Last month’s budget confirmed what many of us in the UK development and construction most feared. There isn’t much cash.
Only £500 million was made available. A drop in the ocean in housing terms.
There are two responses to get meaningful new housing supply. The first is to throw money at it. The Budget suggests that isn’t going to happen. The growth forecasts, thin at best, means new money will go into more pressing areas.
The other response is to bite the bullet and make some significant changes to the UK planning system. Above all, tackle the central fallacy inbuilt that just by mandating a percentage of affordable housing and with a sprinkle of grant here and there, the private sector can somehow deliver the country’s social housing, a fair chunk of local infrastructure, net zero aspirations and advanced standards on fire safety.
Unfortunately, this fallacy appears likely to continue a little longer. Late-stage review mechanisms have for the first time appeared in the NPPF and then there’s 50% affordable aspiration on green and grey belt land.
There isn’t the value uplift in development to pay for all the asks. Lets take London. GLA have just published their Housing in London report 2024. It does not make for happy reading. In 2023/24 the number of affordable home starts funded by the GLA decreased by 91% compared to 2022/23, from 25,658 to 2,358 across all tenure types. The challenges of high build costs, greater regulation and costlier financing have created significant barriers to the delivery of affordable housing of all tenures.
Abolishing the Office for Place and changes to the senior leadership team at Homes England will not materially change matters. Housing supply will continue to stutter and stall.
As housing supply falls, builders and developers retreat. Capacity in the market diminishes. It takes years to create capacity and supply chain. When it is lost, it rarely comes back quickly.
Despite all this, I remain optimistic. The evidence is overwhelmingly clear that the current approach does not work. The commitment has been made by Westminster – we must build more. The how currently alludes them. However, as the numbers become more stark, the pressure will mount.
A simpler and less discretionary framework which allows a fairer balance between risk and reward will come. This Government has a big majority. It has promised big, when the numbers continue to falter, reforms will come.
