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Housing must remain top of the government’s agenda

With the number of new homes being built across the UK still significantly below the level needed to meet demand, housebuilders are often accused of sitting on land with planning consent and not building to help drive up house prices as well as rents. 

But the reality is that in order to increase the supply of much needed new build homes across the country, more actually needs to be done to help alleviate the challenges and obstacles facing residential property developers.

The failure to construct enough homes means that Britain’s housing shortage has now reached crisis point, with the number of prospective buyers and renters dramatically outweighing the volume of homes on the market, while restricting the level of housing stock sales and letting agents have to offer. 

The latest figures from the National Association of Estate Agents (NAEA) may show that the supply of homes available to buyers increased slightly to 38 per branch in July, from 37 in June, but the number of homes for sale remains close to a 30-year low, and that is bad news for estate agents. 

A chronic shortage of properties will almost certainly drive house prices upwards across the UK in the medium to long term, which will not just have an adverse impact on first-time buyers and second steppers, forcing some out of homeownership, but an insufficient supply of housing stock will also make it harder for residential agents to survive. 

Mark Hayward, managing director, NAEA, accepts that “there is a serious shortage of appropriate housing in this country”, and wants the issue addressed as a matter of urgency by building more homes. But is there a political will to tackle the housing crisis?

Political manoeuvring

With housing high on the political agenda ahead of last year’s general election, all the major parties pledged to tackle the housing crisis by promising to build significantly more homes every year to help alleviate pressures on housing stock.

Soon after the Conservatives won a surprise majority in the general election, their first outright majority since 1992 under John Major, the Tories announced that they would aim to deliver 1 million new build homes during the course of this parliament to tackle a ‘decades-old deficit’.

Insisting that he was determined to address the growing housing crisis, the now former chancellor George Osborne (below) appeared to put housing at the heart of Britain’s recovery and growth strategy and in what turned out to be his last ever Autumn Statement and Spending Review, he promised “the biggest housebuilding programme since the 1970s”. 

This included earmarking £6.9bn of taxpayers’ money to support housebuilders of all sizes to build more residential properties, as part of the government’s aim to meet its new homes target by 2020. 

Housing must remain top of the government’s agenda

 While supply-side solutions, which included  various housing schemes like Help to Buy and  encouraging development on brownfield land,  were broadly welcomed as part of wider efforts to  solve the housing crisis, they were never going to  be enough to boost housebuilding to the sort of levels that are required. 

 Last year around 120,000 new homes were built  across the UK, less than 50% of the amount needed to solve the present housing shortage. 

 The number of homes currently being built  continues to remain significantly below the government’s target of 200,000 new homes a year, or the 300,000 new properties that the House of Lords Economic Affairs Committee recently recommended should be delivered each year, as the government’s seeming desire to boost housebuilding levels is offset with a tax raid on homebuyers. 

Given that the outcome from the EU referendum has led to an extraordinary number of events unfolding recently, including a new prime minister, a Labour leadership battle, the collapse in the value of sterling, not to mention a new man in the Treasury, one phrase keeps coming to mind: ‘a good time to bury bad news’.

A good time to bury bad news 

Leaked emails last week revealed that the former UK foreign secretary and Iraq war architect Jack Straw had told former statesman Colin Powell, who served under George W Bush, that the “silver lining” of the EU referendum was that it distracted attention from Chilcot’s Iraq report.

In an email containing a proposed press statement sent to Powell on 4 July – two days ahead of Chilcot and 20 ahead of the Brexit vote – the former minister wrote the “only silver lining of the Brexit vote is that it will reduce medium-term attention on Chilcot – though it will not stop the day of publication being uncomfortable.”

In response, Powell assured Straw a month after Chilcot hit that it “didn’t amount to anything over here [in the USA]” and that he felt it wouldn’t be long before it simply “faded away” in the UK. 

Well there is another issue that is at danger of ‘fading away’, or at least falling down the political agenda, and that is housing, and in particular housebuilding.

Post-Brexit outlook 

The UK’s construction industry suffered its worst contraction since 2009 in June as uncertainty around the EU referendum led to greater concern in the market, a survey mainly conducted prior to the EU vote on 23 June revealed. 

