How can the UK meet demand for housing?

Last month, housing secretary Michael Gove watered down the government’s pledge to build 300,000 new homes per year by altering the targets from ‘mandatory’ to ‘advisory’.

The question remains: how can the UK meet demand for housing?

Paul Brett (pictured), managing director of intermediaries at Landbay, said the planning system is clunky and incapable of providing enough properties. To make matters worse, materials are in short supply due to global supply chain issues and there is a shortage of labour in the construction market.

“The government said it wants to encourage homeownership, but house prices are high and deposits are hard to save for, especially for first-time buyers, and now we have the cost-of-living crisis as well as higher mortgage rates to add into the mix,” he said.

Brett believes there is a paradox here – homeownership is in decline and the government is effectively forcing people into rented accommodation.

Landlords are stymied by housing policies

At the same time, Brett said government policy towards landlords is discouraging some from investing in the growing private rented sector because of increasing regulation and taxation burdens.

“The vagueness from the government surrounding the Energy Performance Certificate (EPC) proposals that rented property must be at least EPC C rated by 2025 and 2028, for new and existing tenancies respectively, does not help either,” he added.

Brett said he has seen a rise in landlords buying new-build property, which is mostly B rated, in preparation for when these new EPC rules do become law.

“There has never been an easy answer as to how to meet this country’s housing demand, but we know it always exceeds supply and new housing is needed,” Brett said.

Should government help smaller housebuilders?

Phil Quinn, head of intermediary sales at later-life lending specialist LiveMore, said the government needs to make it easier for small and medium-sized (SME) builders to compete on a level playing field with the larger ones.

According to the Home Builders Federation, the number of SME builders has declined by 80% since the late 1980s.

“There are not enough house builders to build the new homes we need; for numbers to increase, it would be good to encourage more smaller house builders into the market,” Quinn said.

Lack of commitment could mean lack of housing supply

In light of the change in government policy, Karl Wilkinson, chief executive at Access Financial Services, said authorities will now be less likely to review green belt boundaries and further housing delivery delays will be inevitable.

Without a commitment of substantial numbers of new houses built each year, he believes the knock-on effect will be a lack of availability for new buyers looking to get on the property ladder.

“Competition for those new houses that are actually built will also be fierce, as landlords wishing to avoid the investment costs of raising Energy Performance Certificate (EPC) ratings are increasing likely to buy new-build property for the superior EPC ratings,” Wilkinson added.

He believes the commitment to deliver significant numbers of new homes each year is fundamental to the sustainability and growth of the housing market; Wilkinson said he believes that the government should reinstate the mandate.

Why have housebuilding targets been missed?

Jeff Knight, director of Grey Matter Marketing said the challenge of building a set number of new homes each year has been a goal for as long as he can remember.

Knight added that the government’s new approach of targets being advisory, rather than mandatory, is nonsense and abdicates responsibility.

Knight said the property market needs a proper review of why there is year-on-year failure to hit new housebuilding targets.

He questioned whether the targets are unrealistic, if there are sufficient resources and labour for the construction, and if planning rules are too restrictive.

“What we need is not a pledge for new home construction; we need a proper strategy for building new homes and enhancing communities with the environment taken into consideration. It is no longer sufficient to just focus on building without a joined-up strategy,” Knight said.

What are your views on the government’s housebuilding policty? Let us know in the comments below.