Measures demonstrate Government commitment to increasing housing supply – and keenness to work with the industry
Measures announced today by Secretary of State Sajid Javid are a welcome reaffirmation of the new Government’s commitment to housing delivery and also demonstrate that they are listening to industry concerns.
Moves to speed up the planning process, bring more land forward more quickly and assist small developers are exactly what the industry has been telling Government is needed and should build on the increases of recent years.
Already output has been increased significantly. The number of new build completions has increased by around one-third in just two years following five years of general decline. 2014/15 saw a 19% year-on-year increase in the number of new build completions recorded in England. However, more is needed particularly to help smaller builders play a part.
The number of SME builders has collapsed over the course of a generation due to the complexities and cost of the planning and regulatory systems and a lack of available finance. The House Building Fund, and proposed improvements to the planning system that would in particular assist smaller builders, are welcome steps that should help stimulate a section of the industry that has been frustrated and constrained.
Additional planning constraints and an influx of regulation has resulted in there being very few new entrants to the UK house building industry for decades. Moves to de-risk the system could help encourage new entrants to build homes, whilst also assisting existing builders increase their own supply still further.
In May, HBF on behalf of its larger members, signed a joint Statement of Intent with Government committing all parties to look at how further increases in supply could be delivered. Government has today demonstrated it is serious about its commitments and the industry will continue to work closely with ministers to develop proposals so it can continue to grow, and if implemented effectively they should encourage further increases in investment from home builders..
Speaking today, Stewart Baseley, executive chairman of the Home Builders Federation said;
"Even after the huge increases in housing supply over the past few years we are some way short of building the number of homes the country needs. House builders are still stifled by planning delays that prevent them getting on sites and delivering homes more quickly. Efforts to address this and remove some of the many barriers that new entrants face when trying make it into the industry and build new homes will undoubtedly help to boost housing output.
“Most of the big increases in supply in recent years have been driven by the largest house builders who have significantly boosted investment in land and skills. If we are to get to the level of supply required we need to see more players on the pitch. We need to enable small builders to play more of a part as well as facilitating more of a contribution from other sources.”
MAIN POINTS OF TODAY’S ANNOUNCEMENTS.
1. The launch of a £3 billion Home Builders Fund
The Home Builders Fund will provide £1 billion of short term loan funding. This will be used for small builders, custom builders, and innovators, delivering 25,500 homes by 2020. This is an increase of £325m over the previous commitment through the £525m Builders Finance fund and the £150m Build to Rent fund (both of which will now be incorporated within the new combined fund)
The fund will also provide £2 billion of long term funding for infrastructure. This will be used to unlocking a pipe line of up to 200,000 homes over the longer term – with the emphasis on developments on brownfield land (see below). As is often the case with government announcements of “new” funds, £1.2bn of this £2bn had been previously announced as the Large Sites Infrastructure Fund in 2015.
2. Accelerated Construction
The Accelerated Construction project will be paid for through £2 billion of new public sector net borrowing but is expected to deliver value uplift for the Government in the long term.
Government intends to use this money to step in to address “failures in the market”. Government will take direct action, using surplus public land to build faster, including by encouraging new developers with different models into housebuilding, and to support SMEs”.
Sites within the Government’s portfolio which can be built on by 2020 will be identified, and the Government will work with local authorities to help them bring forward their own sites. Government will deliver outline planning permission and undertake the costs of some remediation work to reduce development risks on their sites, and offer support to local authorities to do the same on theirs.
Government will diversify the market by partnering with new entrants, SMEs, custom builders and offsite manufacturers that, they believe, can build out sites at up to twice the rate a large developer might. By using public land better, for example as equity, rather than expecting an upfront receipt, Government intends to lower developer risk and overcome issues with access to finance.
3. Urban Regeneration
The announcement focusses heavily on proposed changes to the planning system that have been previously consulted on or are contained within the Housing and Planning Act 2016. While there is a focus on bringing forward brownfield sites for redevelopment there is no return to a “brownfield first” strategy, either explicit or implied.
The announcement to “strengthen national planning policy to create a “de facto” presumption in favour of housing on suitable brownfield land and to drive up density levels in high demand areas while ensuring that developments are well-designed and respect the character of the local area” is not yet clearly explained in any further detail. However, the fact that the government believes that this could deliver an additional 25,000 new homes by 2021 suggests that it is a far cry from announcing a blanket presumption in favour of brownfield land within built up areas for which the HBF has been lobbying.
The proposal to allow local planning authorities to grant permission in principle on sites suitable for housing-led development identified in the new Brownfield Registers is a clear sign that the government are committed to the implementation of various parts of the Housing and Planning Act 2016 relating to both initiatives. This, the government claims, will make development of up to 140,000 homes per annum on brownfield land less risky for developers.
The government has also announced that it will build on recent permitted development rights allowing conversion of offices to residential development, by extending the right to allow for demolition of the offices and replacement with housing on a like-for-like basis.
This move was announced by the previous Planning Minister, Brandon Lewis when making the permitted development right permanent in October 2015. Details of how this will work in practice have not yet been announced.
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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.uk