Housing needs planning reform and a minister

The General Election feels a blur in the past yet only really six weeks ago. Throughout the campaigning there was a lot of talk about housing and coinciding with that there was a need to reform the planning system to make housing easier to deliver. This however was not high on the agenda with much focus on the need to build 200,000 new homes in one shape or another. But is the need to reform pushing higher up the agenda now whether the political system likes it or not.

 

Over recent weeks however there have been a number of points made which potentially mean we are unlikely to see much change. Greg Clark, Secretary of State for Communities, is now running the show and has called in his first planning application already for King’s College’s plans to revamp its campus on the Strand ultimately meaning delay to this scheme. This is following Danny Finkelstein signalling a period of stability in planning. Makes no sense to me, the people who use the system say it is failing, politicians seem to think it is failing yet no changes are planned despite a clear vision by everyone to increase housing. I can think of two examples of schemes that on paper should be a sure win for development yet they have stalled at planning with no light at the end of the tunnel to kick off.

 

So is it me or do politicians not realise that to increase house supply you have to speed up planning – they go hand in hand. The lack of supply is adding to the cost of buying a new home – one big circle that if more houses aren’t built the cost of those around increases. This problem is clear in London where lower-earning employees are being priced out of the market but this is also spreading to the regions.

 

The UK’s housing problem is just that, a problem. Does the industry think the conservatives will deliver the 200,000 start homes by 2020? I think the vast majority don’t unless things change. There seems to me to be three options of who should lead the provision of starter homes with central and local government being at the top of the list followed closely by housing associations.

 

There is a clear decision needed on should PRS be increased. We have seen so much institutional investment in PRS over recent times (mostly in London) but is it the way forward? Europe is more of a renting nation than the UK which historically has been a home owner’s nation. As a home owner I like the fact that I can come back from work to my own home and build a future there. That’s me and I’m not saying it is for everyone but the current government policy would be inclined towards home ownership, for example right to buy scheme.

 

So where next – well the UK needs a housing minister. It has been way too long since we did but for people to really think housing is high on the agenda then there needs to be someone in the Houses of Parliament shouting for housing reform. Secondly a clear plan of attack for achieving the housing targets, I’m not 100% sure about Tony Pidgleys plan to restructure the greenbelt but he does raise valid points that greenbelt has to been green – if it isn’t then why is it protected.

 

Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to property and construction.

Enjoy the weekend

Lee

Construction on the up

It’s a busy weekend ahead as the annual Penistone Gala is on (tickets still available if you want some comedy, real ale, music and homemade treats in your life but having spent a lot of time of trains this week I’ve had time to reflect on a few points.

The CPA noted recently that construction has grown for the eighth straight quarter in Q1 2015 and I’m not surprised – I’ve done London, Leeds, Sheffield, Edinburgh and even Penistone this week and they all have construction projects ongoing whether it’s commercial, industrial or residential. The market is very actively and in a good way. Lots of sensible decisions being taken but at the same time some sensible risk around speculative builds (though in truth some of this is purely because a tenant is on the cusp of signing up!).

The good news is that this upbeat mentality and growth is coming across all parts of the sector – large contractors, civil engineers and even SMEs and although yes there has been some causalities along the way we are moving into a good place with 50% of building contractors reporting growth.

A key area for this growth is the housing sector – it’s everywhere and even there we still are not building enough, but we are heading the right way.

The flipside is with growth comes additional costs with labour costs increasing – a combination of catching up on a few years of no growth but also reflecting skills shortage putting the power into the labours’ hands. Similar increases are occurring in material costs. The challenge for the industry is offsetting these costs increases by passing to the ultimate consumer. Not easy! A number of businesses are looking to technology and partnerships to keep the business growing but in a safe place risk wise.



An example recently is the acquisition of Shepherds construction business by Wates Group. The deal works well for Wates in their ambition to grow the business and the culture fit will work given both businesses are family-owned with similar values. Provided integration of the two is well planned and coordinated then there is potential here for Wates to grow significantly in the North but also use the additional resource to support the South.



It was no secret that Shepherd Group was reviewing the entire business and following the homes business being sold it was no surprise to see construction go next having struggled over recent years to complete with the large contractors. It does allow Shepherd to focus on its other offerings which generate good returns.



The challenge during the all-important tender process is a long term view. You can drive growth by keep fees low but it will come at a cost that you are unable to meet the demands of your labour. There needs to be a balance between keeping internal and external stakeholders happy. The Wates example shows some consolidation in the industry and this is expected to continue as businesses battle for growth – the question is who is next?

Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to property and construction.

Enjoy the weekend

Lee

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Politics shaping the property industry

Well I’ve spent a week in Edinburgh and I don’t know how I forgot how beautiful the city is – even the hotels seem to be unique and a world apart from the hotels of some English towns. I spent last night walking around the old town in the evening sun, particularly around the castle and it gave me time to think about what the week had shown me.



Now I’m not one to be too political but a I was reflecting on concerns around the industry champion role being cut as part of cost saving measures. The role of chief construction adviser to me feels a crucial role in helping the industry continue the growth it is starting to see but there is growing fears the role will be scrapped. The position currently held by Peter Hansford is also in question given his contract expiration in November this year.



So why is the role important, well the role is absolutely fundamental, and with previous cuts to the departments there aren’t civil servants in place to drive the construction industry agenda. You should also consider that as Francis Maude has now departed the Cabinet Office there is less obvious support for the Construction Strategy.



The industry needs a focal point to reach across departments, and with the hard and soft skills to generate the energy to keep the construction strategy on track. If you took the role away you’d have to recreate that in another way.

At the same time housing is rising further up the political agenda with mayoral candidates giving it focus in London. Tessa Jowell, a potential candidate is promising to thrust housing back into the spotlight, with the launching of TfL for Housing to build more affordable homes in the capital. Well it’s nice but affordable housing is needed everywhere, not just London but also it does appear that London is seeing a clear rich and poor divide for housing in the capital

The proposal would mean TfL for Housing would act as a developer and build homes with a subsidy or on public land with an expectation of building 2,000 affordable homes a year for the next 20 years. Sounds good doesn’t it but like many things it’s a piece of paper at the moment and more detail would be needed before we could say yes or no on whether it would be successful.

Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to property and construction.

Enjoy the weekend

Lee

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