Housing planning permissions slump to three year low

10 Sep, 2012

Latest residential planning data, compiled for HBF by Glenigan reveal:

Fewer than 25k housing permissions were granted in Q2, well under half the required number to meet housing requirementsQ2 2012 figure is the lowest number of premissions granted since 2009The 12 months to Q2 2012 delivered the lowest number since the survey started in 2006The number of projects given planning permission (489) is lowest since 2009The downward trend for social units continued with just 2718 dwellings granted permission

Figures released today in HBF’s latest Housing Pipeline report reveal that approvals for just 24,872 homes across England were granted in Q2 of this year, a significant fall on the previous quarter (36,761) and on the same period last year (25,171).

The number of permissions granted in Q2 of 2012, the first quarter since the National Planning Policy Framework came into force in March, was the lowest number of housing permission granted in England since 2009, and well under half the level (55,466) granted in the same quarter in 2007.

To meet officially projected need, 60,000 homes per quarter should be being built in England. And whilst the prevailing economic conditions and a lack of mortgage availability remain the largest short-term constraints on home building, planning remains the most serious long term constraint

The NPPF replaced the old ‘top down’ planning system of housing targets and handed much more power to Local Authorities for housing delivery. At a time when Government is looking for ways to increase supply and drive economic growth through housing construction the new figures are a huge wake-up call and clearly demonstrate why it must ensure Local Authorities meet their responsibilities under the new system.

Planning permissions granted now will, in the main, be built over the next three or four years. At a time when fewer homes are being built in England than at any time since the 1920s - just over 100,000 a year compared to a projected household requirement for 240,000, on top of the historic shortfall - the figures reveal how the current position is intensifying the country’s housing crisis.

The statistics also demonstrate why developers need adequate stocks of permissioned land. Given the extensive delays and uncertainties in the planning system, and time it takes to build and sell the homes on a development, home builders need several years’ stocks of permissioned land to be able to properly manage and plan their businesses.  This was recognised both by Kate Barker in her seminal report into housing supply, and in the OFT’s exhaustive investigation into the industry in 2008 that stated ‘The time lag and uncertainty involved in obtaining planning consent and building are such that a land bank will naturally span over a number of years’.

The social effects of continuing to undersupply homes are obvious: five million people languish on local authority waiting lists, whilst first-time buyer numbers have plummeted – further stagnating the housing market.

Building the additional 140,000 homes a year that are needed to meet demand would also give the economy a huge boost. Every home built creates 1.5 full time construction jobs and potentially twice as many again in the supply chain.

Speaking today, Stewart Baseley, Executive Chairman of the HBF, said;

“Under the new planning system Local Authorities have much more power over what is built in their area. But with that power comes a responsibility to provide the housing their communities need. Government needs to ensure that councils are meeting this responsibility.

“Ministers have in the past year unveiled some very positive measures aimed at boosting housing supply, particularly the NewBuy scheme, but they cannot succeed unless we have a truly pro-growth planning system.

“The new system must provide enough viable land to build the number of homes the country needs. Continuing the current record low level of house-building is storing up huge social and economic problems for the years ahead and the shortfall must be addressed.

“Building the homes we need would take millions off social housing waiting lists and enable beleaguered first time buyers to get a foot on the ladder. It could also create half a million new jobs, and give the country a massive and much-needed economic boost.”

Allan Wilén, Glenigan’s Economics Director, commented, “The drop in residential planning approvals during the second quarter of 2012, after what had been a positive start to the year, is disappointing. In particular the slowing in private housing approvals indicates that housing market conditions remain fragile. Whilst the number of private housing residential units approved during the first six months of 2012 was 5% up on a year ago, the level of approvals continues to run at around half the level seen in 2006 and 2007.”

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For media enquiries, or to arrange an interview, please contact Steve Turner on 020 7960 1606 / steve.turner@hbf.co.uk

Notes to editors

The Home Builders Federation (HBF) is the representative body of the home building industry in England and Wales. The HBF’s member firms account for some 80% of all new homes built in England and Wales in any one year, and include companies of all sizes, ranging from multi-national, household names through regionally based businesses to small local companies: www.hbf.co.ukWith over 30 years experience, Glenigan is the genuine market leading provider of UK construction and civil engineering project, company and market information.
Part of the Insight Division of Emap Limited, one of the UK’s largest media businesses providing must-have information, magazines and events, Glenigan users enjoy small business intimacy combined with business security.The Housing Pipeline report for Q3 2012 will be published in December.Housing need figures based on DCLG Household Formation Projections. The number of households is projected to grow from 21.7m in 2008 to 27.5m in 2033, a rise of 5.8m (27%), or 232,000 per year. The latest projections have reduced household growth by approximately 20,000 per year[1] compared with the previous, 2006-based projections.

Useful stats

The number of households is projected to grow from 21.7m in 2008 to 27.5m in 2033, a rise of 5.8m (27%), or 232,000 per year. (DCLG Household Formation Projections.)According to Government figures, even in its current crisis state, housing supply accounts for around 3% of UK GDP and provides between 1 and 1.25 million jobs in the UK.Jobs Calculator:Each home built creates 1.5 full-time jobs -Michael Ball reportIncreasing house-building by 130,000 units per year (to Government household projection levels) would create 195,000 jobs.HBF estimates twice that number of jobs are created in the supply chain – close to 400,000 jobs.

Housing pipeline report Q2 2012 - Sept 2012