House builders across the UK say policy makers should boost resources for local authority planning departments, increase skills and training for the construction sector and step up the delivery of public sector land to help increase the supply of new homes.
The House Builder survey from international real estate firm Knight Frank, which contains the views of builders and developers across the country, also suggests that two thirds believe that the maximum number of new homes that can be delivered per year is 180,000 or less with only 9% thinking the government’s target of 200,000 is possible.
The report points out that while activity in the house building sector has continued to pick up over the last year, the supply of new homes is still falling well short of demand. Boosting supply, where new housing is most keenly needed, is a key priority if the UK housing market is to avoid long term distortion.
However, while nearly 60% of respondents expect housing completions to rise over the next year, with 18% saying the rise could be between 10% and 25%, around half expect no change in the delivery of affordable homes over the next 12 months.
Just 9% of respondents said that under current market conditions it would be possible to deliver more than 200,000 homes a year, every year. More than 90% of respondents are expecting construction costs to rise again over the next 12 months and two thirds expect that development land prices will rise again this year.
Indeed, the report found that rising labour and build costs are expected to pose the greatest risk to the sector in the coming year and some 56% of respondents said that the Community Infrastructure Levy (CIL) was weighing on development volumes The biggest policy change that would help boost development volumes would be recruiting more people to Local Authority planning departments, according to respondents.
‘The imbalance between the demand for new homes and the number of units being built is well-recognised, by the industry and political parties alike. In the 12 months to April 2014, some 141,000 homes were built in the UK, up by 4% on the previous year,’ said Grainne Gilmore, head of UK residential research at Knight Frank.
‘However, official household growth projections suggest an additional 230,000 potential households a year in the UK. Below these headline figures, there is a recognition that the right type of homes must be built in areas where there is the most housing need, typically adjacent to existing urban areas,’ she explained.
‘This has led to tensions about the greenbelt, with a lack of consensus on how to expand accommodation in some of the UK’s most thriving towns and cities. Nearly one half of the respondents to the housebuilder survey said that rules around developing on greenbelt land should be loosened,’ she added.
The report points out that policy makers from all political parties are keen to encourage development on brownfield land and the Royal Institution for Chartered Surveyors has published research suggesting there is enough brownfield land available in England to build 226,000 homes by 2019.
‘However, brownfield development is more costly than that on greenfield, and there must be some recognition of this. In addition, there must also be some recognition that brownfield sites are not always ideally situated to provide the right type of units where they are needed. In terms of housing delivery, nearly 60% of respondents to our survey expect to increase their housing completions in the next 12 months, with a fifth expecting to increase by up to 10% compared to the previous 12 months,’ said Gilmore.
‘While any uplift in development volumes will be welcome, it will be a worry for policymakers that, when asked the maximum level of housing supply that could be delivered to the market under current conditions, more than two-thirds said it was 180,000 units or less,’ she pointed out.
The report also points out that the deadline for the changes to the use of Section 106 payments to fund infrastructure passed on 06 April 2015 but fewer than a third of local councils have so far adopted a new Community Infrastructure Levy (CIL) charging structure instead, meaning that development may be stalled as these charging structures are organised.
Indeed, CIL was identified by three quarters of respondents as a potential risk to the sector in the coming years, with 56% of respondents saying it was acting as a drag on development overall. Some 44% said that policy makers should consider scrapping or reforming CIL to help boost development.
‘In terms of planning, the verdict on the National Planning Policy Framework (NPPF) three years on from its introduction is mixed, but overall house builders say it has contributed to a rise in development volumes. While there may be some issues with the NPPF, only 26% said that moving back to a more regional approach to planning was a key priority for policy makers as shown,’ said Gilmore.
‘While many in the industry believe there are issues that need to be ironed out with the NPPF, there is little appetite for policymakers to launch a new form of planning legislation. However, it is notable that only a quarter of respondents said that under the NPPF the speed of securing planning permissions had fallen. This may underpin the feeling that more resources should be allocation to local planning departments,’ she added.
Providing additional resources to local authority planning departments was identified as the key measure for boosting development volumes by respondents. ‘Many planning departments have been affected by public sector cuts, and as a result are now overstretched. While it may on the surface seem counter intuitive, house builders and developers are in favour of robust local planning departments, it follows that developers not only want speedier decision times, but also more robust discussions around planning decisions, resulting in fewer appeals, and planning permissions granted subject to long lists of conditions,’ Gilmore said.
Improving and encouraging more skills training for the construction industry is seen as the second most important measure. ‘The need for more skilled labour is underlined further in our survey, with 94% of respondents saying that the current cost and availability of labour was a risk to the industry. Some 40% of respondents said the risk was significant, while 42% said the risk was moderate. A further 12% said the risk was modest. Those working in the industry also report that lack of available labour is hampering activity,’ she pointed out.
‘The effective release of public sector land continues to be a key concern of the industry. Last year, the government announced that from this year, the HCA would become the default disposer of centrally held government land. In last year’s Autumn Statement, it was pledged that land with the capacity for up to 150,000 homes would be released between 2015 and 2020,’ she explained.
‘There is a need for local councils to also get involved in disposing of land or using it as part of joint venture developments. In London, the pressing need to deliver more homes has been addressed by setting up a London Land Commission to help speed up the process. It is estimated that 100,000 homes could be built in the capital if all surplus land held by the GLA alone was used for development,’ she added.
‘The need for more homes built where they are needed most is pressing. Ultimately it is a step change in supply which will help ameliorate affordability issues faced by some buyers, creating a sustainable long term housing market,’ Gilmore concluded.
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Source: Property News Spain