Q. What should Labour’s first priority be in relation to housebuilding and why?
A. [Mike] It’s no secret that a fundamental step change in housebuilding output is required in order to catch up on housing under-supply and the number of growing UK households. Ramping up housebuilding activity will significantly boost the economy - each new home contributes around £100,000 to the overall economy, which is generated by labour, materials and services-related spending.
Labour has committed to building 1.5 million new homes in this coming Parliamentary term, which I hope they deliver on, but it is a pledge that has been made in the context of 1.01 million new homes being completed over the last five years. Furthermore, momentum is against Labour too - housebuilding starts in 2023 stood at just 176,000, with starts in the second half of 2023 in particular plummeting by 44% on the previous year. This further muddies the water and adds further concern in relation to seeing an uplift in housebuilding output in 2024/25.
Initiatives aimed at making land and sites available, expediting the planning process and supporting the skills and trades that are needed to build new homes are to be welcomed, but Labour must act fast and be decisive. Finance, which is a major concern for SME developers, especially those who are having to refinance, is critical to increasing output and should be a policy focus area. Any levers that can be pulled now to help attract additional public and private capital to the sector will help relieve sector-wide pressure and deliver the additional housing that is so desperately needed. As great as it sounds, any form of ‘planning reform’ will undoubtedly take years to implement; Labour need to take immediate action now.
Q. What are your hopes for the UK housing market now that Labour have been elected?
A. [Tom] The apocryphal 300,000 houses-a-year target has long been spouted by Governments of all persuasions for as long as we can all remember. Lack of supply leads to sustained prices that prevent people getting on the property ladder, making it difficult to create a dynamic economy where people can move around for work.
Maybe this can be the Government that finally puts the necessary foundations in place to generate increased supply; be it via planning reform, which will inevitably take longer to drive the changes that are so desperately needed, or by creating new towns and increased affordable housing; a solution that also requires early action in order to make any sort of impact over the course of the next Parliament.
A. [Mike] A clearer political picture with a clear governing mandate that will help consolidate the comparative stability of green shoots in both the economy and demand-side for UK residential property that will be supported by a downward trajectory in the cost of capital. At the same time, policy direction will be strongly pro-housebuilding, creating a significant opportunity for SME property developers to shape the housing supply solution and bolster their confidence as they start to see ‘green shoots’ as the economy strengthens.
Time-to-completion for housing transactions and development sites will start to come down, driven by greater clarity and a more positive trajectory. Rationally, competition for purchases will increase (and potential gazumping), so savvy residential, investment and development buyers should close their deals swiftly, especially as finance costs are driven more by SONIA Swaps markets, with priced-in interest rate reduction expectations, rather than actual movements in the central bank rate itself.
Q. What are the key lessons that need to be learnt and mistakes that need to be avoided?
A. [Mike] The big lesson for Labour to learn from is not sufficiently supporting the SME residential property developer segment to build more homes, which is the pain we set CrowdProperty up to solve. In the 1980s, 39% of new homes were being built by SME developers, now it’s just 10%. With plentiful supply of small sites, infill, conversion and refurb opportunities, SME developers aren’t constrained to the availability of large sites like the volume housebuilders – and this is the answer to delivering the 1.5 million homes. We need clear policies to specifically support this vital segment, potentially as widespread as finance, tax, planning and employment.
A. [Tom] Doing something now rather than just simply talking about it and deferring to nimbyism. Unfortunately, there’s no silver bullet solution to tackling the current housebuilding challenges and reform will take time to make an impact. Labour need to take action from day one, there’s no time to waste if they want to deliver on their pledge of building 1.5 million homes.
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