On the 7th February, the government published a white paper, ambitiously titled “Fixing our broken housing market”. It announces the government’s plans to reform the regulation of housebuilding, land ownership and development.
The key theme of the white paper is that Britain needs more homes to be built. Few would dispute this, with figures showing that housebuilding numbers are still below those seen before the financial crisis of 2007/8. Although the Coalition government had dropped the previous Labour target of building 240,000 homes a year, Theresa May’s Conservatives are clear that they want to see numbers rise.
The question is, how will this be achieved? The white paper sets out several measures. These include encouraging local authorities to seize land from developers, when developers are not using it to build on. The land in such cases is to be auctioned off to other builders, with the proceeds compensating the original owner. Local authorities themselves will also come under pressure to achieve higher rates of housebuilding. Often, councils find it politically expedient to restrict development, but under plans in the white paper the government will intervene when councils are standing in the way of building. This intervention will include forcing councils to have a ‘local plan’ setting out ‘housing need’, and giving developers automatic planning permission in local authorities that are falling well below the construction levels set out in their plans.
In addition, the government will examine new methods of building, such as modular construction, with the Homes and Communities Agency planning to invest £3bn in this area. The government also wants to encourage the ‘build to rent’ sector. In its proposals, the government offers developers more certainty around planning permission in return for them selling 20% of developments at ‘affordable’ levels (a 20% discount on market rates). A consultation document on build to rent accompanies the white paper.
These measures should make housebuilding more attractive for developers, fuelling increases in construction. However, the government has no plans – contrary to rumours circulating before the white paper was published – to reform planning restrictions on ‘green belt’ land. Moreover, local authorities will be permitted to raise planning fees by up to 20%, and the government is consulting on introducing fees for planning appeals.
Such obstacles may limit housebuilding. The other big factor is of course finance. The white paper notes that the construction industry “is too reliant on a small number of big players”, and one cause of this could be access to finance. Small and medium-sized businesses in the development and construction sector often need finance for their projects, and this is not always forthcoming from the cautious high street banks.
However, innovative finance solutions such as bridging loans are on the rise, the value of bridging loans increasing by 26% in the fourth quarter of last year, and 9.4% over the year as a whole, compared with 2015. With the UK housing market more buoyant than expected post-Brexit, and a government committed to supporting development, this may well be the time for housebuilding to get going once again.
Tiger Bridging Ltd
152 City Road
London, EC1V 2NX
Company Name: Tiger Bridging Ltd
Contact Person: Matthew Dailly
Phone: 0207 965 7261
Address:Kemp House 152 City Road
Country: United Kingdom