Permitted developments fall as new housing starts slow sharply

According to the latest data from the Ministry of Housing Communities and Local Government (MHCLG), 222,190 additional dwellings were built in the last financial year, up just two per cent on 2016-17.

While the continued growth was welcomed, the figure was a substantial drop on the previous four years, which had seen increases of 10%, 25%, 11% and 15% respectively.

The total shows a plateauing of new buildings at just below the 2007-08 peak of 223,530 – which was the highest since data began being recorded in 1991-92.

Notably, the number of homes completed using permitted development rights fell 28% from 18,887 in 2016-17 to 13,526 last year.

This was on par with the 13,879 properties completed in 2015-16, which was the first time these types of developments were recorded.

Permitted developments fizzling out

Industry commentators cited a range of potential factors and warned that the rapid slowdown was a concern in reaching the government’s target of 300,000 new homes.

Thistle Finance managing director Mark Dyason said the 2% increase on last year highlighted the glacial pace at which homes were being built.

“The fact that the number of new homes being built as a result of permitted development rights also fell sharply will be a particular blow to the government,” he said.

“Permitted development rights were meant to ignite the UK housebuilding market but on this evidence are already starting to fizzle out.

“The irony is that there has never been a more competitive and dynamic borrowing environment for developers.”

Dyason noted there had been an influx of new lenders and challenger banks into the development sector bringing rates down and offered greater choice to developers.

“With Brexit looming, the UK construction sector has been like a rabbit in the lights,” he added.

Brexit slammed on brakes

Naismiths managing director Blane Perrotton agreed Brexit had been a serious cause for concern.

“You don’t need to follow every tortuous twist and resignation of the Brexit saga to identify the culprit for the slowdown.

“Fragile demand and a lack of developer confidence since the 2016 vote have both slammed on the brakes, even here in the engine room of the construction industry.

“More worrying still is the sharp fall in the number of changes of use made under the new permitted development rights.”

Perrotton argued that these new rules, “were supposed to be the white knights of home creation” but suggested they were failing to deliver on their promise with the overwhelming number of new homes being built from scratch.

Great news

However, in a statement communities secretary James Brokenshire was pleased with the figures and said the government was making further investment available.

“Today’s figures are great news and show another yearly increase in the number of new homes delivered, but we are determined to do more to keep us on track to deliver the homes communities need,” he said.

“That’s why we have set out an ambitious package of measures to deliver 300,000 homes a year by the mid-2020s.