Industry experts have called on the government to make radical changes to boost homebuilding.
It follows the release of monthly construction industry data yesterday (5 December), showing a decline in the homebuilding sector. The S&P Global UK Construction Purchasing Managers’ Index revealed homebuilding numbers dropped for the second month in a row.
A report by the Centre for Cities thinktank has also warned that the government was on course to fall short of its 1.5 million target for new builds by the next general election.
Gareth Belsham, director of Bloom Building Consultancy, said residential developers were still struggling with high interest rates – which have increased the cost of buying land – as well as patchy demand from buyers.
“The government’s promise to get 1.5 million more homes built in England over the next five years is looking ever more pie in the sky,” he said. “With costs rising and demand falling, there’s now a real risk of stagflation in residential construction.”
Home Builders Federation executive director Steve Turner told Construction News that reform of local government planning processes was needed to boost site starts.
“The government will need to pull additional policy levers if it is to achieve its ambitious housing target,” he said. “Ensuring local authority planning departments have sufficient capacity to process applications efficiently is key.”
Turner added that initiatives to improve affordability for new buyers were also needed.
“The government needs to do more to support prospective buyers, in particular young people, to access suitable mortgage finance,” he said.
“It is the first time in 60 years there is no effective government support for home ownership, and the suppressed level of demand reduces the industry’s ability to invest in new sites and its supply chain, and so accelerate the delivery of private and affordable homes.”
Reacting to the release of the PMI figures, Terry Woodley, MD of development finance at Shawbrook Bank, called for “comprehensive reform” of government policy to increase demand and supply.
“The decision not to extend stamp duty relief for first-time buyers could also hamper progress, given that they are the majority buyers of newly built homes,” he added.
“SME developers are going to play a crucial role in meeting this [1.5 million] target, so it’s important that the government lays out detailed and effective plans to remove red tape, improve planning systems and encourage developers. Otherwise, the same issues currently stalling development risk dragging and halting any significant progress.”
Deputy prime minister Angela Rayner announced plans in July to consult on a raft of policies aimed at boosting building, including releasing some greenbelt land and intervening in planning at a local level.
But in its new report, the Centre for Cities warns that the government’s pledges on planning reform are insufficient for it to hit its homebuilding target.
Following an analysis of historical data of private and public housing delivery numbers, it warns that even the highest rate of new-build output from private sector homebuilders would leave the government 400,000 homes short by 2029.
This gap is “unlikely to be bridged” by public building programmes, the report adds.
The thinktank’s chief executive, Andrew Carter, said ministers were correct to work to a “bold” target on new homes. But he added that parts of England “would have to reach an 80-year high” in homebuilding.
“This would be a huge positive for the country but the approach has to be much more ambitious,” Carter said.
“By removing the discretionary element of the planning system, the UK would bring its planning system in line with most developed economies, remove a big block on homebuilding and enable places to better respond to future rises in demand for homes.”
