The challenge of meeting the UK’s housing supply targets is more than just a problem for the planning sector, according to BLP Insurance’s Kim Vernau
The construction industry needs to be firing on all supply cylinders to meet the million homes challenge by 2020, according to panellists at an event held by BLP Insurance and the British Property Federation on the recently enacted Housing & Planning Act.
Taking over 150 days to make its way through both Houses of Parliament, much has already been said about the Act’s turbulent progress. The event, chaired by Richard Saxon, Non-Executive Director at BLP Insurance, and with panellists from the British Property Federation, Greystar, Southampton County Council and Basingstoke & Deane Borough Council, sought to debate the effectiveness of the controversial provisions in delivering a realistic solution to the UK’s pressing need for more housing supply.
Housing supply has failed to recover to pre-recession levels eight years down the line, and the ambitious target set by the UK government to get a million new homes built by 2020 is looking increasingly out of reach. Standing in the way are a growing number of major challenges including a lack of local planning provisions, shortages in skilled labour, financial weaknesses in the social housing sector and the absence of mature, purpose-built rental and self-build sectors which are present in other countries. In a nutshell, the new Housing & Planning Act addresses only part of the problem.
Counterproductive measures?
Supply-side measures outlined in the new legislation are primarily focused on speeding up the planning system with the aim of delivering more housing. Sites must now be delivered faster through the planning process and the government has the authority, under the Act, to permit development in the absence of local plans, hoping to increase the speed in the teeth of local opposition. This caveat is required, given that at this stage only 31% of housing authorities have completed local plans.
There is also a focus on home ownership under the new Act, with measures to facilitate the building of starter homes and the extension of Right to Buy to housing association tenants. However, the stipulation that housing built for sale must now include 20% of starter homes sold at a discount will do little to increase supply and could actually reduce the supply of affordable rental properties, subject to the as-yet-unwritten regulations.
Affordable, and social-rented housing can satisfy local demand through allocation to those on the waiting list. However, this won’t happen with starter homes built to sell and the stock will drop further with ‘Right to Buy’ extending to housing associations. Where high ratios of affordable homes are politically demanded, which results in the site not being viable, this could further depress supply.
Joint ventures one way forward
A shining light in the dark is that local authorities may become more entrepreneurial by joint-venturing with developers and using public land. The addition of rental homes to schools, healthcare and public office sites is a new concept of great interest. Opening up new land with infrastructure – or intensifying development where infrastructure exists – is possible, but such projects are hard to finance up front.
The build-to-rent sector is emerging but it has not yet been acknowledged by the government as an important element to increase housing supply and the public is barely aware of it either. Nevertheless, it is the one way in which high-quality capacity can be increased rapidly. Rental units can be built quickly with offsite construction and then let at speed. Discounted units can be provided and, furthermore, allocated discretely. The one big constraint holding the sector back is that build-to-rent can’t compete for sites with build-to-sell. Short of creating a new use-class, local authorities can only harness the potential by joint venturing with build-to-rent developers on public land.
The lack of a self-build market in the UK is also a sticking point when it comes to meeting the demand for increased housing supply. Other countries have this as a major source of supply, employing small builders. However, differences in how we allocate sites for self-build means that it falls short of providing a viable solution.
Where now for housing supply?
At inception, the government said that the legislation would kick-start a national crusade to get one million homes built by 2020. It’s becoming increasingly evident that this is much more than just a planning issue. Even if sites for construction become more readily available through a quicker planning process, reliance on conventional on-site construction techniques and the loss of so many tradesmen and skilled professions in the wake of the recession puts a limit on the volumes possible.
“Breaking through the red tape – Housing supply: where now?” took place on Tuesday 14th June 2016. The event was hosted by BLP Insurance in conjunction with the British Property Federation. Industry panellists included:
• Michela Hancock, Development Director, Greystar
• Ian Fletcher, Director of Policy (Real Estate), British Property Federation
• Mike Harris, Director of Growth, Southampton County Council
• Melbourne Barrett, Chief Executive, Basingstoke & Deane Borough Council
• Chaired by Richard Saxon CBE
Kim Vernau
CEO
