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A look at the South East housing crisis and where we go from here

24 November 2023

Britain has a severe housing crisis. According to a recent report by the non-partisan urban policy research unit Centre for Cities, vacancy rates are below one per cent.

The organisation's recent report, The Housebuilding Crisis, says the UK has a building backlog of a staggering 4.3 million homes. Even if the government's target to build 300,000 new homes a year is reached – which it won't be – it would take half a century to catch up.

Tackling the problem sooner, say the report's authors, would require 442,000 homes per year over the next 25 years or 654,000 per year over the next decade in England alone.

A political hot potato

In the 2010s, a decade presided over by Conservatives,1.3 million homes were built, according to the housing charity Shelter. That sounds a lot, but by contrast, three million homes were built in the 60s. And the Government's own data shows planning permission for new houses in the first three months of this year (2023) was at its lowest in 15 years, representing a more than 10 per cent fall on the previous year.

Labour might have had 13 years of watching from the sidelines while various Conservative governments publish targets and set policy but as the Centre for Cities report suggests, Britain’s housing supply issues began not when Margaret Thatcher launched the Right to Buy in the 1980s, but way back in 1947 when the Town and Country Planning Act 1947 was introduced.

Clement Attlee's Labour Party introduced legislation which established that planning permission was required for land development. Ownership alone no longer conferred the right to develop the land.

Housebuilding rates in England and Wales have dropped by more than a third after the introduction of the Act, from two per cent growth per year between 1856 and 1939 to 1.2 per cent between 1947 and 2019, according to the Centre for Cities.

The developers’ dilemma

The biggest challenge that developers have to deal with is the planning system.

According to Mithun Rabheru, Partner at Thames Valley law firm, IBB Law: “As it currently stands, there is a crisis in our planning system. Local authorities are under-resourced and struggle to deal with all the applications they receive in a timely way.

“On top of that, risk-averse planning officers will often ask developers for additional reports that are irrelevant to the application. This causes further delays and adds costs.

“When all is said and done, developers want to build houses in the right place at the right time for the market. That’s their lifeblood. Delays such as these mean that planning isn’t being granted in time.

“And it’s these delays which are contributing to the housing shortage. The government wants to build 300,000 new homes a year and they’ve never yet come close. And that figure includes social housing – which makes up to 40 per cent of all residential housing planning permissions. If developers are not getting planning permissions, the knock-one effect is that they are not able to deliver on social housing either.”

“And that’s currently not the only problem. Layer on top of that increased labour and materials costs and rising interest rates and the houses which are being built are taking longer to sell.

“The government needs to speed up the planning process and cut out some of the bureaucracy.

“Developers don’t want to hold on to stock. They want to build and move onto the next project – which is exactly what the government wants.

“We also want investors and developers to have an appetite for land, and with interest rates the way they are, that’s not likely to happen until later 2024. It’s going to be choppy waters for the next few months. We’ve been here before, albeit without the planning delays, but the industry will hold its nerve.”

The Land Promoters and Developers Federation agrees, saying that house-building is a long game which is made longer when raw materials and labour are in short supply.

"We should all be striving to address the housing emergency that exists in this country to provide the opportunity for all generations to have a place that they can call home," they say.

Nimbys and golfers

According to a recent survey by the Home Builders Federation, the trade association representing private sector homebuilders in England and Wales, and whose members deliver around 80 per cent of new homes built each year, 68 per cent of people agree that building more homes is vital, while 80 per cent are supportive or not averse to new homes being built in their local area.

But while researching housing developments across the South East, South West and West Midlands, we found evidence that pretty much every one had been opposed – petitions from homeowners complaining about increased traffic, a loss of public amenity, a lack of existing infrastructure.

NIMBYs (Not in My Back Yard) are renowned for launching petitions and campaigns. And local councils and members of parliament know these people are voters – they tend to get heard.

Another major obstacle to solving our housing crisis is perceived to be a lack of land suitable for housebuilding. But is that true? Perhaps in some places, but not in others.

According to Ordnance Survey data, 11,000 acres of land in Greater London alone – double the footprint of the borough of Hackney where 260,000 people live – is given over to golfing, which is the world’s most space-intensive sport.

Tackling the challenge on many fronts

The housing problem is multi-faceted. The UK’s planning system is broken, the cost of land is rising, interest rates are also rising for the developers, along with the cost of labour and materials, and mortgage interest rates are rising for home-owners, so demand for new homes is dropping. If developers can’t secure planning permissions, they won’t be able to build the social housing that is so desperately needed.

Britain needs new homes, and probably the best way to begin to solve the problem is planning reform, according to Andrew Carter, Chief Executive of the Centre for Cities.

“UK planning policy has held back the economy for nearly three quarters of a century, stifling growth and exacerbating a housing crisis that has blighted the country for decades.

“Big problems require big solutions and if the Government is to clear its backlog of unbuilt homes, it must first deliver planning reform. Failure to do this will only continue to limit England’s housebuilding potential and prevent millions from getting on the property ladder.”

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