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Modern Methods of Construction and new ‘players’ critical to solving UK housing shortages – UKFI conference

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  • 09/11/2017
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Modern Methods of Construction and new ‘players’ critical to solving UK housing shortages – UKFI conference
To address the chronic shortage of housing supply in the UK, panelists at the UK Finance Annual Mortgage Conference say that adopting modern construction methods and bringing in new players into the market are crucial steps to a successful response, but there remain obstacles.

Modern methods of construction

With repeated reference to the success of European counterparts — embracing modern construction methods, such as offsite building, and bringing new players such as local authorities, were highlighted as a way to build resilience into the housing market, achieving higher quality housing, with shorter construction times and seeing better energy efficiency.

Samantha Ferneley, business development executive at BLP Insurance, said: “The UK is facing a chronic housing shortage, but a solution exists if the industry embraces modern construction and brings new players to our housing market.”

But there are many obstacles to adapting modern construction methods, Ferneley continued: “It takes a lot to convince people along with this. we’re a country used to bricks and mortar, we like bricks and mortar — so this is a massive change.”

“When we look at the far east, Scandinavia and Europe, you see that this is their choice — and it’s lifestyle housing, it’s well designed, it’s efficient, it’s green, it’s quicker to put up. But we have reservations in this market.”

But there are concerns that building standards can’t be guaranteed when new construction methods are applied.

Douglas Conchrane, head of housing development at Lloyds Banking Group, said the quality of the assembly of these properties is critical to lenders.

“Our concern is still around the legacy problems from the last rush to build, when prefabricated properties came to the market… and these properties are now unmortgageable,” he continued, “so what we’re asking for is some form of accreditation.. so that there’s some comfort in these properties.”

“That’s where we’re trying to come in to convince the market, to convince the lenders that we have a solution and support in making what is a massive change in the UK,” added Ferneley.

New Players

The importance of bringing new players into the market was also emphasised — especially the role of local authorities in developing housing themselves.

“[Local authorities] see gaps in the local market that are not being filled by the private sector — gaps with respect to tight tenure and affordability,” said Jenny Coombs, project director at Local Partnerships.

“I think they express frustration with the pace and scale of delivery by the private housing sector,” Coombs continued.

According to a recent report by the Smith Institute, there are now over 150 local authority housing companies, which could increase to over 200 companies by 2020.

Jaedon Green, director of product and distribution at Leeds Building Society, said: “I think the challenge for the market is making sure we’ve got sustainability and a stable housing market. And to that extent new builders are really good.

But while local authorities are attempting to “disrupt some local markets” by investing in their own developments after a long period of austerity, limits on their investment capacities are fettering their impact.

Local councils are subject to borrowing caps within the revenue housing account, and they’re limited in what they’re able to build.

Moreover, local authorities can only put 30% of right-to-buy receipts towards building new properties.

“These restrictions are certainly limiting local authorities’ desire and ability to [enter the market],” Coombs said.

Coombs also said that local councils have been lobbying the government heavily to lift these restrictions, and pointed to the upcoming Autumn Budget to see whether their suggestions have been incorporated.

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