The UK housing supply – how innovation and working with community could provide the answers we need
08 September 2015
Over the past few weeks I have had the privilege of reading the submissions for the Variety Yorkshire Residential Awards. The one striking point is that whether you are a national house-builder, local house-builder, a PLC or a local SME, everyone is being increasingly innovative in how they deliver housing. Since 2014 there has been a shift in the attitude towards solving the UK’s housing supply problem and it became a key political talking point during the 2015 election (though that feels a lifetime ago). The overall crisis of affordability and ultimately supply continues to rumble on, but discussion around solution is becoming increasingly common.
So what do you tackle first? Well most people you talk to say the price. The market continues to rise ahead of wage inflation and those in London, and to an extent the regions, simply cannot get on the property ladder – not because of the banks but because the deposit far outstrips most 'twentysomethings' savings. Affordability is linked to supply, while supply is low prices will rise. So how do you get close to building 250,000 homes a year? Here are some of my thoughts:
- Help to Buy: Everyone has heard of this and it is performing well in driving housing sales, there is further good news in that it has been extended. Estimates suggest nearly 40,000 homes have been sold under the scheme which supports first time buyers attempting to get on the property ladder. There is an argument though, that although it has kick started and invigorated the market, it is not solely going to solve the issue.
- Small developers fund (“SMF”): I’ve said before that national house-builders don’t need too much help as they already do things on such a grand scale that they must be doing something right. Small and medium house-builders however still struggle to secure financing. The SMF will provide loans that (it is hoped) will unlock 15,000 homes, but the life of the fund is too short to really kick start much and this needs rethinking as financing is the greatest challenge to a SME. Yet they have the potential to unlock land that large house-builders deem unviable. In all fairness simply an extension of the funds' life and greater promotion, even targeting companies, would be the best idea.
- Garden Cities: We’ve done this once so should we do it again? It sounds like such a dream place to live, a garden city, but in reality it won’t solve the problem, particularly when the Housing Minister stated the Government is unwilling to show its support. Now I think if you throw support behind them and select appropriate sites, i.e. those for commuting to London, Birmingham etc, then you could create something special and the scale of them would attract the national house-builders.
- Increase density: We could follow suit with London, where residential is now followed by the word “tower”, where land is limited so you simply build more. It works in London where there is a need for smaller apartments close to the busy business districts, or for those who commute from the countryside but would it work in Sheffield, Leeds or Newcastle to the same extent?
There are many options that could help solve the current predicament, but these are limited in that they only provide a short term solution with few offering large scale help. Creating a drive behind public funded housing, like the good old days, seems an expensive, but longer term answer. It needs funding to get it started but once the churn starts then it could have legs.
All the above though miss out an important group, the community. If a community doesn’t want a development they will do their best to stop it. Working with the community more closely from inception can mitigate this and allow developers and communities to work together for a better future.
Feel free to contact me if you wish to discuss this blog or anything relevant to property and construction.