1.5 million homes?

The head-scratching continues regarding this mythical delivery of 1.5 million homes...

We hosted a breakfast event in Guildford yesterday with a number of lenders, lawyers and developers - the main word in the room was "uncertainty" with regard to the development market at present - "development" and "uncertainty" never go well together!

2024 seems to have been a year of false dawns:

Having spent Q2 being assured that a new government would create a positive and stable environment for development (it didn't)...and then the summer being told "just wait for the rates to drop and things will pick up" (they didn't), we are now sat waiting for the Budget later this month. The developers in the room yesterday were of the opinion that they would prefer some sort of certainty even if it was "bad" certainty - so to quote the great philosopher Steven Gerrard..."we go again" as we wait for yet another pivotal moment in 2024!

Developers want (need) to develop. Lenders want to lend. Surely it has to pick up this time?

More planners mean more permissions right?

The promise of more LPA planners is welcome - but from what I read, it appears to be on average a single planner per LPA promised. That won't touch the sides!

This slides from yesterday's presentation (thanks Matthew Henderson ) shows the number of granted applications has fallen by over a third since 2017. One extra planner per LPA is going to have to work pretty hard to turn this around!

More land available?

Another talking point was "Grey belt delivery" - and in particular 50% onsite affordable housing provision. Generally this seemed to be accepted as a positive move - freeing up more land that perhaps won't be as tricky to get locals on board with in comparison to "green belt" delivery. However, the worry for me comes from both the landowner's and the Registered Provider sides of the equation. 50% affordable will be tricky to deliver on many sites - part of the issue is the value of the land purchased by the developer. I don't see many outlets stating that house values are going to shoot up any time soon or costs (either build or finance) are going to drop quickly / at all - therefore that leaves either land value or affordable provision as the buffer. If we reduce the affordable provision this doesn't sit well with local authorities (policy) and will slow down delivery as the viability / planning process is not particularly speedy or, land values can reduce to accommodate the additional affordable housing.

Unfortunately - it may be that landowners just pull up the drawbridge and wait for a new administration / policy. Compulsory purchase anyone? I can see this getting dragged through the courts - forcing landowners to sell is not a great look for any colour government. This is not a new issue and if I had the answer then I would be sat on a nice island in the Caribbean! In conclusion - Grey Belt is likely to allow a little more delivery but I doubt it is the silver bullet...

This leads on to the next issue - 3 calls in as many weeks from clients who have agreed a policy level of affordable housing only to receive offer(s) significantly lower than would allow a policy tenure mix. The LPA in one instance has helpfully responded with "tough". I'm not entirely sure what the next step is here for that client... that is next week's job to work out a strategy.

However, this again is another sticking point for delivery - we have developers finally getting planning and then very few RPs able to take on the affordable provision as per the planning permission. I can only talk from anecdotal experience but this is clearly another issue that needs to be dealt with. Clearly more money needs to be chucked at the problem - but who pays? Taxpayer? I have a horrible feeling that Jo(ann)e Bloggs taxpayer is already going to be doing some relatively heavy lifting post-Budget. Developer? Will they be able to absorb more costs? House buyers? Higher interest rates and lower disposable income mean there is unlikely to be much that a rise in SDLT for instance could solve in terms of grant funding for RPs.

It is certainty a tricky situation and the government are walking a tightrope here.

On the plus side - pretty much everyone is in agreement that delivery needs to be increased - this is a great start and I can't imagine there are many parts of the economy where almost everyone is in agreement. Hopefully the next month or so finally removes the uncertainty from the system and we can crack on and get some delivery. However, I still remain sceptical that 1.5 million homes will be delivered in the next 4 and a bit years.