A presentation given by David Coles at The Chartered Institute of Housing Fringe Event at Brighton on Tues 7 March 2017
THE HOUSING MARKET IS BROKE (White Paper 7 February 2017) can we fix it?
We are delivering less than 150,000 units per annum, when the requirement is at least 250,000 units per annum to meet the government's target of one million new homes by 2020. A target based on projected need. We are creating an increasing deficit with every year of underperformance.
So what are the impediments to affordable housing delivery?
The Planning system
There have been more unit approvals, but less site approvals. In other words, sites are getting larger.
There are significant problems getting reserved matters and conditions approved, because of officer intransigence, in some cases, and staffing issues.
Around 60% of local authorities do not have an up-to-date plan. This means there is a lack of certainty and lack of structured development, often this means approval by appeal – which has to be undesirable; it adds to uncertainty and is hugely inefficient. The White Paper has introduced a new homes delivery test – to regularise the housing needs assessment process nationally; it will be interesting to see how and if this will work.
Less SME builder developers
The numbers have dropped by 80% in 25 years. Smaller developer builders can generally deliver smaller, more sensitively designed sites more quickly.
The received wisdom is that if the volume is increased enough this will bring house prices down. I suggest that whatever volume we deliver will have little effect on house prices. We are a very long way from satisfying demand.
Delivery time – not only does the planning system take a long time but so does putting deals together – due diligence and contractual processes take too long.
There are huge costs of delivering the physical and social infrastructure and achieving greater sustainability - less energy consumption and lower emissions. We shouldn’t shy away from this – this is an investment in our future.
Neighbourhood planning can slow things down and sometimes neighbourhoods don't really understand the purpose of their plan and status. They believe the plan can stop things happening; rather than take the opportunity to help plan and make things happen for the benefit of their community.
Site allocations, Neighbourhood Planning and Local Planning all take far too long. Again, the result is planning by Appeal.
There is a shortage of labour, skills and materials.
The weakness of the pound is having an effect on import costs as a result of the uncertainty created by Brexit and other global market changes.
Quality and efficiency issues: some housebuilders are falling short of what they aspire to achieve.
Financial stimulus packages created by the government have short-term effects and risk creating inflation of house prices.
Low interest rates and interest only mortgages allow prices to be inflated.
Land price inflation, fuelled by the planning difficulties already mentioned and the lack of availability of publicly owned land.
The changing RP sector (registered providers of affordable housing)
All this leads to the necessity and desire to commercialise.
There is also the emphasis on starter homes over social rented homes.
As a result of this, we see the return of local authorities as the providers of social housing. Local authorities are creating regeneration companies, DCa is partnered with YourMK in Milton Keynes. This is combined with government pressure on local authorities to make public land available for residential development. Local authorities are also having to take a more commercialised view, attracting private developers and funders and creating joint-ventures in order to deliver affordable homes. Will they replace the RPs? There is a danger, if the RPs lose sight of their true objectives.
So, can we fix it?
Local authorities have to get their planning houses in order. Perhaps a form of OFSTED should be created to police planning departments? If local authorities can't service the workload, they should outsource it. The politics of planning would still be safeguarded through the development control committee process. After all, they've done this with building control and many other former in-house departments of local and national government have been outsourced.
There should be a national public register of public land. The whole of the public estate should be subject to an issues and options process to establish what land is suitable for residential and other development. Suitable land should be released at a very low or zero cost, which could represent an investment in communities.
Is land banking an issue? Should vacant land with planning consent be taxed, if so, on what basis?
There should be greater emphasis and encouragement for community right to build and self-build schemes which could be based on exception land or low cost local authority owned land. Ideally, there would be a mix of tenures on such sites. It should be clear that this land will not be released for open market housing, so the land would be released at well below normal market value, but sufficiently above agricultural values. The system needs to be robust enough to eliminate open market ‘hope value’.
The government refers to greenbelt and rarely to open countryside. The White Paper does encourage the review of greenbelt boundaries where there is a shortage of land supply and a shortage of Brownfield, urban sites. The process is however too slow and there is too much political interference in releasing edge of settlement land, which has little or no intrinsic landscape value.
