The UK housing market was one of the biggest casualties of the 2008 global credit crunch, but failure to keep up with demand has been a decades-long issue. House prices have soared compared to income, partly due to a shortage of new affordable homes, along with a growing population.
At least 243,000 homes a year are needed to keep up with the number of new households being formed, but in 2013 only 109,000 were built. Unless prompt measures are taken, the country could be short of up to two million homes by 2020.
The pressure for new homes is particularly acute in London and the South East, but all regions face challenges. An increasing proportion of disposable household income is consumed by housing costs. Young people seeking to access the housing ladder face significant barriers, and there are long social housing waiting lists.
The pressure for new homes is particularly acute in London and the South East, but all regions face challenges.
Housing has not traditionally held the same electoral weight as economic policy, education or the health service, but many MPs in urban constituencies have argued that housing is the priority issue. Pre-election, all political parties pledged to tackle the housing crisis, agreeing that it is critical for the country to build more homes.
Recent government policy focused on encouraging builders, investors and local authorities to increase the supply of both new-builds and repurposed empty homes. Critics say this has not been enough, calling for greater direct investment in the building of new homes, particularly social housing, together with rent reforms and putting a cap on tenants’ outgoings. Both Labour and the Liberal Democrats argued for a state return to directly commissioning and building homes.
We now await the outcome of the new government’s proposed strategy. The construction industry will expect a clear commitment that housing forms a central part of the new national political mission, and a credible plan. Building new homes is a powerful source of growth, creating jobs across the country and supporting large numbers of businesses and their supply chains. For a sustainable way forward, there is a need to reduce volatility of prices and supply, improve affordability and increase liquidity and efficiency in the market.
...there is a need to reduce volatility of prices and supply, improve affordability and increase liquidity and efficiency in the market.
Bringing schemes to market may continue to be problematic. There is a misconception that developers always benefit from increased housing costs, but their financial viability assessments are currently under pressure. Increased land and construction costs often erode their margins, with the planning system, shortages of land, materials and skilled labour, and local opposition to building frequently cited as additional barriers.
In response, the Confederation of British Industry (CBI) has called for measures that enable the market to deliver a pipeline of land for new homes to buy and rent, financed in innovative ways and built by a skilled workforce. The business lobbying organisation highlights the need to underpin this development activity with a flexible planning system and a simpler and more competitive tax regime.
Faithful+Gould has a strong presence in the residential sector, with over 35 years’ experience of supporting stakeholders. We understand the different needs and drivers of private developers, Registered Social Landlords (RSLs), private rented sector (PRS) landlords, land owners and local authorities. Our focus is on helping our clients navigate a route through the funding challenges, and on achieving best value in capital and operational cost planning.
In all sectors of the housebuilding market, early cost appraisal influences scheme efficiency...
In all sectors of the housebuilding market, early cost appraisal influences scheme efficiency, equipping stakeholders to make the best decisions. We are increasingly involved at masterplanning stage, where there is greatest opportunity to inform design and achieve best value.
There are challenges in developing and managing mixed tenure schemes, and we are experienced in balancing the agendas of multiple stakeholders where required. Developers and local authorities will typically need to negotiate on the social housing elements of private schemes, and accurate cost appraisals will facilitate this.
Our knowledge of the market and understanding of the supply chain ensures reliable information on construction costs and revenue forecasts, safeguarding financial appraisals during volatile market conditions.