What will the next Government mean for new housing in the UK?
By Hugo Trower, Residential COO.
The Conservative Party, despite 14 years in Government, consistently failed to deliver its housing targets of 300,000 new homes per annum, and then decided to abolish the targets entirely. Every additional 100,000 new homes is estimated to add 1% to GDP, so it is essential that the new Labour Government puts development at the very heart of its agenda. The Labour Government has committed to delivering 300,000 homes per annum. However, its manifesto is extremely light on detail and does not go far enough in explaining exactly how these numbers will be achieved. In our view this pledge will not be delivered without major planning reform and policy intervention. That means supply will remain tight and house prices will continue to increase over the medium to long term.
The Labour Party’s manifesto includes a brownfield first approach, which includes releasing ‘grey belt’ land in the green belt, strengthens the presumption in favour of sustainable development and will provide funding for more planning officers. These policies are all fine but are not the major reform that is required to generate the dramatic acceleration required to deliver their targets (and account for the cumulative backlog of successive years of failure to deliver the housing targets).
Labour’s manifesto also includes a pledge to deliver the next generation of New Towns. New Towns have been delivered before, albeit with varying degrees of success and nothing is included in this manifesto about how they would actually assemble the land and ensure both the financial viability and deliverability of each site. It is highly likely that we will be in the next parliamentary term before a spade is put in the ground in one of these new towns, let alone a house being delivered, and so the housing supply issue will have compounded for yet another five years. Then when eventually the homes are built, they will almost certainly be developed by the volume housebuilders, who will try to increase the density of a development (to an unnecessary degree), reduce the affordable housing provision on a site (through arbitrary viability arguments) and continue to build poor quality, badly designed homes.
At least part of the solution to the housing crisis is to remove the politics and NIMBY-ism from the planning process and ensure that all (or most) of the towns and villages across the country takes a share of small scale housing developments. These sites are usually well designed and integrate seamlessly, often within or as a natural extension of a settlement boundary. Focussing on increasing the supply of these smaller sites will make a meaningful contribution to housing numbers because they will be delivered far faster than the New Towns, thereby plugging the gap in the interim. They would also be delivered by SME housebuilders who tend to build bespoke, high-quality homes which often add to the local area, rather than detract from it and offer buyers more choice in the new homes market.
The Barwood Residential Investment Platform has a long and successful track record in supporting experienced SME housebuilders in the acquisition and development of these small sites and is making a meaningful contribution to the number and quality of the housing stock, by offering 100% equity funding which is often cited as one of their main barriers to entry.
For more information about how we help support developers and generate returns to investors, please get in touch.
Updated 8th July 2024