The government is keen to move away from `generation rent’ to a model of greater home ownership. But are the measures it is putting in place enough to deliver the homes the country needs?
Once again, the Autumn Statement and Spending Review last week by the chancellor demonstrated that the government remains focused on solving the growing UK housing crisis. It was interesting to see the change of emphasis to “the growing crisis of home ownership in our country”, however, reinforcing the clear political message that this government wants to change the balance away from “generation rent” and back towards an ownership model - a model most famously and assiduously promoted by Margaret Thatcher.
In pointing to the halving of home ownership in under 35s over the last 15 years (from 60% to 30%), the chancellor highlights the plight of those unable to access the housing market through an ownership model. It remains a moot point, however, as to whether the significant stimulus of home ownership models alone, at the expense of rental models, will radically redress the balance, increase delivery and meet housing needs.
When looking under the skin of the recent Town and Country Planning Association report into the new estimates of housing requirements in England from 2012 to 2037, a number of interesting facts come to light. For example, housing delivery over the last five years in the North-east met 85% of housing need, while only 34% of housing need was met in London. Overall, across the country, delivery ran at only 54% of housing need. Delivery is often worst in the areas of greatest demand creating increased affordability challenges.
The report also shows the scale of single persons no longer forming households, as students, with high levels of debt, return to live with their parents. More alarmingly, the report points to the inescapable conclusion that due to scarcity and lack of affordability, a significant percentage of new couples may also need to move in with either parents or existing households over the coming decade, a statistic which should make all of us sit up and think.
In the absence of an SME resurgence, a lot rests on the ability of the larger housebuilders and registered providers to grow consistently at rates not previously sustained over long periods
The government now has either in place or signalled a significant range of additional measures to stimulate housing demand and increase the affordability of housing over the next five years in particular. Although some of these measures are still light on detail in several key areas, there is no doubt that the extension of Help to Buy to 2021, the introduction of Starter Homes to be sold at 80% of open market value and a Help to Buy shared ownership model will continue to underpin strong market demand for new homes.
The introduction of “delivery tests” on local planning authorities, coupled with the ongoing range of measures to streamline the planning system and, if necessary, intervene where local plans are not sufficiently advanced by March 2017, continues to increase pressure on councils to make planning more responsive. They are also being made more accountable for granting sufficient consents to allow housing need to be met in their area. In this respect it would be interesting to see a map of the 260,000 consents granted in the last 12 months overlaid on the areas where housing need is at its most acute, to understand just how aligned the planning system is to need.
There are also measures to stimulate housing supply; more help for the much depleted SME sector, increased public sector land to be brought to market, more enterprise zones and investment into key regeneration schemes such as Ebbsfleet. It also has to be recognised that the increase in the supply of homes through the conversion of offices to residential has grown. While controversial to some, there is no doubt that this policy has accelerated housing supply significantly.
Which leaves the key question of where will the balance of the increased delivery come from? The government is now looking to the major housebuilders and the top 20 registered providers to step up delivery. With demand underpinned for the five years by various schemes, there is every prospect of increased supply of major housing sites in particular. Even so, the clear attack on the buy-to-let investor through increased stamp duty will slow down demand on many of the country’s more significant urban regeneration schemes.
The more difficult question to be tackled is how to re-stimulate the SME sector and how to meet the growing desire for self-build. Despite the planning in principle proposals, the barriers to entry for SMEs remain high and any prospect of a meaningful recovery within this sector of the market appears slim. So, in the absence of an SME resurgence, a lot rests on the ability of the larger housebuilders and registered providers to grow consistently at rates not previously sustained over long periods. To achieve its objectives the government will no doubt be looking for signals of such intent.
At Crest Nicholson, we remain committed to controlled growth and aim to grow output from 2,530 dwellings to nearer 4,000 by 2019. Making private rented homes part of the mix is helping to achieve this. But to achieve the required level of new homes will require significant additional management capacity from both housebuilders and their supply chains, as well as sustained training of apprentices and graduates. It is not yet clear whether larger housebuilders alone, without the combined support of both the private and public sector, can deliver the government’s ambitious housing targets.
Chris Tinker is executive board director and regeneration chairman at Crest Nicholson