The government has set a target of 200,000 new homes to be built per year in England - but we are nowhere near that. How do we solve the crisis?
In order to solve the UK housing crisis, the Government has set a target of building one million new homes in England by the end of the parliament in 2020 – or 200,000 every year.
Most analysts say that at least 250,000 houses need to be built every year just to keep up with the growth in the population.
Last year, only around 160 000 homes were completed, however.
How can the UK hit the Government’s figure and, preferably, overshoot it? We asked some housing, construction and regeneration experts for their thoughts.
Dame Kate Barker
Author of the Barker Review of Housing Supply in 2004, Dame Kate is a non-executive director of Taylor Wimpey and a former Bank of England Monetary Policy Committee member
I don’t think there’s a housing crisis. But I do think the housing market is delivering very well for some people and really badly for others, and therefore there’s a real problem with equality.
The way you fix it is that you tax the people who do well out of the housing market a bit more and give more at the other end to those who do badly – so look again at housing benefit, look again at social rent, and look at increasing council tax rates on higher value homes, and you look at capital gains tax on those residences when they’re sold.
I think the situation for land and planning has improved greatly. However, a lot of authorities are not planning for enough houses, and they are not getting enough challenges from the planning inspectors about how to do that.
The Government needs to consider if there needs to be an intervention which is a combination of central and local authorities that looks seriously at areas for big urban extensions and new towns.
I’m always taken by the observation that London is much bigger than the other cities we’ve got, which leads me to think that extending our other big cities would be a sensible way forward – and among the sensible places to start would be Manchester, Leeds and Birmingham.
I’m not that hopeful we will reach the Government’s target of 200,000 new homes a year.
Because of the lag in getting seriously big sites started, I think if the Government hopes to go above that by the end of the period, it would have to be working actively today to be identifying where it wants to be doing urban extensions, and acquiring the land. And it’s not.
Some talk about modular housing, saying that it would save time – but that time is nothing compared to the time spent preparing the land in the first place. As a solution to the UK’s housing problem, I think it’s a red herring.
I have been thinking about this problem for so long, I have come across virtually every idea there is in terms of getting development going. In a nutshell, government in England is in a position where meeting unconstrained demand for housing is politically very difficult, so we don’t quite do it.
I’m afraid it’s a case of muddling through.
Paul Cheshire
Emeritus Professor of Economic Geography at the London School of Economics
First, you have to increase the supply of land for housing. We set the supply in 1955 when we defined green belts, and since then land supply has been almost frozen, but real incomes have tripled.
We’re still behaving as if we lived in the world of the 1950s in terms of housing – and we don’t. We also make it very difficult to build upwards.
Our planning system determines the supply of land by fiat without reference to prices, but then markets set the price as people demand space for housing. The planning system should have to respond to price signals.
If there’s a difference in the price of land between what it’s being used for and the alternative proposed use, for example houses, of more than £1m, then there should be a presumption in favour of development unless the price differential can be shown to be justified in terms of the public good or environmental benefits of keeping that land as it is.
Plenty of land out there has no environmental value whatsoever, and no public access. For example, we have an oversupply of golf courses: more of Surrey has golf courses on it than it has houses. That’s because there’s no competition for the land.
We certainly shouldn’t build everywhere. We need planning to preserve environmentally valuable land and lots of space for recreation. There is 514,000 hectares of green belt surrounding London, and you only need a tiny fraction of it to more than satisfy housing supply.
Second, we essentially fine local authorities if they allow building to occur. They have to supply the services, but they don’t actually get any revenue from council tax because of revenue equalisation across local authorities.
We need to give a proper incentive to local communities to accommodate new housing: a 20pc fee on the final price of all housing should go directly to the local authority. But it has to be spent on things that both support the planning process and the new housing infrastructure – like schools or transport; or affordable housing.
The landowner would pay for that because it would come out of the value of land. Land prices have risen so much because we have rationed supply, so the things you need the land for, houses, have gone up in price as a result.
Jeremy Grint
Director of regeneration for the London Borough of Barking and Dagenham
It is not necessarily about building on the green belt or building huge towers. Densities need to increase: many town centres have good public transport facilities but have limited housing within them. This does not necessarily mean they have to have tall towers to achieve that end.
In some places there would be significant political resistance to this approach. The economics of it might be difficult, too, without some government intervention to help assemble sites, and establish a master plan which shows how new buildings can fit into the existing urban fabric without destroying it.
A similar approach could also be applied around other railway or London Underground stations where there may be some low-density housing, or in some cases none at all.
Some of this may mean building on the green belt. My second point would be around how new housing can be built quickly at scale. This is not going to happen with the way we currently build. There needs to be far greater off-site construction.
We seem to be struggling to get this happening at scale. Manufacturers would need to be able to produce a variety of quality designs that can also pay respect to the local vernacular and be cheaper or certainly competitive with traditional building.
In order to do all this, organisations will need to start building factories soon in order to gear up to be able to produce thousands of homes a year.
Offsite manufacturing will also start to help with some of the skill shortages in the construction industry. However, while that approach should help to deal with some of the trades shortages, it may not necessarily help with some of the shortages around project managers and surveyors.
There needs to be a sustained approach with a guarantee of employment from the Government to encourage universities and colleges to produce potential employees with the right skills.
Part of this is about trying to smooth out the fluctuations that affect the construction industry over an economic cycle and potentially this – in crude terms – could be done in housing by building affordable homes at the bottom of the cycle, when costs of construction should be lower, and building market homes towards the top of the cycle.
Haydn Mursell
Chief executive of Kier Group, former deputy finance director of Balfour Beatty and former UK finance director of Bovis Lend Lease
The last time the UK built more than 200,000 homes a year it was post-war and there was a massive council housing programme under way.
Social housebuilding has to play a major part if we are going to achieve this output again. The private sector can absolutely help in partnership with the public sector and already both parties are actively working together to increase output.
While councils are financially stretched– budgets have been cut by £18bn in real terms since 2010 – they are often asset-rich. They can use these assets in a multitude of ways to facilitate the building of social housing which will then provide a source of income (or reduced outgoings) for the council.
There is no “one size fits all” solution, as each council has a different set of circumstances and different housing challenges, but it can certainly be achieved and in a reasonably short time frame when all parties work together.
In addition, government initiatives such as direct commissioning and other similar initiatives which see collaboration between the public and private sectors should have an impact on housing output.
A programme to redevelop a proportion of the UK’s 350,000 vacant properties needs to be an integral part of any strategy to tackle the country’s housing shortage.
In November 2015, Kier collaborated with Manchester City Council as part of the BBC’s DIY SOS programme to build homes for injured servicemen and worked with Stoke-on-Trent City Council on the “£1 Decent Homes” initiative in 2014. These projects can serve as the blueprints for how forward-thinking councils working with the private sector can unlock the potential in these under-utilised assets.
References: http://www.telegraph.co.uk/finance/property/12167335/How-to-solve-the-housing-crisis.html