The ladder to New Homes

Posted on: July 8th, 2015

There is no doubt that we face a housing crisis. In 2014, according to the Department for Communities and Local Government, just 118,760 new homes were completed against the generally accepted need of 250,000 new homes each year.

The number of new home starts is at its highest since 2007, but still 30 per cent lower than the number of homes being built before the global economic crash. And nowhere is the need for new homes greater than in London and the South East.

If we are to provide homes for our children and grandchildren reform and help is going to be needed in equal measures. Karen Webb outlines five key areas that need addressing.

Planning reform

The Coalition Government has introduced welcome reform to our complex planning regime, yet further and deeper reforms are needed.

The introduction of the National Planning Policy Framework (NPPF) and its presumption in favour of sustainable development has made it faster for
housebuilders to achieve outline planning permission. However, it can still take many months to turn outline permissions into full planning permission that allows a developer to start building. This is where further reform in needed.

Measures to make it easier and faster to build on brownfield land would also be welcome. A 2014 research report by the Campaign to Protect Rural England, From Wasted Space to Living Spaces, identified enough brownfield sites in England to provide 976,000 new homes.

These sites are often difficult and expensive to develop and the government should provide assistance to housebuilders to bring forward viable schemes on brownfield land.

Affordability

The average price of a home in the UK is £231,487, rising to £326,163 in the South East. With lenders typically requiring a 25 per cent deposit, the affordability of home-ownership is a real challenge, particularly for first time buyers.

The Government’s Help to Buy scheme, introduced in 2013, allows home buyers to get onto the housing ladder with just a five per cent deposit and has been a real success, helping some 70,000 people so far. Research published at the beginning of this year by the Mortgage Advice Bureau shows first time buyers are able to get onto the housing ladder some six years earlier compared with those having to save for a deposit.

A long-term commitment to Help to Buy will not only help those wanting to get on to the housing ladder, but will encourage housebuilders who can take comfort that their products will have buyers.

Affordable home requirements

Small housebuilders are a dying breed, struggling with costs and regulatory burdens. Similarly, small development sites have been difficult to bring forward, hampered by the requirement to provide affordable homes, even in some cases where a developer is proposing just one or two dwellings.

In December 2014, the Government introduced a new threshold for the requirement to provide affordable housing of 10 homes or more, or schemes with a maximum floorspace of 1,000 square metres. This is welcomed, and will help smaller developers and greatly increase the viability of small sites.

Social housing providers, however and perhaps predictably, have not welcomed these measures, and the Labour Party has said that it would abolish the concession.

The concession is a genuine incentive and one that will provide new homes with little detrimental effect to affordable housing numbers. It should be retained for at least the lifetime of the next government.

Empty homes and public land

It is estimated that there are some 600,000 homes lying empty, and whilst the Government introduced powers enabling local authorities to bring them back into use, the ‘Empty Dwelling Management Orders’ or EDMOs, have been little used. In 2014 local authorities used these powers on just 17 occasions, and 15 of these were in the North East.

It is a sign that these powers do not work. Our next Government should re-examine measures to encourage landlords and property owners to release or use these empty homes. In 2012 the Government announced measures to release redundant public sector land, claiming capacity for up to 100,000 new homes. There is little evidence this has happened. This commitment needs to be revisited and a scheduled programme of release introduced.

Skills shortage

The National Federation of Builders has said that the housebuilding industry needs 40,000 new workers every year for the next four years to meet the rising demand. The shortage of skills is so acute that wages, particularly for bricklayers, have increased by up to 50 per cent, and schemes are being held back.

This is only going to be addressed by a concerted effort by government, schools and industry to encourage, promote and provide attractive apprenticeships in increasing numbers.

There is no quick or simple fix to our housing shortage. It is only through a concerted, coordinated and sustained effort that we will provide the homes our children and their children will require.