Changes need to meet housing targets
Weeks ago now, the political parties outlined their manifestos, which contained housing targets and the issues in meeting these.
The Federation of Master Builders (FMB) have since discussed threats to house building plans and Shulmans LLP spoke to UK Construction Media about a range of problems that will have to be tackled to meet any housing shortage.
Rosemary Edwards and Tim Halstead discuss a variety of issues, from skills shortages and problems building on brownfield sites, to funding needed to get smaller companies building houses again.
The ‘seismic changes’ that are needed if any of the political parties are to meet targets are discussed below.
Rosemary, Partner and Head of Residential Development with leading corporate solicitors Shulmans LLP, has acted for many of the UK’s top house builders for over two decades.
“I have heard of many major house builders being accused of ‘land-banking’,” she said, “but this is patently ridiculous. A house builder’s business is entirely based on selling homes. If they can build them and sell them, why would they hold back? In reality a house builder will struggle to sell more than say 40 houses a year on any one site, so natural market forces mean that a scheme of 200 houses may take five years to build out. Increased planning and regulatory hurdles have added time and cost, such as the new Community Infrastructure Levy, now effective in some districts, including Leeds. Staff shortages in local authority planning departments can also add to delays.
“Then there’s the problem of mortgage finance. We may say that we need 200,000 new houses or more each year, but not everyone who wants a house can afford one – and mortgage eligibility criteria have tightened up considerably in recent years.”
Tim Halstead, Shulmans’ Managing Partner and a nationally acknowledged authority on house building, added: “There’s a great deal of talk about building on brownfield sites, but doing so throws up as many problems as it supposedly solves. Such sites often have several landowners, so you have to bring them all together or persuade the local authority to exercise compulsory purchase powers. That all takes time – and of course you have to build houses, where people want to live (which may not be on a former industrial site). There is often the added complication of expensive clean-up of contamination or increased costs arising say from digging out old foundations. Those costs can make schemes unviable without subsidy. As long ago as the 1980s we worked on a site in Hull that got a central government grant of £20M. There just isn’t that kind of money around right now.”
Tim also pointed to a chronic UK skills shortage being another factor in the low numbers of new houses being built. “Many skilled construction workers left the industry during the recession,” he said.
“You can’t just click your fingers and bring in an endless supply of tradesmen to get new houses built.” House builders are now competing, more so than ever before, to recruit skilled labour and to maintain relationships with quality contractors and suppliers. That drives up costs and can cause delays.
Recent proposals include encouraging small and medium-sized developers back into the market, but Rosemary pointed out: “Whilst the major house builders like Barratt and Taylor Wimpey survived the recession, many smaller ones didn’t. As development costs continue to rise, funding remains a major issue for those developers who don’t have large amounts of private equity backing.”