• 13th February 2017

Changes for the Construction industry

Housing white paper means changes for Construction industry.

Last week the Department for Communities and Local Government published a housing white paper, “Fixing our broken housing market”, looking at the issues behind the housing crisis and steps to address it.

Elements of the proposal will have a big impact on the construction and architecture industries, particularly regarding increasing the pace of development and using a wider selection of developers.

Below is a summary of the report, which you can read in full here.

Since the 1970s, there have been on average 160,000 new homes each year in England. The consensus is that we need between 225,000 and 275,000 homes per year to keep up with population growth and start to tackle years of under-supply. This isn’t because there’s no space, or because the country is “full”. Only around 11 per cent of land in England has been built on. The problem is threefold:

Not enough local authorities planning for the homes they need
Over 40 per cent of local planning authorities do not have a plan that meets the projected growth in households in their area. There are many reasons for this, but one of the most significant is the way local decision-makers respond to public attitudes about new housing.

The pace of development is too slow
This Government’s reforms have led to a large increase in the number of homes being given planning permission. But there is a large gap between permissions granted and new homes built. More than a third of new homes that were granted planning permission between 2010/11 and 2015/16 have yet to be built.

Over the past 25 years, productivity across the whole economy has grown by 41 per cent as new technology and new ways of working make business and industry more efficient and effective. In construction, it has grown by just 11 per cent – almost four times slower.

The construction industry is too reliant on a small number of big players
Housing associations have been doing well – they’re behind around a third of all new housing completed over the past five years – but the commercial developers still dominate the market. And within that sector, a handful of very big companies are responsible for most new building. Britain’s 10 largest housebuilding firms build around 60 per cent of our new private homes.

Our housing shortage is quite simply due to not enough homes being built. Fixing it is more complex, says the report. This is a problem that has built up over many decades, and solving it requires a radical re-think of our whole approach to home building.

We need to plan for the right homes in the right places
This is critical to the success of our modern industrial strategy. Growing businesses need a skilled workforce living nearby, and employees should be able to move easily to where jobs are without being forced into long commutes. But at the moment, some local authorities can duck potentially difficult decisions, because they are free to come up with their own methodology for calculating ‘objectively assessed need’.

So, we are going to consult on a new standard methodology for calculating ‘objectively assessed need’, and encourage councils to plan on this basis. We will insist that every area has an up-to-date plan. We will increase transparency around land ownership, so it is clear where land is available for housing and where individuals or organisations are buying land suitable for housing but not building on it.

We need to build homes faster
We will invest in making the planning system more open and accessible, and tackle unnecessary delays. We’re giving councils and developers the tools they need to build more swiftly, and we expect them to use them.

Development is about far more than just building homes. Communities need roads, rail links, schools, shops, GP surgeries, parks, playgrounds and a sustainable natural environment. Without the right infrastructure, no new community will thrive – and no existing community will welcome new housing if it places further strain on already-stretched local resources.

We will diversify the housing market
We will open it up to smaller builders and those who embrace innovative and efficient methods. We will support housing associations to build more, explore options to encourage local authorities to build again, encourage institutional investment in the private rented sector and promote more modular and factory-built homes.

These measures will make a lasting, positive impact on housing supply, but they will inevitably take time to have an effect.

So, finally, we will help people now – from investing in affordable housing, to banning unfair letting agent fees, to preventing homelessness.

The report outlines each of the steps in more detail:

Step 1: Planning for the right homes in the right places

  • Making sure every part of the country has an up-to-date, sufficiently ambitious plan so that local communities decide where development should go
  • Simplifying plan-making and making it more transparent, so it’s easier for communities to produce plans and easier for developers to follow them
  • Ensuring that plans start from an honest assessment of the need for new homes, and that local authorities work with their neighbours, so that difficult decisions are not ducked
  • Clarifying what land is available for new housing, through greater transparency over who owns land and the options held on it
  • Making more land available for homes in the right places, by maximising the contribution from brownfield and surplus public land, regenerating estates, releasing more small and medium-sized sites, allowing rural communities to grow and making it easier to build new settlements
  • Maintaining existing strong protections for the Green Belt, and clarifying that Green Belt boundaries should be amended only in exceptional circumstances when local authorities can demonstrate that they have fully examined all other reasonable options for meeting their identified housing requirements
  • Giving communities a stronger voice in the design of new housing to drive up the quality and character of new development, building on the success of neighbourhood planning
  • Making better use of land for housing by encouraging higher densities, where appropriate, such as in urban locations where there is high housing demand; and by reviewing space standards

