According to the report from IHS Markit and CIPS UK Construction PMI, last month saw residential building outperform commercial construction and civil engineering activity, despite the most recent increase occurring at the slowest pace in three months. A new study from Glenigan reveals the number of affordable housing units in the planning pipeline leapt by nearly 20% last year, to its highest level for six years. Showing that the drive to build a million homes is taking effect. Yet the housing market is still in need of a significant boost, particularly for first time buyers. As despite the launch of Help to Buy, a poll of more than 4,000 British adults found that seven in ten (69%) said that any recovery would not feel real until it becomes easier for young people to own a home.
Government is determined to ensure more houses are built more quickly, while maintaining quality
Government has issued its response to Mark Farmer’s independent review Modernise or Die, setting out a response to each of the 10 recommendations. In relation to housing Mark Farmer recommended “Government should act to provide an ‘initiation’ stimulus to innovation in the housing sector.” In their response the Government say they are “.. determined to ensure more houses are built more quickly, while maintaining quality, and is keen to work with firms that can achieve these goals through innovative construction methods.” The greatest potential for growth in offsite is in the housing and commercial sectors. Our recent research into UK Offsite Manufacture shows that we are on the cusp of a significant increase in the use of offsite with the potential for the share of the market using these systems to quadruple in the next few years. Colin Yates of Workmobile explains why housebuilders need to embrace digital technology for the future health of their businesses. And Paul Mills writes for PBC Today on how the construction sector can implement technology to successfully achieve deadlines, reduce cost and ensure quality.
Residential construction is also diversifying. The past year has seen a significant rise in the number of small and medium sized house builders and housing associations building more homes, supported by Government funds and more accessible finance. Tackling the issues identified by the House of Commons Communities and Local Government Committee of an over-reliance on a few large developers. Yet latest research from the Federation of Master Builders shows 32% of small building firms are saying that soaring construction material costs are squeezing margins with 22% having to pass these price increases onto consumers.
Changes in land and planning to assist housing developers
A few months ago the think tank Civitas, in response to the white paper on Fixing our broken housing market recommends changes in land and planning, enabling developers to sell homes cheaply and quickly, by purchasing land at lower prices. Find out more in their report Building Homes Faster. And last month we reported on a poll from Reuters suggesting that planning regulations should be relaxed to help ease the home ownership crisis.
Mark Farmers recommends that “,Government, as part of its housing policy planning, should work with industry to assemble and publish a comprehensive pipeline of demand in the new-build housing sector.’ Part of Government’s response to creating a pipeline of demand in new-build housing ‘The £500 billion National Infrastructure and Construction pipeline, published last December, sets out for the first time plans to support large-scale housing and regeneration…Government has recently consulted on measures to give greater emphasis to Build to Rent in the planning system and to make the affordable housing requirements placed upon such schemes more predictable. The Housing White Paper also sets out the Land Registry’s commitment to an open approach to land data and achieving comprehensive land registration by 2030.’
This month there has been a number of articles and reports backing this. Important legislation was introduced in the Housing and Planning Act 2016 which could change the landscape of the planning application process. Karen Howard, Partner at DLA Piper explains in an article for PBC Today. With a subsequent article reviewing how the insertion of new conditions in the Neighbourhood Planning Act could have significant consequences for the sector. And the government has launched a £54 million Land Release Fund package to transform local communities and release land for thousands of new homes. Yet there are still concerns as some claim Section 106 is pricing developers out of market. As developers will often be asked to make a lump-sum payment to the local authority without any clear indication on how the money will be spent and some agreements can reach up to £10m or more. ‘It’s no secret that there is a housing shortage in the UK,’ said Lendy co-founder, Liam Brooke in his article for PBC Today. ‘More needs to be done to help support developers – allowing them to get spades in the ground and houses built.’
In London Sadiq Khan is using his planning powers to fast-track new homes. Developers will have to provide at least 35 per cent affordable housing without public funding. On public land, this rises to at least 50 per cent. The Mayor is also working with housing associations and councils on new schemes that will provide 60 per cent or more affordable housing. This is backed by his record-breaking £3.15 billion deal with government. Many though are questioning what is the definition of an affordable home?