Prime minister David Cameron has signalled a shift in government housing policy that has received a mixed response from across the construction industry.
The ‘affordable housing’ commitment that planners extract from housing developers is to be extended from home for rent to homes for purchase. The definition of ‘affordable housing’ is thus being extended from rental accommodation to home ownership.
In his speech to the Conservative Party conference this week, prime minister David Cameron said: “We need a national crusade to get homes built.That means banks lending, government releasing land and, yes, planning being reformed.”
Mr Cameron said: “For years, politicians have been talking about building what they call ‘affordable homes’ – but the phrase was deceptive. It basically meant homes that were only available to rent. What people want are homes they can actually own. After all, the officials who prepare the plans for the new homes, the developers who build them, the politicians who talk about them… most of these people own the homes they live in. Don’t they realise other people want what they’ve got – a home of their own? So today, I can announce a dramatic shift in housing policy in our country.
“Those old rules which said to developers: you can build on this site, but only if you build affordable homes for rent… we’re replacing them with new rules. You can build here, and those affordable homes can be available to buy. Yes, from Generation Rent to Generation Buy.”
House-builder Linden Homes, part of the Galliford Try group, thought this was a great idea. Managing director Andrew Richards said: “It’s encouraging to hear the government’s continued commitment to initiatives that will help to make homes more affordable for people across the UK. Linden Homes supports the principle of the Starter Homes initiative and we welcome the government’s intention to support first-time buyers. Starter Homes will complement other schemes the government has introduced, such as Help to Buy. The main barrier for aspirational homebuyers is financial constraint and schemes such as these are infinitely key in enabling them to get onto the housing ladder.
Stewart Baseley, executive chairman of the Home Builders Federation, was also supportive: “We welcome the government’s plans to deliver on its pledge to improve home ownership opportunities for young people. Over the past 25 years, as building new homes has become ever more costly and complex, output has fallen and the housing ladder has slipped further out of reach for many.
“Greater flexibility in the way affordable housing is provided should not only speed up the process of securing an implementable planning permission but also make more sites viable for new housing. This will in turn increase availability of homes of all types and help address the chronic shortage that has been allowed to develop. House-builders are committed to delivering high quality, low-cost homes for a new generation of first-time buyers, if the policy environment allows them to.”
However, the Federation of Master Builders (FMB) said that prime minister’s pledge to replace ‘Generation Rent’ with ‘Generation Buy’ required further support for house-builders. FMB chief executive Brian Berry said: “The prime minister is right to put home ownership at the heart of his government’s vision. For too long we have been suffering the worst housing crisis since the end of the Second World War. It’s crucial that we improve affordability and options for those looking to get on the housing ladder.”
Mr Berry continued: “To create a ‘Generation Buy’, we need to create a ‘Generation Build’. This means having a more dynamic house building industry in which smaller firms and new entrants can prosper and grow, so that we can deliver small scale housing developments in every village, every town, and every city. We also need to make use of previously-developed land to take the pressure off the green belt. It will also mean attracting a new generation of talented workers into the construction industry to overcome current skills shortages and meet the expanding demand for its services. These are both challenges and exciting opportunities and we look forward to working with the government to make the prime minister’s vision a reality.”
Michael Thirkettle, chief executive of construction consultant McBains Cooper, echoed this view: “The construction industry will welcome these proposals, as new measures to kick-start the housebuilding programme are urgently needed. New housebuilding is at its lowest level for two years and we’re falling well short of the number of new homes needed each year to address the housing crisis.
“However, on its own this policy won’t solve the problem. There is a desperate skills shortage in the construction industry, particularly for the likes of bricklayers and electricians, and without allowing more recruitment of skilled foreign workers the industry won’t have the labour to meet housing targets. Around 300,000 people left the construction industry between 2008 and 2010, and because training and apprenticeships take time, the government should allow skilled construction workers to be listed as an occupation with official shortages. This would allow more recruitment from outside the EU, which is impossible under current stringent immigration rules.
“The government also needs to look at the planning system and consider allowing more building on the green belt, as there is not enough capacity in brownfield sites to meet the required number of new homes.”
The British Property Federation said that the rented sector should not be seen as a bad thing but should actually be supported. Its chief executive Melanie Leech said: “Politicians talk about Generation Rent as if it is something to be ashamed of, when this should not be the case. Countries such as Germany and the USA have thriving rental markets, where people happily live in institutionally-backed, purpose-built, high quality rented accommodation for many years.
“While we are not against owner occupation, and see Starter Homes as a welcome initiative, we are aware that such a policy is stoking demand for home ownership, rather than focusing on meeting supply.
“Build to rent has enormous potential to deliver additional homes to the UK, and government must not overlook this in blind pursuit of making us a nation of homeowners.”
Aecom practice leader Andrew Jones had deeper reservations, saying: “Shifting the ‘Affordable’ definition to include Starter Homes for first-time buyers could exacerbate rather than solve the problems of affordability and access to the housing market. Without a blended, multi-tenure approach there is a risk of increased land values rather than increased supply, particularly in London and the southeast. And shared ownership schemes – one of the most successful stepping stones to affordable home ownership – could be severely challenged as a result of today’s move.
“Over the past century, supply has only increased through a balanced mix of housing tenures. History shows us that the private sector alone cannot deliver the step-change required to solve the housing crisis for the next generation and beyond. We need a strategy that extends the breadth of development actors – reintroducing SMEs and specialist entrants, but also looking to development corporations and new towns to get the step change we need in delivery.
“The underlying problem of supply remains. The government’s current proposals should stimulate the delivery of homes on sites already identified for development, but there is still a fundamental lack of supply in the parts of the UK where demand is critical and future economic prospects are strong.