Jamie Johnson, CEO of FJP Investment, reviews the struggles faced by developers constructing new builds and proposes a series of reforms to ensure the UK is able to increase housing output
According to recent government statistics, the annual construction output of new-build houses has shot up to an 11-year high. On the face of it, this is good news – numbers are getting closer to the point of matching our national long-term demand. Of course, we are still hundreds-of-thousands (130,000, to be exact) behind the target of 300,000 new builds being added to the market each year, but it is progress nonetheless.
Preconceptions surrounding new developments
However, if one takes a step back to look at the housing puzzle more holistically, a stark truth rears its head – this battle is much more than about simply getting shovels in the ground and buyers though the doors. Instead, there is a need to understand and resolve the negative preconceptions surrounding new developments.
Indeed, the public has a plethora of concerns that will need to be addressed if the supply of new homes continues to rise, according to recent research from FJP Investment.
Of considerable concern is infrastructure and connectivity. Having surveyed 1,000 UK homebuyers and property investors, FJP Investment found that 57% of people think new builds are constructed in inconvenient locations. Sajid Javid’s recent announcement of a significant £29bn roads package therefore comes as welcome news, because infrastructural improvements do come with significant price tags.
Similarly, two-thirds (67%) of homebuyers criticised new-build properties for being too expensive, saying they feel developments are often aimed at the top end of the market. The average new-build property in the UK costs £290,176, 29% higher than the average price for existing properties (£224,729).
At these sorts of prices, potential buyers expect new builds to be both attractive and finished to a high standard. Frustratingly, this is not the case. The research revealed that half of people think new builds are typically unattractive, and even more (63%) think they are “devoid of character”. But, making new builds stylistically appealing is not, by any stretch, rocket science. Instead, developers need to commit to constructing new buildings that boast the latest modern furnishing and are finished to the highest possible standards.
Generally, many new developments are not finished to a high enough quality. FJP Investment found that three-fifths (60%) of people worry new-build houses and flats are often finished to a poor standard. What’s more, we are seeing in the press numerous examples of poorly constructed new builds. At the end of September, a group of residents from Barry claimed they felt “unsafe” in their homes, with one woman reporting drainage problems and radiators falling off. With many of these homes being at the top end of the market, this kind of builder oversight is not acceptable.
Guidelines for new builds
Naturally, the government understands these problems – at the 2019 Conservative Party Conference, housing secretary Robert Jenrick announced impressive new guidelines in England for new developments. Therein he suggested many reforms to the aesthetic, emphasis that should be placed on new builds, with a general refocus on including more natural beauty and increasing liveability. Crucially, though, these guidelines lack regulatory bite. There is no Ofcom or Ofgem of the housing sector, and neither should there be – the freedom of our sector is one of its many strengths.
Without tight government oversight and with building targets still much higher than supply, these kinds of reforms could risk augmenting the public concerns. This would be a terrible own-goal for both developers and the government, and so those in the sector must remember the urgency of building beautiful, liveable, well-finished and well-connected homes.
So long as new builds are broadly considered unattractive and inconveniently located, their efficaciousness in the battle against the housing crisis will be reduced. That is why it is crucial the government’s plans for infrastructure funding and quality guidelines is not simply a case of political posturing, and actually translates into legislation. The UK needs new-build properties to address the housing crisis, so let’s make sure they are built to a standard that makes them desirable to prospective buyers.