Step 2: Building homes faster

  • Providing greater certainty for authorities that have planned for new homes and reducing the scope for local and neighbourhood plans to be undermined by changing the way that land supply for housing is assessed
  • Boosting local authority capacity and capability to deliver, improving the speed and quality with which planning cases are handled, while deterring unnecessary appeals
  • Ensuring infrastructure is provided in the right place at the right time by coordinating Government investment and through the targeting of the £2.3bn Housing Infrastructure Fund
  • Securing timely connections to utilities so that this does not hold up getting homes built
  • Supporting developers to build out more quickly by tackling unnecessary delays caused by planning conditions, facilitating the strategic licensing of protected species and exploring a new approach to how developers contribute to infrastructure
  • Taking steps to address skills shortages by growing the construction workforce
  • Holding developers to account for the delivery of new homes through better and more transparent data and sharper tools to drive up delivery
  • Holding local authorities to account through a new housing delivery test

Step 3: Diversifying the market

  • Backing small and medium-sized builders to grow, including through the Home Building Fund
  • Supporting custom-build homes with greater access to land and finance, giving more people more choice over the design of their home
  • Bringing in new contractors through our Accelerated Construction programme that can build homes more quickly than traditional builders
  • Encouraging more institutional investors into housing, including for building more homes for private rent, and encouraging family-friendly tenancies
  • Supporting housing associations and local authorities to build more homes
  • Boosting productivity and innovation by encouraging modern methods of construction in house building

Step 4: Helping people now

  • Continuing to support people to buy their own home – through Help to Buy and Starter Homes
  • Helping households who are priced out of the market to afford a decent home that is right for them through our investment in the Affordable Homes Programme
  • Making renting fairer for tenants
  • Taking action to promote transparency and fairness for the growing number of leaseholders
  • Improving neighbourhoods by continuing to crack down on empty homes, and supporting areas most affected by second homes
  • Encouraging the development of housing that meets the needs of our future population
  • Helping the most vulnerable who need support with their housing, developing a sustainable and workable approach to funding supported housing in the future
  • Doing more to prevent homelessness by supporting households at risk before they reach crisis point as well as reducing rough sleeping

For local authorities, the Government is offering higher fees and new capacity funding to develop planning departments, simplified plan-making, and more funding for infrastructure. We will make it easier for local authorities to take action against those who do not build out once permissions have been granted. We are interested in the scope for bespoke housing deals to make the most of local innovation.

In return, the Government asks local authorities to be as ambitious and innovative as possible to get homes built in their area. All local authorities should develop with their communities an up-to-date plan that meets their housing requirement, decide applications for development promptly and ensure the homes they have planned for are built out on time.

For private developers, the Government is offering a planning framework that is more supportive of higher levels of development, with quicker and more effective processing and determination of planning applications, and is exploring an improved approach to developer contributions. We will encourage greater diversity of homebuilders, by partnering with smaller and medium-sized builders and contractors in the Accelerated Construction programme, and helping small and medium-sized builders access the loan finance they need.

In return, the Government expects developers to build more homes, to engage with communities and promote the benefits of development, to focus on design and quality, and to build homes swiftly where permission is granted. Critically, we also expect them to take responsibility for investing in their research and skills base to create more sustainable career paths and genuinely bring forward thousands of new skilled roles.

For local communities, the Government is offering a simpler and clearer planning process that makes it easier for them to get involved and shape plans for their area. We will ensure they see the benefits of housing growth and have greater say over the design of local developments.

In return, the Government asks communities to accept that more housing is needed if future generations are to have the homes they need at a price they can afford.

For housing associations and other not-for-profit developers, the Government has already announced funding worth a total of £7.1 billion through an expanded and more flexible Affordable Homes Programme. We will provide clarity over future rent levels.

In return, we expect them to build significantly more affordable homes over the current Parliament.

For utility companies and infrastructure providers, the Government is offering a clear framework and simpler plans to help them understand the demands made on them, and is exploring an improved approach to developer contributions to help pay for new infrastructure.

In return, the Government expects infrastructure providers to deliver the infrastructure that new housing needs in good time so that development is not delayed.

Stride’s Architecture Operations Manager, Mark Nagle, had this to say on the white paper:

“The housing white paper is welcome news to the architectural industry and feels like a positive update to the Housing & Planning Bill of last summer and with some sensible ideas to support the increase in demand.

The government’s commitment to reducing the maximum period permitted between obtaining planning permission and starting on site to two years is particularly helpful, but with no thoughts for the prevention of ‘landbanking’ a trick seems to have been missed. Many of our architectural clients are passionate about innovation as a solution to the housing crisis and added funding announced for custom build and increased off-site manufacturing seems a breath of fresh air. The quota for starter homes being reduced from the restrictive 20% margin is also likely to be beneficial.

With large housing developers making up 80% of the current housing constructed in the UK it can be argued that restricting supply of homes is good for their margins therefore the governments committed funding support for SME’s in the market will help increase competition and hopefully generate more urgency towards construction.

The white paper doesn’t have all of the answers but is a step in the right direction. The issue in terms of affordability remains but engaging architects’ ideas to build, not just any home, but the right homes with good quality, well planned and sustainable developments will be vital to making a success of this white paper in the long term”.

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