewer new homes being planned and built in many areas.
The issue is not only the amount of houses being built, but also the cost of the homes to build and critically to buy or rent.
Significant investment is needed to tackle the housing shortage
In order to persuade communities to accept new homes, brownfield development is touted as the answer, alongside requirements for high levels of design and environmental protection. Details of a long-promised new levy to fund more infrastructure are yet to surface. However, those requirements add cost, at the same time as the price of materials soars.
The scale of the challenge requires much more intervention. There is no way to fix an undersupplied housing market without significant investment – and a clear commitment and direction from the top.
Making housing more affordable requires more housing to be delivered overall. The majority of affordable new homes are delivered through S106 deals as part of larger sites. Sunak’s recent decision to downgrade targets feels like a step firmly backwards in this endeavour.
Levelling up
The other point to consider following Sunak’s announcement is levelling up. Said to remain a key priority of this Conservative government, we are seeing little evidence of this. The majority of government housing funds are still directed towards London and the South East.
The fact is that more tools are needed to encourage development up and down the country. Incentivising development may involve reducing the financial burden on new homes in some areas, not increasing it.
However, all areas need to play a part in the drive to provide more affordable homes throughout the country and the downplaying of targets, as the starting point for determining what housing should be provided in each area, will not assist with that.
So, what’s next?
The government’s latest proposals come as a disappointment to many in the sector. Building more homes helps to address the social issues caused by our housing shortage, but also creates jobs, investment and economic activity across the country.
The government needs to be ambitious with its policies and targets if it is to create a positive environment within which the industry can deliver the homes the country needs.
More importantly, it needs to make difficult and unpopular decisions to ensure everyone has access to a decent home. Doing more from the top, rather than relying on local decision making, is vital for a sustainable and affordable built environment in the UK.
Claire Fallows
Partner
Tel: +44 (0)20 7203 5000
