Industry urges govt to reform housing after ‘modest’ 7% growth

The Department for Communities and Local Government said the number of new houses brought to market between April and June had risen 7% on the previous quarter, with both the private sector and housing associations reporting an increase.

New starts had also seen an upswing in the private sector, with developers commissioning 4% more new builds than in the preceding three months.

In total, 36,400 new houses were started, while 34,920 units were completed, equating to 144,280 starts and 139,030 completions over a 12 month period.

However, the “modest” rate was not enough to reach government targets of building one million new homes by 2020, according to online mortgage lender LendInvest.

Managing director Rod Lockhart said: “The modest pace of the improvements is a concern. At the current rate, we will fall well short of the Government’s target of one million new homes by 2020, and fail to make inroads into the sharp housing shortage in the UK.”

Lockhart urged the government to jumpstart the housebuilding industry by focusing on smaller developers, introducing more funding and a better planning environment.

He said: “The large housebuilders are not keen to do more, so efforts must be focused on small and medium-sized builders. The rumoured £5 billion Home Building Fund is a good start, but finance is not the only area holding these builders back. More has to be done to reduce the complexities of the planning system and open up access to land to build on.”

The government’s figures showed private developers had been more active in initiating new builds than their housing association equivalents.

In the three months to June 31,000 houses were started by private firms, compared with 4,970 by associations, of which 440 were local authority commissioned, the figures showed.

Housing associations fared better at bringing houses to market, completing almost a third more projects than in the previous quarter, at 6,400 units compared with 4,950. However, the sector still underperformed each of the quarters in the last calendar year.

Private completions, on the other hand, reached quarterly levels higher than at any point in 2015. The sector completed 27,910 units, swinging back after a brief dip in the early months of the year,

On the whole, both starts and completions reached annual levels last seen in late 2008 and early 2009, shortly after the financial crash.

Housing charity Shelter suggested if the current rates continued, this meant there still wouldn’t be as many homes built in 2020 as before the 2008 crash.

Indeed, research commissioned by the organisation found the government would be 266,000 homes shy of their one million target if it did not reform the housing market.

It warned of an 8% fall in house building over the next year, as big house builders continue to retreat from the market after the Brexit vote.

Director of communications, policy and campaigns Roger Harding said: “It’s clear from today’s figures that as a country we’re still falling far short of building the number of homes we need.

“Theresa May now has a real chance to turn things around and return hope to all those being left behind by our housing shortage, but only through committing to measures that can reform house-building for the long term. This includes using record-low interest rates to invest in a new generation of genuinely affordable homes to rent and buy, and helping our struggling small builders access the land and finance they need to build.”

The Communities and Local Government Committee launched an inquiry into the home building industry in July, saying it wants to find out whether the industry has the capacity to build enough houses or, if not, what constraints it is facing and how they can be overcome.

The inquiry is expected to hear from across the industry, including small and medium-sized developers and members of the off-site construction and self-build sectors.

The government previously said 275,000 new affordable homes were needed to ease the UK’s housing shortage. But figures released last year, showed it had missed its target for 2015 by more than half, after a mere 131,060 new homes were completed.