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WHAT ARE THE CHALLENGES IN INCREASING HOUSING OUTPUT? – PART 2, BY RICHARD CHERRY

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27/05/2014

 

In the second part of this blog post I will look at the vital roles that the private rented sector, planning and land supply play in new housing supply and how they can be improved.

What are the challenges in increasing housing output? – part 2, by Richard Cherry

Private rented sector (PRS)

Home ownership is, of course, not affordable or right for many people and my Company believes there is huge medium term potential to expand the private rented sector and we are taking steps to build up our market position. In London, it is hard right now to make such schemes commercially attractive when house prices are continuously rising so rapidly.

So it’s therefore likely that Government support will be needed for some time so initiatives such as the Build to Rent fund is very positive but in my view more could be done to encourage growth of the private rented sector, for example why not give PRS developers and investors an exemption from CIL or other planning gains.

Planning

The biggest constraint to the supply of new homes cited by most house builders today is town planning. Planning and politics are inseparable and we have to accept the disruption that Government changes to planning systems cause, but I would strongly urge the next Government not to make wholesale changes. The current planning system is in pretty good shape, it’s not perfect, but we know where we stand so please let us have a period of consistency to allow the industry to get on with its job.

One thing we must recognise is the huge strain that change together with spending cuts is having on Local Authority planning departments.  Our experience is that an awful lot of the planning teams in Local Authorities are significantly under resourced in terms of man power. The private sector can and should help here.

Certainly with our major applications we are very willing to provide significant financial support to Local Planning Authorities to ensure that sufficient resources are available to process our application.

This is not to suggest automatic political support but simply the efficient processing of planning applications.  There are sporadic examples of where this is successfully happening but a greater acceptance of this approach would be very welcome in my view.

Land Supply

Land with planning permission is hugely expensive particularly in London and the South East and no house builder can afford to hoard land – it makes no economic sense. However if any organisation can be proven to be hoarding we therefore would support the introduction of a ‘use it or lose it’ approach advocated by some politicians, but this must apply to the public sector as well as the private sector.

However, a factor often not recognised by those accusing the industry of land hoarding is the simple issue of local market capacity. I appreciate it’s hard to comprehend that in some parts of London currently but in most of the South East in any one town or village there is limited demand for new homes at any one time. My company has some very large developments stretching to several thousand homes in some but the size of the project doesn’t necessarily increase local demand.

So for example if we have a single project for 2,000 homes for private sale and the local market capacity is, say, 150 homes per year it will take 13 years to develop the scheme, unless we flood the market which will probably kill off demand completely.

What is needed is more house building outlets. A greater number of small/medium sized sites will deliver more new homes in the short term than will be the case with large new community schemes.

One way of accelerating supply on larger sites is to target a broader range of tenures, particularly private rented housing.

In most of London and the South East land supply is of course incredibly constrained and so there necessarily needs to be a much greater emphasis on redevelopment.  To make this happen more quickly the public sector procurement process has surely got to be streamlined, Governments and probity need to be respected of course, but this I’m sure can be done in a more efficient way. Very expensive competitive processes lasting sometimes up to 2 years are a massive waste of resource and time on all sides.

As David Lunts rightly said at the Alan Cherry Debate “we need all parts of the housing sector to be working optimally to solve the housing crisis.  This isn’t the case at present and PRS is the most underpowered element in this.”

So there’s plenty of work to be done by everyone involved in the housing sector!

Richard Cherry
Deputy Chairman


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Here you’ll find property related blog articles from the team at Countryside as well as independent experts. Expect regular tips and advice on topics such as buying a new home, interior and landscape design, setting up home, mortgages and finance, plus articles on architecture, the property market, regeneration and more.

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