Will new plans solve the housing shortage?
In another major Government announcement this week, Housing Secretary Michael Gove described plans to build more homes across the country. Ardent’s Head of Regeneration John Sayer has been examining the announcement to see what is new and whether it will have the desired effect.
In announcing a new plan to build more homes across the country, Housing Secretary Michael Gove said: “Most people agree that we need to build more homes – the question is how we go about it.” Now that’s how to summarise a very complex issue in a very simple sentence!
The efforts to build 300,000 homes per year is falling short of the target, a point acknowledged by the Department of Levelling Up, Housing and Communities (DLUHC), and this latest announcement is testament to that.
Among the new plans include more Development Corporations and their use of compulsory purchase powers, investment in planning to help clear the backlog and a planning team deployed to Cambridge to help get a new urban quarter off the ground.
Anything that might get housebuilding moving is to be welcomed and those of us who wear a compulsory purchase hat will watch the Cambridge ‘project’ with interest as it might be a test case for the removal of hope value from the compensation process.
Of course, we all want to be optimistic about the proposals but it feels like they are at least five years too late to have an immediate impact on the industry – especially at a time when the economics of housebuilding are struggling to add up for some developers.
With costs rising and prices, at best, plateauing, the viability of many schemes is being challenged and there maybe a question of the Government needing to step in to support housebuilding – probably through loans that are better than the market rate. Tipping the balance in viability appraisals back into positive territory will help some schemes in the planning stage deliver new homes in the near term.
Whether there is the appetite for that in the current climate remains to be seen but it could be crucial in the delivery of affordable homes.
There is an irony that the Help to Buy scheme ended in England earlier this year and is also coming to an end in Wales. It is probably needed now more than ever for first time buyers due to rising interest rates and mortgage affordability.
It has to be said that the long-term policy of public sector passing the responsibility for public housing onto private developers has clearly (and inevitably) led to an undersupply of the required social homes. Therefore, setting up more Development Corporations could help but they should be strongly mandated to deliver social housing so the public sector is taking a more pivotal role.
There is, as ever, a focus on brownfield sites over greenfield and the industry is in favour. Here at Ardent, we are experts in land assembly and have helped to unlock complex site ownerships to deliver regeneration projects across the country
However, unless there is a major shift, it’s not a quick solution to providing new homes as it often involves a multitude of land owners, potentially the CPO process and costs involving demolition and clear up.
Not to re-run the debate around hope value, but offering affected land and property owners less compensation during a CPO is more likely to lead to appeals and will, therefore, slowdown the delivery of new homes rather than speed it up.
I am ever the optimist and I do hope that these plans do make a dent in the Government target to build more homes but I think it’s important to inject a dose of realism into how quickly they can have an impact.