The government has committed to creating or building 1.5 million new homes in the new Parliament. But there has been limited ‘concrete’ commitment as to how new housing will be funded. Perhaps it is up to large-scale developers or builders to engage in new development projects.
Housing needs and planning
What is needed to achieve the target is available land and companies prepared to build homes. Anything built will need to comply with planning and building regulations, of course. Given commitments to ‘green’ construction, they will not come cheap (extra insulation, ground and air source heat pumps and solar panels, perhaps).
In the chancellor’s statement on 30 October 2024, she said the government would: “deliver on our manifesto commitment to hire hundreds of new planning officers to get Britain building again.”
A planning officer normally needs to be a graduate in town planning or a related discipline. They must also usually hold membership of the Royal Town Planning Institute (RTPI) or the Royal Institution of Chartered Surveyors (RICS). It’s not obvious how many qualified potential candidates are available to fill the new roles.
But, while the chancellor has committed to funding 300 extra planning officers across the country, this is understood to be insufficient to meet the demand on councils. The allocation is only around one planning officer per planning authority.
There will surely also be a need for more building control inspectors to evaluate and inspect building methods and materials, insulation measures, sewerage and drainage connections etc. Are enough suitably qualified professionals available?
And how will all these additional roles be funded? Many local authorities are struggling with their finances – some are even effectively bankrupt. So, thought needs to be given to how council budgets can accommodate the greater costs incurred by the government’s ambitions.
Where is the land for new housing?
There has been debate about the land available for building new homes. Will ‘green’, ‘brown’ or ‘grey’ sites be used? There are some choices to be made about what is viable and which option is the most constructive or destructive to existing communities.
It’s not only about the land space. It’s also about the necessary infrastructure being available – water supply, sewerage, electricity or gas, transport, medical facilities, shops, schools etc.
To deliver the government’s targets, local authorities may be obliged to ’re-zone’ spaces within their supervision (either owned by them or by others – maybe needing compulsory purchase of disused warehousing or other redundant premises) to allow planning officers and planning committees to enable new housing projects to go ahead.
Who will build the new homes?
Currently, planning regulations are difficult to understand. Local authorities develop their own planning frameworks. They apply regulations at will, making projections and forward planning for developers unpredictable across the country.
The situation is further complicated by local authorities’ ability to impose a charge known as the Community Infrastructure Levy (CIL) to fund infrastructure development. This can be applied to development which creates a new dwelling or net additional floor space of 100 square metres or more. Application of the CIL is a council-led decision and is not applied uniformly.
These features of the system destabilise the market for the provision of new homes.
Even if developers secure planning consent, it has been widely reported that there is a skills shortage in construction. Many companies aim to build new developments but bemoan the lack of suitably skilled (or willing) employees or sub-contractors to complete suggested projects. And cross-border travel restrictions for highly skilled tradespeople have made the pool of valuable people very limited since Brexit.
What is affordable housing?
The government’s new ‘golden rule’ is that 50% of housing development should be affordable.
Assuming that land is available and planning permission provided to create it, what is meant by ‘affordable housing’?
The term was first introduced in 2015 by then Chancellor Phillip Hammond under David Cameron’s government. The overall aim was that developers should offer new homes for rent at no more than 80% of the average market rental value in any given area. According to the government’s official website, it now includes discounted homes for first-time buyers. For example, the ‘First Homes Scheme’, in which homes are sold to people buying their first home for 30% to 50% below market value.
Current affordable housing supply
In 2021/2022 affordable housing supply was:
- 53% affordable or intermediate rent.
- 33% other affordable routes to home ownership.
- 13% social rent.
- 2% discounted homes for first-time buyers and homes committed by developers to be sold at a discount.
Over this period, 59,175 affordable homes were completed. This equates to around 300,000 affordable homes over a five year parliamentary term, under half the new government’s target.
First-time buyers
For those not eligible for affordable housing, privately renting or buying are their options.
Anyone attempting to buy their first home between now and the end of March 2025 will not pay Stamp Duty Land Tax (SDLT) on the first £250,000 of the purchase price. But it’s challenging to find any property for sale in the Southeast for under £250,000. The average recorded by the Land Registry is around £350,000.
Assuming an agreed price of £350,000, the SDLT would be 5% on the £100,000 above £250,000, which sums to £5,000. Plus, of course, legal and mortgage arrangement fees. It is assumed that nothing less than a 10% cash deposit would be required by most mortgage lenders.
This will take some careful calculation before making any commitment to buy.
Time to “walk the walk”, not “talk the talk”?
It’s one thing to pronounce on policy, which may just be a laudable reflection of ambitions and objectives.
But it is quite another to see something meaningful and to see some immediate action that addresses such fundamental issues.
