How to build homes this country needs

Since we woke up to a new Labour government at the start of July, there has been a significant shift in gears on housing. This “shock and awe” approach is welcome, underlining the new government’s determination to get Britain building again, achieve economic growth through housebuilding and deliver on the new target of 1.5 million homes over the next parliament.

The government’s focus on growing the economy by increasing housebuilding is really positive, and so too is its commitment to tackling some of the biggest industry issues.

The new government has hit the ground running. In the first few days, ministers took action to unlock stalled sites and infrastructure projects, using the powers available to the Secretary of State. They are keen to support planning departments and to help recruit more planners where they are needed most. Opening up the grey belt, a new phrase for poor-quality areas of green belt, such as disused car parks or wasteland, would also help. The country has a significant volume of grey belt available, with the potential to make a tangible impact on housing delivery. This pragmatic change in direction is welcome.

Few would disagree that building on the green belt needs to benefit the local community, with affordable housing, green and biodiverse spaces, improved infrastructure and high quality, well-designed homes.

Meanwhile, we await more details on the government’s biggest and boldest proposal: building more new towns. The establishment of the New Towns Taskforce is encouraging, and its effectiveness will be key to delivering the 1.5m homes target.

It’s not just planning that will see more homes built though. Wider macro-economic factors also play a part. Falling interest rates and boosting demand are both key to unlocking these higher completion numbers. Affordability though still remains challenging for many people.

While it is positive to see that the new government is planning to make the mortgage guarantee scheme permanent, there remains a significant gap in support for first-time buyers for new homes. So how realistic is the 1.5m new homes target by the end of this parliament? The most important thing is that there is an ambitious target. Targets should be challenging by nature, they shouldn’t be easily achievable and it shows purpose.

Ministers appreciate how serious the under-supply of new homes is and want to do something about it. Our country urgently needs more new homes, of all types and tenures, and having a target of 1.5m will help to deliver them. On the demand side, the Bank of England’s decision to cut interest rates for the first time in more than four years may initially have a limited impact on mortgage repayments, but it does a lot for buyer and seller confidence. Figures from Halifax were already pointing to movements in the housing market over the summer, with the rate of house price growth reported to be at its highest since January. This could be a sign consumers have waited long enough to make changes to their lives.

While we would like to have more detail on demand-side help for consumers, there is certainly no lack of detail on the commitments from the government on removing the barriers to building homes, and the scale of its ambition is welcome. One area where there are concerns is in social housing. The sector faces increased operational costs due to inflation and investing in decarbonising and improving standards in existing homes. Equally, housing providers have seen incomes reduce as they help residents deal with the cost of living crisis.

The loss of appetite among housing providers to purchase homes from developers through what is called the “Section 106 process” was set out in a recent report by Savills. The report found 53% of housing associations no longer intend to acquire Section 106 homes (with restrictions on price and buyer eligibility) or are reducing their requirements, and that 75% of housing associations had a smaller financial capacity for them. This dramatic fall in activity acts as a collar on all development and restricts the ability to deliver the new homes we need in sustainable mixed communities.

We also need more support from government for the affordable housing sector. Housing associations urgently need a long-term rent settlement to help them plan for future investment. Ideally, it should be a 10-year, index-linked settlement for social rents which also include a reintroduction of rent convergence. Recently the G15 group of the largest housing associations estimated scrapping rent convergence has cost the sector £2 billion.

If we are to have a chance of achieving the 1.5m new homes in the lifetime of this parliament, it will be all hands on deck. We need developers to build as much as they can, housing associations to be able to play their part and for existing homes to be brought back into use. Only with a co-ordinated push for housing growth with ambitious local plans in place, local authorities taking responsibility for housing their populations, tangible support for both affordable housing providers and local authority planning departments, coupled with demand side affordability measures, can we hope to reach the 1.5m target.

So while the 1.5m figure is very challenging it shows the ambition and action we need to finally deliver the homes this country needs.

Barratt Redrow: Building together to accelerate the delivery of the homes this country needs. barrattredrow.co.uk