The Markit/CIPS construction purchasing managers’ index dropped to 46.0 in June, its lowest level since June 2009, in what could be a sign of worse to come.

“The extent and speed of the downturn in the face of political and economic uncertainty is a clear warning flag for the wider post-Brexit economic outlook,” said Tim Moore, senior economist at Markit.

Housing must remain top of the government’s agenda

Howard Archer, chief UK and European economist at IHS Global Insight, described the findings from the survey as “absolutely dire”.

He commented: “The survey can only intensify concern as to just how much the construction sector will be hampered by the Brexit vote.

“The government will be particularly worried to see housebuilding contract at the fastest rate since December 2012 and the second fastest rate since April 2009, given that it is looking to address the UK’s acute housing shortage.”

To add to the government’s woes, figures issued earlier this month by the National House Building Council showed that registrations of new builds have fallen since the EU vote, especially in London, where the housing shortage is most acute, having dropped by 62% since the referendum, compared to the corresponding period last year.

Shape the political agenda 

Despite the ongoing housing crisis, the main political parties are far more focused on other issues like Brexit, the NHS, the economy, as well as immigration, and that is partly because housing lobbyists are not doing enough to be heard. 

Housing must remain top of the government’s agenda

 Tony Blair’s former director of communications and strategy,  Alastair Campbell, highlighted this problem during a keynote  speech at last year’s Association of Residential Letting  Agents (ARLA) conference, in which he urged the residential  property industry to campaign harder on housing issues in  order to make it a greater political issue.  

 “Too many people give up before they have actually been  heard,” he said. 

Campbell (above) pointed to homeless charity, Shelter, as an organisation that commanded prominent media coverage thanks to their knack of campaigning on a particular issue, and quite frankly he made a good point. 

He added: “You have all the politicians talking about a housing crisis, but in terms of what they are going to do about that, who is shaping that agenda for them?

“Just as Shelter has been a very successful campaign organisation I think you [the housing industry] have to have that sense of the campaign mind set, not because you’re trying to win brownie points but because you are trying to win arguments.” 

Autumn Statement 

With two months until the new chancellor’s Autumn Statement, boosting the supply of much needed new homes must be high on Philip Hammond’s list of priorities, or there is a very real danger that the government will miss its housebuilding target. 

A fresh report by Capital Economics and who else but Shelter found that housebuilding could fall by up to 8% in the next year as uncertainty following the EU referendum takes hold. 

Housing must remain top of the government’s agenda

While Brexit “will not substantially impact prices, [it] will have a longer term drag effect on housebuilding”, the report said.

It added that if this trajectory continued, the government would actually struggle to deliver 750,000 new build homes by the end of the parliament in 2020, let alone a million properties. 

Capital Economics and Shelter’s forecast is supported by the latest planning application statistics from the Department for Communities and Local Government (DCLG) which revealed that local planning authorities granted 22,000 fewer applications in the second quarter of the year, compared to Q2 2006. 

Housing must remain top of the government’s agenda

“These figures show the government is failing to put its money where its mouth is when it comes to housing. The sluggish growth in the approval of residential applications will not be enough to enable a million new homes to be built by 2020,” said, Andrew Bridges, managing director of Stirling Ackroyd. 

Bridges (right), like many property industry professionals, wants to see the chancellor do more to fix the housing crisis by supporting housebuilders in their efforts to step up supply, and that includes “additional help to unblock stalled sites” and the introduction of “incentives to build-out existing permissions”. 

Ultimately, the government must do more to remove serious barriers to growth for housebuilders, with access to finance, land availability, and planning often highlighted as the biggest challenges. 

Planning overhaul needed 

In its recent submission to the Communities & Local Government Committee’s Inquiry into capacity in the homebuilding industry, LendInvest argued that “the government has a real opportunity to reinvigorate the market by putting homebuilding front and centre of its industrial policy”. 

