The number of new homes being built each year in England will fall below 100,000 if current trends continue. The Government’s target is 185,000 new homes this year.
But according to a new report by BNP Paribas, ‘Housing the Nation’, the UK’s well-documented housing shortage has been compounded by a steady reduction in house building since the start of the economic downturn – with the situation worsening in the last 12 months.
The report says that before 2008, the average number of quarterly starts on new homes was over 42,000. It has since dropped by nearly 40% to fewer than 26,000.
Starts in the last two quarters have fallen back further to levels last seen in 2009, the lowest point in recent times for house building.
But house building this year could fall below 2009 levels, says the report. It says that starts were 18% down in the first three months of 2012, compared with the same quarter last year.
In some regions such as the North-East and North-West, house-building levels have more than halved since 2007.
The report blames a combination of economic uncertainty, lack of consumer confidence, local authorities’ ‘not in my backyard’ attitudes and the dearth of mortgage finance. It also criticises the Government’s planning reforms, the National Planning Policy Framework, for being ambiguous and creating confusion.
Tim Cann, head of development and residential consulting at Paribas, said: “With more than 1.8m households on council waiting lists, the report reveals that the Government is on track to miss its targets by a worryingly large number.”
Last year, the Government’s target was 185,000 new homes in England, but just 110,000 were built.
The report says that under new localism powers, local authorities in England have cut this year’s 185,000 target to 160,000. Only half of local authorities have stuck with their old house-building targets, while 24% have reduced them and only 8% raised them. A further 18% of councils have not yet decided.
The report’s authors say their expectation is that new home completions this year will fall below 100,000.
The report says that the provision of affordable mortgages is essential for the sector to recover.
More controversially, it calls for Green Belt land in the South to be released for new homes, and says that local authorities which reduce housing targets should be made to repay the New Homes Bonus.
Comments
Well done BNP Paribas, what a sound report!
At The Land Office we're seeing development sites being shunned because of the uncertainty of the Community Infrastructure Levy (CIL) and we call for the Government to scrap this TAX on development land.
Some local authorities have said it is negotiable, but only after the planning process. Developers will not know what to offer for the land, or if they want to even risk their resources on planning, until they know the sum of all likely costs including CIL.
With the ambiguity of the planning process and the CIL TAX the drop in new builds will be even greater unless the Government cap the rate of CIL that a Local Planning Authority can charge at a very reasonable level or scrap it altogether.
A great report from PNB Paribas.
At The Land Office we are seeing some good housing sites being shunned by developers because of the threat of high TAX on the land in the guise of the Community Infrastructure Levy (CIL).
Whilst Local Planning Authorities (LPAs) may hint that they will negotiate the CIL TAX, that doesn't help developers who cannot agree to buy a site with so much uncertainty around the price and land owners are not willing to agree a variable price to accommodate this TAX either.
A LPA might use their ability to negotiate to get the development they want instead of sticking to planning policy, which throws the planning process out of the window. It is wrong to create a system that enables LPAs to say we'll reduce the charge if we can what we want, does that sound like corporate bribery to you?
We will see a big decline in new builds as the CIL gradually spreads through the country. Any extra cost will decrease the supply of land. Land owners will wait for a change of policy or a new Government rather than drop their land price to make the CIL TAX affordable.
CIL is just so wrong and in some areas it is so high that all development will stop!
What do you think?
Lance Trendall
The Land Office