By Ritchie Clapson CEng MIStructE, propertyCEO
The (newly named) Ministry of Housing, Communities & Local Government is responsible for several key areas, but housing is the one getting the most airtime. With an estimated shortage of around 4.3m homes in this country, urgent action is needed to solve the housing crisis. But, given that we’ve had a housing crisis for as long as most of us can remember, what exactly can be done to move the needle?
Ambition
The first test any new government needs to pass is one of ambition. Yes, words are easy, but the prospects of making a significant dent in such a huge shortfall aren’t going to be that great if there’s no ambition to achieve it. Luckily, the government has arguably passed this test by promising to deliver 1.5 million homes within its first five years of office. Sure, it still leaves a big hole, but you’ve got to start somewhere.
Resolve
The second test is one of resolve. Nimbys are a tricky bunch, and everyone wants the housing crisis solved, providing no new homes get built a) on the green belt or b) anywhere near where they live. Being pictured in the local rag alongside a local green belt protection group used to be good PR for your jobbing Labour MP. Today, these images are more likely to be seen on the front page of the national press, with the whiff of hypocrisy hanging heavy in the air as the new government places the green belt firmly in its sights.
The true test of the government’s mettle will be whether it’s prepared to stomach the inevitable local backlashes. ‘Of course we want the housing crisis solved; just don’t do it HERE,’ will be a typical, passionately felt response. But politically, if eggs need to be broken, it makes sense to do it when you’re fresh out of the blocks with a huge majority. That way, you’ve a fighting chance of seeing your labours start to bear fruit come the next election. So far, the government has said all the right things, but only time will tell whether its resolve will hold up.
Game plan
The third test is about having a game plan. It’s one thing to spout fine words, but you won’t achieve much without a strategy. The government has announced a number of ideas it’s looking to implement, which it believes will unlock the required 1.5m new homes. One of these is the development of their newly-coined ‘grey belt’ land. This is effectively green belt land wearing overalls; land which abuts our towns and cities which already has some form of development, such as car parks and the like.
There’s also been mention of building some new towns, something that sounds good in principle but begs a number of questions. There are several choices here, from building extended urban towns that abut existing cities, creating extensions to existing cities which are separated by green space, or going all out for some new Milton Keynes. This latter approach would take a lot more than five years to complete, and with around 125,000 homes, Milton Keynes represents the pinnacle. But Milton Keynes was built over 50 years ago. Our most recent effort, Northstowe in Cambridgeshire, targeted 10,000 homes, yet, seven years later, only 1,500 have been built. So, we would need 12 new Milton Keynes or 150 fully completed Northstowes to hit 1.5m new homes – it’s a sobering perspective on the sheer scale involved.
Arguably, the most critical area being targeted by the government is unused brownfield land. This is land that has already been built but isn’t used, including the empty shops and offices that blight our high streets all over the country. According to countryside charity CPRE, around 1.2m new homes could be built using redundant brownfield land. Not only does this account for most of the government’s target, it’s also a vote-winner as no greenfield land is touched, plus it will help bring our town centres back to life. Also, all the infrastructure is already in place. This represents the quickest route to hitting the target, plus we’ve got more unused brownfield land becoming available every year.
Reality
So, on to the fourth test which is all about reality. Having a plan is one thing, but is it executable? This is where there are a few flies circling the ointment. One of those will be the planning system, which was last properly updated in 1947. With too few local planning officers working in a massively under-resourced system, it isn’t easy to see how the government’s bold high-level plans to unlock new homes will actually be approved at a local level. You can bet your bottom dollar that every green-belt landowner will be arguing that their own fair acres should be designated grey belt, but it will presumably be down to the local planning teams to decide each case on its own merits. Given they have insufficient resources to handle their current workload, I can’t see how this will happen. And planning officers are highly skilled; you can’t simply put untrained bums on seats and expect instant results.
There are around 18,000 planning officers in England currently and the government has committed to recruit 300 more planners, an increase of just 1.7%. This prompts two big questions. Firstly, is it enough to make a difference? And secondly, where will they be recruited from? If they aren’t already involved in planning, then they’re going to have to be trained first which will necessarily take time before they’re going to have much of an impact.
New towns are also one of those ideas that sound great in principle but can prove trickier in practice. One key challenge surrounds affordable homes. The current planning approval process requires housebuilders to build a proportion of homes on their sites at cost. The government has indicated that it wants 50% of the homes in their new towns to be affordable. But if half of what a developer builds has zero profit, they’ll need to increase their margin from the other 50%. This is unlikely to be viable which may mean that new town projects prove unattractive commercially to developers. The government will need to devise another way of tackling the problem. This could involve allowing a small albeit restricted profit on affordable homes or having a tiered system whereby more profit is permitted based on the percentage of affordable homes the developer creates on any given site.
Another new town challenge is that we don’t have a recent poster child to shout about since Milton Keynes. Northstowe is a stark reminder of the scale of what needs to be achieved – what they’ve managed to build in seven years equates to just 0.1% of Labour’s new homes target. The town also fell victim to the country’s dire planning system, with too few local amenities being built to support the people moving in: no high street, pubs, or cafes. If the government is to convince people that new towns are the way forward, they’ll need to ensure that these communities will be of good quality. This means ensuring that amenities are available for early adopters and that the planning system is fit for purpose.
Opportunities
And what about brownfield redevelopment? The main challenge here is that this sort of project doesn’t appeal to the scale housebuilders who typically create new buildings in large fields – they don’t have the skills or appetite to repurpose existing buildings on smaller sites. This opportunity instead falls to smaller developers, often solo entrepreneurs and investors, and this is where the government needs to provide some support. We’ve had nearly a decade of the previous government targeting landlords and property investors to the point where the buy-to-let investment model barely stacks up. Yet these are precisely the people who could readily turn their hand to small-scale development projects – in fact, many already do refurbs, flips, and buy-to-let upgrades. It could be a great win-win for the government: help unlock potential new homes from brownfield land while at the same time encouraging entrepreneurship and wealth creation opportunities for individuals.
What’s not to like about that?
ABOUT THE AUTHOR
Ritchie Clapson CEng MIStructE is a veteran property developer of 40+ years, an author, industry commentator, and co-founder of the leading property development training company propertyCEO. Ritchie is passionate about tackling the lack of housing in the UK and helping ordinary people to be part of the solution. To discover how you can get into property development, visit www.propertyceo.co.uk