It added: “It is not enough, however, to set ambitious housebuilding targets without addressing the challenges in the sector that are preventing developers from delivering the targets that the government aspires to achieve. Instead, measures should be taken to address the shortages in land, opportunities for finance and the lack of skills in the sector to truly get Britain building.”

Housing must remain top of the government’s agenda

 But until the “chaos” in the local authority planning  departments are resolved, housebuilders will have no  chance of building anywhere near the level of new build  homes needed to resolve the housing crisis, according to  Trevor Abrahamson (left), director of Glentree Estates. 

 He said: “With local authority cut-backs, planning  departments are reducing staff numbers across the country  which has resulted in a substantial reduction of planning approvals between 2010 and 2015 according to the Freedom of Information Act. 

“The local authorities are parlously under resourced and simply cannot cope with the workload.”

Overall, the UK has missed its housebuilding targets by a staggering 1,199,180 since 2004, recent figures from Yorkshire Building Society revealed.

The lack of sufficient housing supply has caused prices to increase well beyond wage growth, which has increased competition for properties and priced many people out of the market.

The property veteran of four decades is now calling on the housing minister, Gavin Barwell, to do a ‘root and branch’ reform of the planning process by creating a planning czar and expanding the Department of the Environment, which will then not only deal with planning appeals, but with all minor applications that will be adjudicated exclusively on planning criteria and not, as present, influenced by “petty local politics, localism and nimbyism”.

Cut stamp duty 

Aside from a planning overhaul, many property industry professionals would love to see changes to stamp duty in the forthcoming Autumn Statement, which was only last week described by former Conservative chancellor Lord Lawson as “crazy” and a “tax on mobility”. 

Housing must remain top of the government’s agenda

Simon Law, chairman of the Society of Licensed Conveyancers wants to see the government scrap stamp duty altogether to create a more “buoyant and vibrant” market, as well as a “marked hike in investment and building of new homes, not to mention create a “much more straight forward and quicker home buying and selling process”.

Last month, the TaxPayers’ Alliance also urged the government to scrap the levy to boost market activity, which in turn would encourage greater levels of housebuilding. 

“For decades politicians have failed to tackle the root causes of the housing crisis: a chronic lack of supply,” said Jonathan Isaby, chief executive of the TaxPayers' Alliance.

“The new chancellor should now seize the opportunity to drastically simplify and reduce property taxes, while removing planning restrictions which prevent huge swathes of land from being built on for no good reason at all,” he added. 

Skills shortages

Another hurdle facing housebuilders is a major shortage of skilled labour in the industry. 

It is estimated that around 50,000 homes across England alone are still waiting to be built despite receiving planning consent partly because of a construction skills shortage in the residential development industry.

Housing must remain top of the government’s agenda

Developers are now trying to address the issue through the Home Building Skills Partnership (HBP), a pan industry body set up by the Construction Industry Training Board (CITB) and Home Builders Federation (HBF) to develop, grow and sustain a programme that provides the workforce the industry requires to deliver the increases in housing supply the country currently requires.

Redrow Homes CEO John Tutte (right), who heads up the HBP, commented: “The industry faces a huge challenge in the years ahead as it looks to attract and train the people required to build the homes the country needs.” 

Other considerations 

Boosting skilled labour, cutting stamp duty, overhauling the planning system and unlocking more land, including some greenbelt, for the development of significantly more homes of all housing types will certainly go a long way towards tacking the housing crisis, but we all know that much more needs to be done to address the supply-demand imbalance. 

Aside from a complex planning system, skills shortage and punitive stamp duty costs, there are a number of other areas that require greater government and industry support to help boost new housing supply; issues surrounding all property taxes, bringing more empty homes back into use, encouraging and supporting self-building and investing more in Build to Rent, among other channels. 

Ultimately, only by increasing housing supply, whether new-builds or being more creative with existing housing stock, will we come close to catering for growing demand from buyers and renters, not to mention deliver more much needed housing stock for sales and letting agents across the country. But for that to happen, greater government support and a dramatic change in housing policy is urgently required.

*Marc Da Silva is Estate Agent Today and Letting Agent Today Features Editor. You can follow him on Twitter @propertyjourno 

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