Whither UK housing – does the Coalition Government have a clue?

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By Nick Keable, Vice President, UK Operations, The Saint Consulting Group

Fact No 1 – The UK remains in the grip of a housing crisis.  Demand remains high (we’re dying older, kids want to move away from Mum and Dad earlier, we’re divorcing more often and immigration has grown considerably).  But supply has dwindled down to its lowest ebb since 1946 or 1923, depending on which version of history you prefer.

(Interesting note – According to a recent UK Government commissioned study, for at least the last 20 years, we have built proportionally considerably less housing than many of our nearest European neighbours, one of the results of which is that our house prices have soared.  Duh!  Go figure)

Fact No 2 – The continuing impact of the recession means that mortgage affordability remains stubbornly low.  Unless you have a lottery win this Friday or the bank of Mum and Dad coughs up your deposit, the 20-25% downpayment most banks now demand as a minimum remains out of reach for the masses.

Fact No 3 – We need millions of new homes.  The last Tory Government wanted 4.4 million by 2016.  The recently departed Labour Government’s stated target was 3 million by 2020, although its last policy utterances added up to just shy of 6 million by 2025.

So what is our shiny new Government doing about this crisis?  Here’s a list of its pronouncements to date:

Positive measures

  • Local Housing Trusts – a relatively modest scheme helping local communities to build their own homes which forms an element of the Decentralisation and Localism Bill currently before Parliament — small beer
  • Yet another Government initiative to bring empty homes back into use — not holding any breath on this one
  • A ‘Home on the Farm’ scheme that encourages famers to convert disused farm buildings into affordable housing — not really expecting a major impact from this one either

(Its much vaunted ‘incentivisation’ scheme for local authorities, which apparently will transform all councils into aggressive supporters of residential development for some not inconsiderable shekels dangled at them by the Coalition Government, has yet to be announced but is programmed for later this month).

Negative measures

  • Complete chaos in the planning system by abolishing the regional strategies (from which all housing numbers have hitherto been derived)
  • Abolition of the National Housing and Planning Advisory Unit which was responsible for estimating the housing numbers needed across the UK
  • Two measures in the Decentralisation and Localism Bill which will further restrict housing delivery – local referenda (whereby local residents will be able to frustrate unpopular large scale planning applications) and SSSI style protection for green space (inevitably further restricting land available for development)
  • Two changes to PPS3 – the abolition of minimum residential density targets and the removal of back gardens from the definition of brownfield land (bearing in mind that 25% of housing development last year was back garden development and in the South East that often was up at the 40-50% mark)
  • A reduction of £450 million to the HCA’s budget as part of the wider Government cost cutting exercise
  • Funding for eco-towns has been halved

So the question is this: (a) does our new shiny Government just not understand how to tackle the housing crisis or (b) is it in political denial about it in order to appease its shire county NIMBY voters?

Prediction – Should the Coalition Government last, the housing numbers will continue to bump along the floor, as banks begin lending again over the next few years a 1980s house price inflation boom will develop and the Government will be forced to pull its head out of the policy sand after taking much criticism.

You heard it here first.

Nick Keable is vice president, UK Operations, for The Saint Consulting Group, email keable@tscg.co.uk, phone +44 207 592 7050

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