Delivering the Housing We Need

Cathy Ley, Partner, Fladgate

Is the debate about delivering additional housing in new, and significant, volumes starting to result in action? Fladgate has been seeking views from its clients and contacts

Chancellor George Osborne’s invitation to participate in regional decision-making, building on the example of Greater Manchester, emphasises the importance of local and regional bodies taking a practical lead in progressing new housing projects. The proposed Housing & Finance Institute is a welcome initiative in promoting public authority partnerships with the housebuilding sector focused on delivery. As with all such initiatives, the test will be in bringing projects forward swiftly to make an impact. A cross-party consensus would ensure such projects are not prone to local, regional or national agenda changes following elections.

At a time of tight public sector budgets, the resources available for planning departments are under great pressure. As well as understanding this, the private sector may need to provide practical help (paying for additional consultancy resources?) in order to make schemes happen. The Chancellor’s announcement on deemed planning consent for certain brownfield sites is of interest. Whether this will reduce pressure on planning authorities remains to be seen. There is caution within the sector: will the qualifying conditions for inclusion in planning zones be burdensome? 

Even following the grant of planning consent, requests for relatively minor amendments may trigger a full planning committee review on projects viewed to be contentious. Sometimes the role of the planning professional seems to be weighed alongside that of elected members. There appears to be something of a ‘game of pass the parcel’ with planning authorities unwilling to be bold. How best can we instil in those charged with making planning decisions the necessary confidence to deliver innovative housing?

Housing finance
There remains a significant lack of debt financing available to housebuilders. Where this is available, financial models often assume a longer construction timeline than is tenable for housing developments. Also, available finance appears centred on projects with large numbers of units. In a sector where 2,000 is ‘large’, a threshold of 10,000 is far too high. Undoubtedly, the banks’ risk aversion reflects the lessons of the 2007/08 downturn. Can the banking community respond to the need for more housing and remain responsible lenders?

Turning to finance for would-be house purchasers, is there a case for mortgage consents being in place for longer? This might open up new opportunities for domestic buyers so that overseas cash purchasers are less critical to making developments viable. 

Who meets the costs of major capital contributions early on in delivering housing projects with contaminated land or floodplain works issues? Focusing on brownfield sites or those previously passed over raises more significant upfront costs. Should these be considered part of the initial construction costs, or can initial costs be repaid over a longer period, taking account of full lifetime costs and income in a public and private sector financing agreement?

Similarly, managing a difficult planning consent process is another likely additional expense, to be addressed early on. 

How best can we supply social and affordable housing within commuting distance of the jobs our economy needs but with modest pay? Truly affordable public transport is vital to linking new homes to work opportunities. For developers and social policymakers alike, the creation of new ghettos of social rented housing is unattractive. Notwithstanding new initiatives around brownfield land, a considered discussion is needed about using some green belt land for housing development, as part of the evaluation of what housing is needed and where, responding to unmet needs at the most local levels and supporting communities.

Who delivers housing?
The housebuilding challenge is considerable. Ultimately, developers will only pursue profitable housing projects. The private sector would welcome opportunities to work with the public sector, realising that there are resource and skills shortages. It may have a role in seconding staff to the public sector or paying for additional consultancy support.

Working with a number of different public agencies can be testing for the private sector. This risks delaying completions of housing projects and could make a project uneconomic. The length of the timetable increases where projects are advertised and procured as significant housing schemes subject to EU legislation on public procurement. In addition, wasted costs for unsuccessful tenderers raise barriers to participation.

The Local Government Association’s research earlier this summer supports the anecdotal feedback of those working in housebuilding about difficulties recruiting key specialists, managers and construction workers. Initiatives could include practical mentoring of interested school/college students, and inviting practitioners into schools to give advice on jobs. 

Finally, should we consider innovative construction techniques for delivering housing? Despite reservations, the quality of pre-assembled housing (or specific elements) is constantly improving and must be an option as we seek to make the most impact in the shortest time on the supply of housing.