What can be done about housing?

It is no surprise that at the beginning of tenure is the best time to make changes and the government has the opportunity to really do something about housing. The manifesto and discussions since have made it clear housing is on the agenda but without the housing bill we lack the full detail. Brandon Lewis, having been reappointed, does give some stability to the industry but even more need for a quick action plan.

So where should the top team be focusing its efforts? With the introduction of the NPPF and the economic recovery, the level of outline consents granted is already running at around 240,000 homes per year, nearly double the actual number of homes being completed. However, the challenge is turning the outline consents into actual homes. Surely this can only be addressed with wholesale changes to the complex planning system.

The government can tackle certain areas that will help housebuilders deliver more but they will need to take bolder steps on housing delivery, such as re-appraising parts of the green belt. Any changes to the green belt will be unpopular but why can’t England follow the approach taken north of the border where green belts are reviewed every time the local plan is reviewed. Yes let’s focus on redeveloping brownfield but we can sensibly look at green belt.



On social housing we heard a pledge of 275,000 homes over five years which is better than a kick in the teeth but given the tight constraints on funds will there be sufficient funding and while you are building the “right-to-buy” scheme means housing association stock could reduce with tenants taking advantage of low mortgage rates. On top of social housing, a further 200,000 starter homes for which there is little more detail.



Radical changes are needed. We seem to live in a society where the middle class have been priced out of the market – how can it be right that those on the dole get more? The introduction of a national housing target (rather than simply talking about it), and draw up an implementation plan to meet it. What is this number? Well widely believed that 200,000 is a good starter per annum. One that is opportunistic for all walks of life – SMEs, national housebuilders and housing associations. Draw on industry experience and public sector to ensure the plan benefits everyone and focuses on the community and please promote the housing minister to the cabinet and make them accountable.

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

The housing crisis that the government faces

Another day another budget and it certainly was a busy one. As an individual there was some good news and some bad news but the listed housebuilders were in for a hit with up to 7% wiped off share prices on the back of news that tax relief on mortgage payments is to be restricted to the basic rate of tax for those buying to let. It’s like full circle given the share jump they received following the Conservatives forming a government.


This recent fall does come off the back of Mr Osbourne committing £6bn to Help to Buy until at least 2020. The first chunk of £1.5bn has been delivered to the Homes and Communities Agency and is ready to roll. The scheme that gives equity loans to help individuals get on the property ladder is boosting the economy by driving house building. The key point I see is that by committing to 2020 you provide the certainty to housebuilders to recruit which benefits their own supply chain too.


But while housebuilders’ share prices have risen sharply on the election result, the Conservative Party manifesto contained no pledge to meet rising demand by setting a target to build more homes, as called for by many in the sector and this is still the case – unless it is addressed in the Housing Bill.


Certainly there is little doubt about the scale of the housing crisis that the government faces. The latest housing supply projections show that 210,000 new homes are required across England each year to cope with the number of new households forming every year. Once the accumulated backlog of past undersupply is factored in, housing pressure groups agree that the UK needs at least a quarter of a million new homes each year. Just 141,000 were built in 2013/14.


Against this backdrop, many people are putting off setting up home altogether. Figures published by the Office for National Statistics earlier this year showed that nearly a third of a million households contain more than one family.


Among young adults, nearly half of whom live in private rented accommodation, the proportion of 20 to 45 year olds putting money aside for a home deposit was down by 6% to 43% last year, according to a survey published last month by the Halifax bank. Home ownership is at its lowest level since 1985, according to recently published Department for Communities and Local Government figures.


So what do we need well its simple (I think):

• National housing target;
• Housing minister to report on progress on nationally significant sites and against the housing target; and
• More funding for social housing

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

What could the Summer Budget bring

Next week brings us the Summer Budget in unlikely to bring much for housing with the housing bill coming in due course. We already know this will extend the right to buy scheme and push for regeneration of brownfield sites. One item that would be good to see a change on is the promise the government gave to build 200,000 starter homes.

 

The target set by the government is to help achieve the “affordable” element of their target but with current house prices there is an argument that even at a 20% discount they would be anything but affordable for those who actually need housing.

 

The National Housing Federation suggests 245,000 homes a year need to be created with around 80,000 affordable. I think you could go a long way to helping this by devolving an element of releasing the land to create these opportunities to the local authorities.

 

Last month the Communities Secretary Greg Clark announced a target to release public land to create 150,000 new homes over the course of the parliament. The sites are yet to be identified though the Homes and Communities Agency has identified sites for 14,000 homes (just shy of 10%) already. This challenge is being place on central government but also local government using the 326 town halls in the country.

 

Where you would like to see this going is the release of brownfield sites for development and allow for redevelopment of some areas of inner city. A good starting point is to create a register for these brownfield sites that are suitable for housing development. In a portfolio held by government of in excess of £100bn of land and property assets it should be straightforward to identify 150,000 houses in 5 years.

 

Another big area at the moment is the investment in infrastructure which will ultimately lead to a conversion on creating a northern powerhouse.  There is a need to rebalance the economy with the country so dependent on London and the South East and a key route to aiding this is investment in infrastructure. The recent announcements that there were problems with the investment programme for Network Rail puts surely some doubt into HS3.  It won’t be a surprise if there are announcements for some early investigation work on HS3 but having lived in the region for a while we must not forget that it’s not all about rail – simple improvements to Trans-Pennine road routes, for example making use of tunnels already present, would aid connectivity.

 

From speaking to a number of individuals there is a strong belief that the best way would be to HS1 and HS3 are completed and then at some point HS2 is completed. The cost to benefit ratio for HS2 is still unclear and the timescale to me almost means it will be redundant before it commences.

 

So whatever the Summer Budgets I don’t think it will answer all our queries but rather raise more. In all the right places all the right talk is happening but actions speak louder than words.

 

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