Theresa May, the new Prime Minister, has inherited a daunting to-do list.
While tackling the Brexit fallout is inevitably at the top of that list, it is encouraging to see that the housing crisis is also getting significant attention from the new PM.
Mrs May was absolutely right to say that “we need to do far more to get more houses built” during her short campaign for leadership. For decades, the UK has stumbled along, tinkering around the edges while the structural undersupply of housing has got progressively worse.
This cannot be allowed to continue. It needs to be dealt with today, not kicked into the long grass for a future administration to worry about.
So what should the Prime Minister, and her new housing minister Gavin Barwell, do about it?
Firstly, they need to look at access to land. Under David Cameron, the Government took welcome steps to address this; last winter the Department for Communities & Local Government pledged to release enough publicly-owned land to build 160,000 homes by 2020.
But in practice, it is falling dramatically short. A report from the National Audit Office in July revealed that so far the DCLG has only managed to sell land with the capacity for 8,580 homes. If the DCLG is to hit its target, it needs to show radical improvement here. The impetus for that needs to come from the top.
What’s more, when the time comes to build, then we need more diversity in the type of housing produced. Governments in recent years have been pre-occupied with schemes which help people to buy their own home, but this ignores the way the property market is changing. Many people are actively choosing to rent their home, preferring the flexibility it offers. It is crucial that homes are produced with the private rented sector specifically in mind, alongside measures to support the burgeoning build to rent market.
The Prime Minister is clear about her intentions to increase the production of housing in the UK, but the nation’s largest housebuilders may not be quite so keen to do more. One major housebuilder has warned that, following the Brexit vote, it will “reassess” its land acquisition strategy. Others are said to taking a similarly cautious approach, which may result in their housing output actually falling.
This provides the Government with the perfect opportunity to address the over reliance we place on the largest housebuilders. We continually look to them to build us out of this housing crisis, but the fact is that there are thousands of small- and medium-sized developers up and down the country who are nimble and enthusiastic about delivering the homes that we need, but need more support.
That means helping them access the land that normally goes to the big housebuilders. According to a Guardian investigation last year, large housebuilders are currently ‘landbanking’ more than 615,000 housing plots. If they won’t use them, they must be released or sold to smaller developers.
They also need more sources of finance. Since the credit crunch, the high street banks have implemented strict criteria on what they look for from development deals, limiting them to only dealing with the biggest builders. The Government needs to do more to help small builders fund their projects – alternative lenders already account for 14 per cent of all development deals, and that figure will only increase.
There is some cause for optimism on this front. The DCLG Select Committee has launched an inquiry into the capacity of the housebuilding industry to meet the demand for new homes, including looking specifically at the role of small- and medium-sized developers. This was followed last week by the National Housing Taskforce opening its own Inquiry into supporting new sources of housing supply, such as small, custom and community-led builders.
Real momentum is building, but it needs wholehearted support from the Prime Minister and Housing Minister if it is to result in tangible improvements in our housing supply. Over to you, Prime Minister.
Christian Faes is co-ounder and chief executive of LendInvest