To all those in the construction industry, the story is a familiar one.
The UK’s lack of affordable housing has become the great social issue of our generation.
There is huge political pressure to get more homes built and sold at affordable prices, and the forthcoming election has only exacerbated the issue and brought further pressure to bear.
In a bid to drive up ownership and win support from first-time buyers, all political parties are looking at ways to encourage homeownership.
Budget takes lead
In the quest for votes, political parties of all persuasions are looking at innovative policy to bring homes within reach of ‘hardworking families’.
Last week’s Budget was a prime example, with the government announcing a new ‘Help-to-Buy’ ISA.
“Giving money to home buyers without building any more homes just means you push up the price of homes”
But, as Newsnight presenter Evan Davis tweeted: “Giving money to homebuyers without building any more homes just means you push up the price of homes.”
This issue – as every housebuilder knows – is one of supply.
As part of our series of housebuilding reports, we interviewed 49 managing directors and CEOs from major developers and housing associations, to get their views on the issue and the results were not unexpected – if still a little concerning.
They showed 94 per cent felt government targets of 245,000 new homes per annum in the next two years was completely unrealistic, and wanted to see the introduction of mandatory response times for planners to speed up the process.
New garden city
The housing bosses agreed that if planning and land availability challenges are addressed, they could increase output by 19 per cent annually, creating more than 22,500 new homes.
Based on 2014 figures, that’s the equivalent of a new garden city each year.
The current shortfall is estimated to be more than 120,000 homes per year; with more than 150,000 plots being held at permission stage, you can understand the frustration in the housebuilding sector.
While sentiment regarding the achievability of targets is wholly negative, what is really surprising is that with a few small tweaks to planning policy and the distribution of public sector land, the government could create what is effectively a garden city ever year in terms of numbers.
“Housing bosses firmly believe that the most impactful initiatives would be the release of surplus land and implementing mandatory response times”
Housing bosses firmly believe the most effective initiatives would be the release of surplus land and implementing mandatory response times.
However, there are small initiatives which could really boost development.
They want the government to support the construction sector by helping to develop skills.
More power given to local authorities via devolution would also be beneficial, and of course alternative sources of lending.
The government’s policy to address homeownership is positive but ultimately needs to be backed up by increasing supply to enable developers to increase output.
Ed Goodworth is a partner at BDO