Regeneration of existing estates is an important contributor: it will improve the quality of homes, public spaces and facilities. It can also lead to a rationalisation of land, improved public realm and greater sustainability and a real sense of ownership.
Releasing smaller edge of settlement sites and encouraging local authorities and RPs to partner with smaller local developer / builders could reduce delivery time and increase quality and improve a sense of uniqueness and locality in developments. Using local businesses is also good for the local economy.
What is the role of PRS (private rental sector)?
Is there a case for encouraging the expansion of PRS to include larger homes? I guess the market will decide. I see a danger in rolling out a massive rental program which encourages people into long term rent without any possibility of building an equity stake. It could be argued, that this is a better use of resources; it could discourage property price inflation and encourage more circulation of money within the economy. It could however make the landlords very rich at the expense of the tenants who pay maximum rents within their pay scale. How will the Millennials save for their retirement – or is this a chance to break the link between reliance on house price inflation and saving for retirement?
We need to understand - the demographics: the characteristics of different groups is fundamental to providing the right sort of accommodation for generations: baby-boom to Millennials. ‘Generation Y’, particularly the urbanistas, tend to live for the moment and make experiential / lifestyle choices ahead of long term investment.
We need a structure which encourages downsizing; there are still tax and investment incentives to hang on to your large house for as long as possible, if you can afford it.
There needs to be adequate provision of attractive affordable retirement accommodation – but, I suggest, in integrated communities.
It is important that we create integrated communities with a mix of generations. We need to incentivise people to communicate, share and care for each other. We need innovative thinking: DCa has teamed up with BrightYellow ltd (a tech company) to create an app fronted platform to encourage this sort of interaction.
We have to address homelessness. Again innovative thinking is required; DCa is working on a concept which will deliver cheap and quickly deliverable homes.
We must support training at all levels. DCa is involved in the MK50; the ‘Constructing Excellence’ group, working with a local College training young people in the construction sector. We also encourage youngsters by working in schools; we are particularly keen to help young people create a vision for themselves which will help draw them towards a happy and successful life. We are working on the RIBA Ambassadors ‘Missing Building Programme’ to introduce youngsters to design and the built environment.
The recent White Paper has set up a Home Building Skills Partnership which we should be aware of and support where we can.
RPs need to foster their ethos to house and care for people who need support. The principle of allowing people to staircase to full ownership is a good one and needs to be encouraged. I think that the mix of tenures this eventually creates and the churn in property ownership is, in principle, a good thing.
We must embrace technology to rationalise and improve the quality of what we do. DCa is fully committed to the use of BIM as a design and process tool to improve the quality and speed of delivery. Contractors have to embrace this to optimise the full potential, improving quality, efficiency and minimising waste.
I have already referred to the use of IT to link / connect people to tackle loneliness and disengagement, to encourage real (not virtual) integration within communities.
Land and property is so much cheaper in the north. There has to be government incentive to drive investment northward. The Northern Powerhouse is an important component of this, as is HS2. I believe that instead of, or as well as, expanding Heathrow, Birmingham airport should become part of the London hub system, connected by HS2. This will give greater justification to HS2, with very fast journey times into London and investment post further north. The only downside for Birmingham is that the airport might have to be called London Birmingham!
Seriously though, it is this sort of lateral thinking which could drive investment northwards, which would encourage migration from south to north; make homes more affordable and create plenty of jobs. We are a small island and it is ridiculous that most of the wealth is concentrated in a small part of the south of England.
All this represents a great challenge, but also a great opportunity. If we don't rise to the challenge we will get an increasingly fractured society and a dispossessed generation – our children.
We need to use all our skills, knowledge, creativity, experience and leadership to deliver really well designed, affordable, sustainable, healthy homes in attractive, sustainable environments - for our children, our parents and ourselves.
Can we fix it? – yes we can.
DAVID J COLES BA(Hons) BArch RIBA
CE @ DCa (David Coles architects ltd)