UK Homebuilding - Can the Government's proposals satisfy the housing need?

Implications: The UK Government has announced proposals to deliver 3 million new homes by 2020 to keep up with demand, particularly for affordable, sustainable homes. To enable this to happen, land must be made more readily available and the complex planning process that exists, must be simplified. To achieve these significantly increased housing numbers, delivery mechanisms must be redefined. The public sector's role must be redefined and private developers must see some commercial advantage that may or may not accrue to them. The Government's proposals are designed to stimulate discussion and the consultation period ends in October, this year.

Analysis: The number of households in the UK is projected to grow by almost 225,000 a year and yet the number of all new homes being built is just 185,000. Of these, the vast proportion are private homes and although developers are required to include up to 40% affordable homes within larger schemes, the cost of buying a house is now beyond the reach of most. The average cost of a home is currently 7 x salary and this is expected to rise to 10 x salary by 2026.

The Government proposes to more than double the current output of affordable homes and deliver 70,000 affordable homes in each of the next three years, to include 45,000 new council houses annually. They intend to introduce a range of measures  that include equity loans to first time buyers and key workers to enable them to get a foot on the housing ladder.

It is intended to ease the greatest obstacles to development, those of land availability and the lengthy and costly planning process, which is often driven by vested political interests.

It is also intended to dispose of surplus public land for development and new planning incentives and enforcements, targeted at local authorities will further speed the complicated process.
 
For the first time, various Government departments will work together in creating balanced communities that provide schools, health facilities, transport and employment opportunities, alongside new housing provision. Within two years, construction of five new 'Eco Towns', settlements of between 5,000 to 20,000 homes will be commenced, each of which will be an exemplar, 'green' development as the Government seeks to demonstrate its commitment to tackling climate change.

Working alongside the private development sector, the public sector has a role in delivering new affordable homes directly, with the creation of new Local Housing Companies to develop Council owned land. This is likely to be in addition to the Government funded Housing Associations that currently provide the largest proportion of social housing. This reverts back to the situation that existed many years ago when local Council's were responsible for providing and maintaining all public housing need in their area.

If these proposals are adopted, private homebuilders may benefit as land and planning issues have been the greatest obstacles to development. It will give them the opportunity to concentrate on the other issues that are looming within the industry. These include issues such as driving down the cost of construction, skills shortages, off site manufacturing and design innovations to achieve the higher performance standards demanded; all this whilst maintaining profitability and enhancing shareholder value in a very competitive market.

It will be interesting to see whether the radical proposals contained in the Housing Green Paper are accepted, or, whether they are just the Government's aspirations that have no hope of being delivered.