Judy Terry is a marketing professional and a former local councillor in Suffolk.
There is no doubt that the housing shortage is a problem, causing ever greater resentment, especially amongst young people, who cannot afford to get onto the home-ownership ladder.
Nevertheless, it is important to keep things in perspective. Under Labour, house prices tripled between 1998 and 2007 and, by 2010, building rates had reached lows not seen in peacetime since the 1920s.
Our population is rising at a much faster than expected rate. Based on UN estimates, the UK population in July 2017 was 65,524,079, up from 58,789,194 in the 2001 census. The proportion of over-65s is 17.7 per cent, and set to rise to 25 per cent by 2039.
According to a 2015 report by the ONS (Office for National Statistics) 28% of the 26.7m households are in single occupation. Independent research notes that up to 50 per cent of family sized social/council housing is occupied by just one or two pensioners.
In November 2011, the Coalition Government published an ambitious Housing Strategy for England. Entitled ‘Laying the Foundations’, it promised to boost delivery, recognising that getting housebuilding moving again is crucial for economic growth.
The radical Action Plan included a new build indemnity scheme to provide 95% mortgage loans led by the Homebuilders Federation and Council of Mortgage Lenders, a £500 million Growing Places Fund to support infrastructure, and a £400 million ‘Get Britain Building’ investment fund for small and medium-sized builders. It also promised to free up public sector land with the capacity for up to 100,000 new homes, and a £30 million Custom Homes programme to encourage self-build. Further measures included the New Homes Bonus and Community Infrastructure Levy alongside a simplified planning policy.
Assisting people to buy their first home was a key component of the Strategy, with FirstBuy launched in September 20ll. The second phase, Help to Buy, came on stream in October 2013 and was praised by Redrow’s Chairman as a ‘phenomenal success’, although take up was largely limited to about 4% of the market beyond London and the South East. (He suggested that it should only be available to those developers supporting skills training and advised extending mortgage terms for first time buyers.)
Despite all these initiatives, and official statistics for the period 2014-15 recording a 24% increase in London, and a 25 per cent uplift across the country, the problem remains. Just 144,280 new homes started to June 2016, well short of the 200,000 needed, and too few in the right places (it would help if they weren’t being demolished for HS2 and the second Dartford Crossing).
The reasons are complex, but we are bombarded with often ill-informed commentary by those (including some politicians and charities) who fail to, or are unwilling to, understand how the system works, or the impact of Brexit. The Royal Institution of Chartered Surveyors (RICS) announced in its June survey that uncertainty is stifling the market, and Jeremy Corbyn didn’t help when he wrongly asserted that ‘construction is in recession’ during the last PMQs.
Shelter recently reported that just 68% of sites with detailed planning permission had completed properties within five years which ‘means that 320,000 haven’t been built…. Developers perversely make more profit sitting on land than they would by building homes’. Meanwhile the Government’s February White Paper suggested giving greater powers to compulsory purchase unused development land. Can you imagine how long that would take, and what it would cost the public purse in legal fees alone?
Inevitably, and with good reason, developers deny deliberate land banking; like any business, profit is necessary to support investment – in acquiring and developing sites, paying the rising costs of materials, equipment and employees/sub-contractors.
Critics also fail to appreciate that, since the industry was emasculated following the 2008 financial crisis, it has taken time to rebuild the supply chain. Colleges have been slow to expand training so there is still a shortage of specialist skills, with developers struggling to recruit bricklayers, carpenters and joiners, and plumbers whilst relying on skilled immigrants and, more recently, their own apprentices.
There are also the ever more onerous Section 106 demands, adding millions to any new build project, and (don’t forget) to house prices – because buyers are paying for these ‘contributions’, (which partly accounts for the explosion in house prices). Negotiations can carry on for months, or even years, following planning consent, adding to delays on site, as well as increasing costs, which can include barristers’ fees for challenging bad decisions.
