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A third way to tackle the UK’s housing crisis

Should we be heading back to the future? Sir Michael Lyons thinks so.

In an effort to boost housing supply, he has urged contractors to set up housebuilding arms as part of measures laid out as a blueprint for Labour’s new policy.

This includes encouraging supermarkets and even churches to turn housebuilder.

Sir Michael has understood that housing supply is unlikely to be ramped up by the significant numbers needed while it is dominated by a handful of housebuilding firms.

The days, however, when every main contractor spread their activity between being a housebuilder and a contractor are long behind us and it is hard to see, given the risks and capital involved, how they will go headlong down this path again.

Alternate path

However, there is a third way, as a number of firms such as Kier, Laing O’Rourke and Willmott Dixon are already demonstrating.

“Today’s modern contractors are not trying to be a mini-Berkeley or Taylor Wimpey, but opting instead to become housing facilitators”

One great example comes from Kier Homes, which is funding the construction of 152 low-income homes in Kent without the need for the HCA.

The model involves Kier funding construction of the homes, while the council puts in its land for free and an institutional investor buys the homes once they are completed.

Today’s modern contractors are not trying to be a mini-Berkeley or Taylor Wimpey, but opting instead to become housing facilitators, bringing stakeholders together - local authorities with their land, pension funds with their long-term investment and housing associations with their management skills - to lever development.

It’s an approach that’s innovative, sensible and - as Sir Michael would agree - greatly needed.

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