The economy may be unwieldy, but Government can resolve key challenges facing UK homebuilders

The Home Builders Federation's Policy and External Affairs Manager, Emma Ramell explores the actions today's Government could take to resolve the challenges facing the homebuilding industry and support the UK's growth ambitions.

Home builders, like most businesses, welcome certainty and stability. But in a year which has featured war in Ukraine, rising energy prices, a cost-of-living crisis, climbing interest rates, inflation at 40-year highs and potentially, the UK’s longest ever recession on the horizon, it’s hard to think of a time in recent memory when there have been so few reasons to be cheerful.

And that’s before you consider the political upheaval that’s also taken place in the past 12 months. Three prime ministers, four chancellors, four housing secretaries and five housing ministers surely cements 2022 as one of the most uniquely disruptive years that many of us will have ever experienced.

With economic uncertainty likely to stretch into 2024, and the housing market already beginning to cool as a result, to some extent we will simply have to ride out the storm. While there are certainly domestic issues at play that we hope the new Government will get a grip of, these are being compounded by global economic headwinds which are far bigger than any one industry, government, or nation.

However, while the economy might be something of an unwieldy beast, there is still plenty Rishi Sunak’s Government can do to proactively resolve some of the other challenges facing the home building industry and set it on a path to furthering the UK’s growth ambitions.

Tackle the nutrients problem

At the top of the list of barriers that need to be addressed by the new Government are the various measures that Natural England has introduced which are delaying the delivery of an estimated 150,000 new homes with around one-third of local authority areas in England impacted.

The majority of this number, more than 100,000 homes in 74 LPAs, derives from nutrient neutrality requirements imposed following a Court of Justice of the European Union ruling in 2018.

However, water neutrality concerns have also led to a moratorium on house building in parts of Sussex, and, unless addressed, has potential to spread to other local authority areas. Similarly, ‘Recreational Impact’ measures are delaying development in areas including Hertfordshire, the New Forest and Wealden.

While the contribution of house building to the nutrients problem is minimal, it is only housing developers who are having restrictions placed upon their activity. We welcomed the Government’s announcements in July and November outlining proposals to tackle the issue, however they do not match the scale or urgency of the issue at hand.

The industry both respects and recognises the need to protect habitats, and the environment more generally. However there has to be a balance and a moratorium on homebuilding in 1/3 of the country is neither appropriate not proportionate. As such, we continue to call for transitional arrangements to allow home building to resume immediately whilst longer-term solutions are identified and implemented.?

Fix the planning process

One of the (unfortunate) factors HBF members have in common is frustration with the planning process which many will agree is in the worst state it’s ever been. A perfect storm of underfunded and under resourced planning departments, political interference in decision-making, slow development and adoption of local plans and delays to the dischargement of conditions, are all, to a greater or lesser extent, helping to put the brakes on home building.

An already miserable situation has now been worsened considerably by the Government’s recent concessions to the NIMBY-leaning faction of Conservative backbench MPs. In a recent Written Ministerial Statement, Housing Secretary, Michael Gove, confirmed:

• A consultation will be launched on changing the calculation for local housing need figures. The statement made clear that “the numbers will be advisory starting point, rather than mandatory. It will be up to local authorities, working with their communities, to determine how many homes can actually be built, taking into account what should be protected in each area (such as the Green Belt, national parks or heritage assets).
• There will be no obligation on local authorities to maintain a rolling five-year housing land supply (5YHLS) where their plans are up to date.
• The Government will also consult on dropping the requirement for a 20% buffer to be added for both plan making and decision making, to allow local planning authorities to take into account areas that have historically overdelivered on housing.
• Collectively, these measures have the potential to catastrophically undermine housing delivery. Meanwhile, nothing has been said about how the inefficiencies and delays in the planning process will be addressed.

With a Government consultation on the new National Planning Policy Framework (NPPF) prospectus due before Christmas, there is a clear opportunity for Department of Levelling Up, Housing and Communities (DLUHC) to address some of these concerns. However, given the sensitivities within the Conservative Party on housebuilding and Gove’s attitude to the industry, you don’t need to be a fly on the wall in No 10 to conclude that the Government’s appetite for rectifying the challenges faced by the industry is diminished at best and non-existent at worst.

A plan for housing delivery

Linked to the above two concerns is the need for Government to articulate its overarching approach to housing delivery.

Numbers (and locations) aside, most people will agree that new homes are a necessity, not a nice to have. However, if we are to increase the supply at the pace that is needed, this needs to happen by design, rather than left to chance.

For all its lofty ambitions around housing delivery, successive Conservative governments have failed to translate this into a practical and implementable policy. Changing this approach should be a top priority for DLUHC and is an ask that HBF embodies throughout its communications with ministers and officials.

In the absence of economic stability, it’s important, now more than ever, that the Government gives developers a crumb of certainty. After all, if house builders feel incentivised to invest, the rewards will be repaid not only in economic growth and housing supply, but ministers may also restore the Conservatives’ credentials as the party of home ownership.?

Emma Ramell is the Policy and External Affairs Manager at The Home Builders Federation. After graduating from Royal Holloway, University of London, with a BA and MSc in Politics, Emma started her career in the Houses of Parliament. Following her stint in Parliament, Emma has worked in a number of policy and public affairs roles in a variety of sectors including: retail, food and drink and most recently, health.