UK needs more than good intentions to get houses built – Haresnape

by: Charles Haresnape, group managing director, Mortgages, Aldermore
  • 31/05/2016
  • 0
UK needs more than good intentions to get houses built – Haresnape
Across the UK, you are bound to find significant differences in opinion on national issues, but on housing there tends to be a broad consensus: Britain simply isn’t building enough properties.

These concerns, which formed a large part of the recent campaigning in the mayoral elections, will in no way be new to Londoners. Private sector rent in the capital has increased from 49% of average pre-tax income in 2010 to 62% at the beginning of 2016.

On the other end of the island, the number of households in Scotland is forecast to rise by approximately 74,000 by 2020, with an estimated 465,000 new homes needed in Scotland by 2035.

However, against this backdrop of fast-growing demand, the most recent figures from the Markit/CIPS construction Purchasing Managers’ Index showed that UK construction activity grew at its slowest pace in almost three years in April.

While there have been some improvements, with housing starts in 2015 up 6% year-on-year, many difficulties remain, from the planning system to access to finance, particularly for smaller developers.

Housing concerns are usually dominated by a discussion about London and the South East, but the problem extends throughout the UK. Many see it simply as a lack of will, but the issues involved with building a house go beyond what many would ordinarily see as ‘housing policy’.

For example, planning permission could be drastically overhauled, but Britain would still need the required number of bricks to build the property. The last time we managed to build over 200,000 homes in a year was 2008, which required stocks of 1.1 billion bricks and production of 1.9 billion more to fulfil orders and keep prices stable enough to facilitate construction. Analysts say that to reach housebuilding targets without large amounts of imports, production of bricks would need to at least double.

Added to this are a myriad of other issues, such as the shortage of skilled workers in the construction industry, with a recent report estimating that at current levels of employment, the UK would need 106% of all bricklayers, and 73% of all architects working exclusively on housing to build 250,000 homes per year.

In the 1990s, the SME and regional sectors built as much as 80% of new homes in the UK but over the past six years this figure has fallen to under 50%.

Reinvigorating the market share of smaller developers would go a long way to bringing back some of the 300,000 construction jobs lost during the recession. It is essential if the required number of homes is to be built. The largest homebuilders recently signed a statement of intent with the Home Builders Federation to build twice the number of homes in 2019 as they did in 2010. However, while this is a good start, without greater involvement from smaller developers, long-term achievement of building targets looks far less likely.

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