The Chief Executive of privately-owned Cala Homes, sums up the problems:
“The Government’s National Planning Policy Framework has brought more land to the market… but it doesn’t go far enough. Urgent reform of the planning system is required to remove the obstructions that are preventing us and other developers from getting on and building the homes the country desperately needs.”
He’s right. To call the planning system sluggish, and lacking commercial ‘nous’ is an understatement, and the Local Plan process is unnecessarily protracted.
On 14th June I received a letter from Ipswich Borough Council stating that it had adopted its Local Plan for 2011-2031 on 22nd February 2017. (Six years wasted, as prominent redundant sites blight the town and frustrated developers wait to submit plans for land already secured.)
The letter went on: An independently appointed Planning Inspector requested that the Council work on joint or aligned local plans with neighbouring local authorities.. with the aim to have the plans adopted by 2019. The first step is to identify potential development sites that can assist in meeting future housing needs.
The council will: invite views on the methods and effectiveness of community engagement on planning matters currently undertaken by the council through its current Statement of Community Involvement and.. how to ensure any engagement is undertaken in a cost-effective manner.
There follows a list of six supplementary documents, including ‘Recreational Avoidance and Mitigation Strategy’, whatever that means.
Within the letter’s four pages, there is no mention of any discussions with developers, business or the Local Enterprise Partnership.
I’ve attended endless housing conferences organised by the public sector, without a single developer or industry representative being invited to speak; instead, officials talk to each other, promising the unachievable.
At one meeting, a respected Chamber of Commerce Chairman was criticised by officers for daring to highlight the lack of an industry presence and how planning too often fails the economy, with its lack of vision, rather than taking a broad view to link housing and job creation, as well as infrastructure and population trends. He politely suggested that developers should be listened to, sharing their insight and ideas.
Countrywide plc confirmed the dilemma in a report by its specialist Land & New Homes division, commenting:
“In a marketplace where demand far outstrips supply, differing local approaches to the planning system can often cause housebuilders major headaches….. At its best, the planning system works to quickly deliver new development where needed, balancing the needs of local people with those of economic development and the environment, but we need a more consistent approach to get the UK building at the rate which is needed.
“Frequently, it is a slow, expensive and bureaucratic process, with the £25,000 average costs, excluding local authority fees, making development unviable, particularly for smaller developers. With pre-application charges ranging from £350 to more than £3,000, the days of picking up the phone to a planner, previously the easiest way of achieving the best outcomes, are fading.”
Inevitably, politics plays a part. Local opposition (especially around election time) can result in applications being rejected, despite them being perfectly acceptable, and subsequently won on appeal.
It’s understandable that communities don’t want to be overwhelmed with new housing, when local facilities (schools and doctors’ surgeries) and the road infrastructure cannot cope with the existing population. Consequently, it is essential that these issues are addressed as part of a national strategy, connecting regional conurbations to each other, with innovative solutions. Hyperloop systems could perhaps be an alternative to traditional railways or new roads.
Above all, stop talking about the need for new housing and writing endless reports for lengthy consultation; instead analyse outcomes from the 2011 Housing Strategy and Action Plan and pursue what worked. Explain the benefits of development to residents: villages and small towns could see their shops and pubs restored whilst young people will have somewhere affordable to live and work either locally or within an easy, affordable commute. Encourage new businesses in rural areas, with long-delayed faster broadband. Enable and incentivise downsizing by both homeowners and social renters.
At the recent General Election, the Conservatives promised to build 1.5 million new homes over the next five years (Labour pledged just one million) and to create a digital map of land ownership, clarifying the 20 per cent where ownership is unclear, potentially releasing sites for development. We all know of redundant pockets of land and buildings ideal for new housing, but tracing ownership is difficult.
But without greater flexibility and speed in the planning system, nothing will happen. In five years time, the Conservatives’ promised 1.5 million homes will not even have been started, yet alone delivered.