The UK housing shortage is at crisis point with building work at its lowest levels since World War Two, according to a report by the Home Builders Federation. The shortage is apparent across all housing stock from social to private with a shortfall of a million homes.
The next government needs to take action quickly to ensure the situation does not get any worse. Bob Weston, Chairman and Chief Executive of Weston Homes believes there are five main issues currently affecting the housing market for private developers, which the next government needs to address to improve the situation.
1) Development Corporations
The current planning systems for major schemes should be removed from the local political agenda and taken away from Government corporations and councillors. In their place should be a regional system of development corporations which have the capacity to make decisions – this would speed up the process.
2) Conditions on Planning Consent
The number of planning conditions for each site has quadrupled in last four years – there are literally hundreds. Only a handful of planning consents are granted. Even for small sites the list of documents and red tape is enormous. Are they necessary? They were not 20 years ago so why are they now? 3) Government “Take” Section 106 requirements
The cost of planning applications has increased with the Government “take” – the section 106 payments from each development having grown, 20 years ago they did not exist, in their place was a corporation tax on profits, 10 years ago they were small, today they have now risen to 30 per cent of the development cost. Build costs have increased from materials to labour costs and new requirements like eco credentials and codes for homes. Yet the recession has meant that pricing has gone down so developer profits are less – this makes developments unviable for housebuilders and ultimately means developers are building fewer homes. More
4) Incentives for housebuilders
In the future there will be less development on Brownfield regeneration sites. This is due to the disadvantages today for housebuilders to develop on them – mainly the large increase in land fill tax. There is a wider expectation for building on Brownfield sites yet no tax breaks, which previously have been given to housebuilders. Tax breaks should be given once again to developers as an incentive to encourage future development on Brownfield sites.
5) New homes market cliché
New homes offer a better standard of living and are more energy efficient than traditional housing. New homes are better for the environment and cheaper to run for homeowners. Yet there is not a new homes premium. There is a premium for every other product which is new – cars, white goods, clothes but not homes – it is the only new product than exists which is not more expensive than a second hand version. This needs to be recognised by funding and government intervention.
Bob Weston, Chairman and Chief Executive of Weston Homes, commented: “I have highlighted five main problems that I believe are stumbling blocks affecting the new homes market in the UK. The next government needs to address these issues so that developers can continue to build the homes we so desperately need.”