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The Government’s target of constructing 300,000 new homes annually by 2025 has been called into question due to a lack of confidence among builders and developers
Housing Secretary Michael Gove reiterated the Government’s long-held but often missed 300,000 annual homebuilding commitment last weekend but property commentators have highlighted several stumbling blocks.
Jonathan Rolande, a spokesman for the National Association of Property Buyers, suggested Gove has little chance of succeeding due to a “perfect storm” that is battering the housing market from all angles.
He said: “The confidence of housebuilders is low, and we have serious inflation to deal with. Add in fact the cost of building materials is rocketing, price of bricks are up 12%, steel is up 50%, concrete has gone up 37% then it’s a nightmare scenario.
“Skilled labour is in short supply too and, since leaving the EU, it is now more difficult to ‘import’ it as needed. If borrowing money is a solution, that has also just become a lot more expensive.
“Gove is widely seen as a fixer, somebody who can get things done. But even he will struggle with the perfect storm that is battering the housing and new-build market.”
Rolande, co-founder of property firm House Buy Fast, said it is all very well having a 300,000 target but who will build them?
He added: “I expect housebuilders to now focus only on developments where resales can be counted on and prices are less likely to drop during construction.
“This is likely to be prime property that will appeal to investment funds and overseas buyers. The volume of affordable and family housing built is very likely to reduce whatever the target set.
“Simply having a target, whilst useful, is not going to solve the housing crisis. We seem to have lurched from a period of prosperity to one of retraction within just a few months. It is a great pity that for the many years there was money to spend, the Government did not take the long-term view and embark on a homebuilding programme itself.”
These concerns were echoed by Jason Tema, director of Clearview Developments, who said: “As the construction sector is facing a chronic shortage of qualified staff, labour costs are going up and, inevitably, are handed down to the buyer.”
“The construction industry has seen many SME developers go into liquidation since the pandemic but the current economic uncertainty is adding further challenges. With experts predicting that house prices will continue to fall, many house builders who were already only breaking even, might now be facing losses on their projects that their business might not be able to absorb.”
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At last a sensible article on house building problems. I can't speak for anyone else but it is only very recently I've noticed comments on inflation of materials, which will surely worsen if there's a major push with house-building.
Some suggestions for Mr Gove....
1. Scrap the attacks on the private rented sector as the contraction is forcing tens of thousands of households into homelessness.
2. Re-form Development Corporations.
3. Stop selling Government owned land to developers that then land bank or use it for other reasons than housing. Gift the land to the DCs and reform PP for this land.
4. Make use of crowd-funding. Offer the public Development Bonds that pay somewhere above bank rates but make interest tax free. Perhaps 5% would be a good starting point. This will then mean the DCs have seed capital and the Treasury doesn't have to dig into its coffers.
5. Use modular construction methods which have been proven to save time and money in builds. This is extremely important as if you launch a major house-building plan using conventional means the price of materials and labour will escalate quickly, making houses even more unaffordable.
6. Make it possible for immigrants to have easier access to mortgages. This may mean developing some system to access their credit history (if they have one) in their country of birth.
7. Genuine first time buyers can be offered seriously impressive discounts, selling to them at cost of build. There would of course need to be some tie-in period so they can't just sell on. Any other purchasers pay market value.
8. Profit from the sale to non FTBs can be fed back to local and central Government to improve infrastructure.
9. Any immigrant, not just those that buy houses, that wants to return home after they have been in the country for 'x' years should be assisted in doing so in some financial way. There could perhaps be a points system so those that have been employed as key workers would benefit greatest. This would mean they would not be a burden on the state and NHS in their later life.
10. Bring in SDLT reforms so that any retiree can downsize without having to fork out many thousands of pounds. Currently many are locked into homes that are just too big for them. Free up that housing.
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