The forces shaping UK housebuilding in 2017

housebuilding industry 2017

Paul Walton, a director at North West planning consultants PWA Planning, summarises the major policy announcements and other external factors that will shape housebuilding in 2017 and what opportunities this will bring for the development sector.

Another year, another housing crisis. Could 2017 be the year our leaders finally come up with a credible long-term plan for increasing the supply of new homes?

The irony is, we’ve had some of the best housebuilding data for years in the last few months, but we’re still not building enough homes to keep pace with population growth.

Here are some of the key factors likely to influence the housebuilding sector over the next 12-months and beyond.

Housing white paper

The Communities Secretary Sajid Javid is due to publish a housing white paper in the coming weeks which is expected to lay out his plans for significantly accelerating Britain’s housebuilding.

Despite a flurry of positive housebuilding data in recent months, including housebuilding reaching its highest level for eight years, Mr Javid has stated that current levels of construction are “nowhere near good enough” and that he wants “major, long-lasting reform”. So, what will the white paper contain?

It’s thought that the communities secretary may force local authorities to increase the number of homes in the local plans they are required to produce, but this is likely to be a very contentious issue, particularly as many local authorities are already struggling to meet existing targets.

I look forward to seeing just how radical this white paper will be. Will the ideas be new and bold? Will they be feasible? How can we deliver new homes in a way that reduces the impact on the environment? How will new housebuilding programmes be funded and will they be supported by the right infrastructure too?

Garden towns and villages

This year started with the announcement of a shortlist of Government-backed garden villages and towns. A list of 14 garden villages, including developments in Lancashire, Cumbria and Cheshire here in the North West, has been released by the Department for Communities and Local Government with the potential to deliver a total of 48,000 new homes. A further three garden towns were also announced in Aylesbury, Taunton and Harlow and Gilston.

While this news is welcome, it’s going to be some time before these schemes are on site and we start to see the economic impact. As for how effective these developments will be in tackling the housing crisis, a number of questions have already been raised about their suitability, location and effectiveness.

Housing infrastructure fund

It already seems like a long time ago now, but back in November 2016 chancellor Philip Hammond announced a new National Productivity Investment Fund (NPIF) that will see £2.3 billion invested into housing infrastructure.

The NPIF aims to provide additional spending in areas that are key to boosting productivity, including housing, transport, digital communications and research and development.

Hammond said one of the biggest objections to new housing developments is the impact on local infrastructure. The £2.3 billion Housing Infrastructure Fund will be used for a range of projects, including roads and water connections to support the construction of up to 100,000 new homes “in the areas where they are needed most”.

In addition to this, the chancellor announced that £1.4 billion would be used to provide 40,000 new affordable housing starts by 2020-21, including some for shared ownership and some for affordable rent.

Opening up public land

In October 2016, the government said it would pilot accelerated construction on public sector land, supported by up to £2 billion of funding. To meet this commitment, the government says it will invest £1.7 billion by 2020-21 through the NPIF to speed up housebuilding on public sector land in England through partnerships with private sector developers. Scotland, Wales and Northern Ireland will receive funding through the Barnett formula.

Planners and developers will welcome with open arms anything that can bring new sites to the table and this is something the industry has long called for. The question will be just how quickly these sites can be mobilised.

More green belt development

I believe it’s inevitable that we will see a significant increase in housing allocations on land currently protected by green belt policy. Major areas of land are to be removed from green belt and identified as potential housing allocations, thereby allowing planning permission to be granted. In some cases, permission may even be granted on sites still within the green belt, if the housing shortfall is sufficiently acute.

Of course, very few people are comfortable with the prospect of development on their doorstep, particularly if they live in a rural area, but the simple fact of the matter is there’s a chronic housing shortage, so the likelihood is that more of the green belt, as well as other sites in the open countryside, will be opened up. We’ve seen a number of court decisions over the last couple of years that point towards this trend.

This is such an emotive issue, but I have argued previously that the term green belt is misleading because there is a tendency to see all open land as green belt, when the reality is that roughly only 13 per cent of the land of England has a green belt designation. That said much of the green belt covers land on the edge of our main towns and cities and where development would be most sustainably located. It is this conflict between protection of the green belt and meeting housing needs in the most sustainable manner that planners will wrestle with in the coming months and years.

Flooding risks

With the major flooding of December 2015 still imprinted on many people’s memories, flood risk issues will continue to dominate debate about new housebuilding projects, particularly at local government level where we’re likely to see greater scrutiny of planning applications.

While building in flood risk areas is commercially viable, the housebuilding sector needs to be able to demonstrate it can manage and mitigate flood risk issues effectively.

Brexit uncertainty

The UK’s biggest housebuilder Barratt has already said it may build fewer homes in the current financial year due to rising land prices in London, a rise in property taxes and uncertainty created by the Brexit vote.

It remains to be seen just what impact Brexit will have in the medium and long term. One thing for sure is that the financial and political uncertainties across the world are likely to have an impact on the housing market in the UK.

Paul Walton is a director of PWA Planning, a team of specialist planning consultants in Preston. For further advice call Paul on 01772 369669.