Rishi Sunak cannot afford to put housing on the back burner

David Alcock, MD at Blend, looks at the government’s current approach to housing and how this is impacting SME housebuilders.

Related topics:  Planning,  Housing,  Government,  Housebuilders
David Alcock | Blend
19th June 2023
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At a time when Britain is suffering from a severe housing crisis, especially in the most prosperous places in the Greater South East, this government has taken an increasingly anti-house building and anti-business policy environment stance that is threatening to leave thousands of much-needed new homes on the drawing board and pushing a growing number of SME housebuilders out of the market.

A report by the Centre for Cities shows that compared to the average European country, Britain has a backlog of 4.3 million homes missing from the national housing market as they were never built. Addressing this backlog, or certainly learning from past mistakes, is the key to solving the unprecedented housing crisis that is gripping the UK.

Yet despite it all, this conservative government seems to have adopted an anti-development view that is hard to comprehend in the context of ongoing missed housebuilding targets. The view also goes against one of the most closely held values of British society that an Englishman’s home is his castle.

Compulsory building targets watered down, the Help-To-Buy scheme gone, the requirement for councils to demonstrate a five-year supply of housing land scrapped, a missed opportunity to support housing in the Spring Budget and now the latest blow to our housing market: fifty local authorities have announced their intentions to scrap their planning targets.

The Government’s appeasement of its backbenchers and the free rein given to quangos will have catastrophic impacts on housing supply. But it will also have dire consequences for many SME housebuilders who will have to shut up shop.

Sit down with any developer and ask them what’s the greatest challenge they face in delivering homes – the planning system will place in their top 2 responses and you will also hear how its not getting any easier.

Having supported SME housebuilders for the past 6 years, we at Blend are acutely aware of the challenges faced by our borrowers. Some SME housebuilders we support tell me that developing is no longer worth the headache; one of my clients who’s been waiting on planning for a small scheme since 2019 is considering shutting shop.

This is a sad outcome for a sector that has long been the backbone of the construction industry and that’s vital to the nation’s economic recovery. But when you realise the total number of SME housebuilders has decreased by 80% over the last 30 years, it becomes very apparent why we continue to face a housing crisis and fall short of our housing targets year on year.

But the reality is that the broken planning system is forcing some SME housebuilders out of the market.

A broken planning system

There is a widespread view that the existing planning system is broken. The solution proposed in the government’s White Paper involves a radical change to the status and content of local plans.

The issue? Since the launch of the government’s Planning for the Future consultation to speed up and modernise planning and get the country building, no real steps have been taken to reform the planning system.

Fast forward 3 years since the launch of the consultation, a survey by the Home Builders Federation shows that 9 out of 10 SME housebuilders are unhappy with the Government’s approach to housing.

The survey also reveals that according to 93% of SME developers, securing and processing planning permission to the point where construction work can start is the most important barrier to growth. I am hearing the stories weekly and witnessing the impact first-hand.

Another report lays bare the implications of the Government’s anti-development approach to house building, warning that supply could halve and fall to the lowest level since World War Two.

As well as the much-publicised reforms of the planning system that will see local authorities no longer required to plan for the housing needs of its communities, the report highlights the growing list of interventions by bodies such as Natural England that could see supplies fall from 233k last year to below 120k homes per annum in the coming years – well under half the Government’s frequently espoused target of 300k.

In summary, the future of housing hangs by a thread and this government cannot afford to put housing on the back burner.

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