The number of new homes in England is expected to slump to its lowest level since the second world war due to a ‘perfect storm’ of government policies and mortgage rates, warns the housebuilding industry
A new report, ‘Making a bad situation worse: The impact on housing supply of proposed changes to the NPPF, ‘ predicts that changes to England’s planning framework, combined with the impact of government environmental rules, could plummet the supply of new Homes in England to 33,000 new properties in 2021-22 to just 111,000 later this decade.
If predictions prove correct, this would mean that the number of new homes in England would drop to its lowest level in over 80 years.
The proposed changes to the framework could reduce housing supply by 77,000 homes a year
The report also concluded that governmental rules to guard against the pollution of rivers and waterways could further cut the housing supply by 15,000 – 41,000 homes a year.
The report suggests that the issue has been created by a regulatory framework that has allowed the water industry to underinvest in wastewater treatment networks and inadequate incentives for farmers to change practices.
SME housebuilders will be affected by these regulations the most
Whilst the rules affect the whole housebuilding sector, SME housebuilders are severely impacted as they are less likely to have the resources to manage the delays created in their businesses, especially regarding cash flow.
‘Now is the time to deliver meaningful, positive reforms which will embed growth into our economy’
LPDF chairman, Paul Brocklehurst commented: “There is an acute housing crisis that weakens the economy and impacts on the life chances of young people and families. Yet the proposed changes to planning policy will alone result in around 77,000 fewer new homes per year being built in England, dropping to just half the Government’s 300,000 target, making a bad situation worse.
“Every report written on the housing market, such as those recently by the Centre for Cities, Centre for Policy Studies or Policy Exchange, highlights the desperate need to build more homes not less.
“Not only will the proposed NPPF changes impact on the economy, housing delivery and affordable housing, shattering the dreams of many young people and families, they do nothing to correct the issues of undersupply in the delivery of land for employment uses, key if we are to compete on the global stage. Rather than concede ground to NIMBYS and so called local patriots perhaps now is the time to deliver meaningful, positive reforms which will embed growth into our economy.”
What will happen if there is a cut in the housing supply?
If recent trends continue, the cut in housing supply will lead to:
- £34 billion lost GVA in the economy due to the reduction in the size of the housebuilding industry
- 386,000 fewer jobs directly or indirectly supported by housebuilding
- £8,700 extra savings needed for a typical deposit by first-time buyers
- £18,400 added to the price buyers pay for the average home
- 17,500 shortfall in new affordable homes each year, adding to the large backlog
- 11,500 fall in already declining births due to further house price increases.
Government pledge to build new housing stock has failed to deliver
When the Conservative Party was elected in 2019, they pledged to build 300,000 homes annually by the middle of this decade. However, after 13 years of Conservative-led government, only 39% of local planning authorities have an up-to-date local plan.
The research by LPDF and the HBF has found 47 councils have postponed that local plan process amid recent policy uncertainty, with the council in Gove’s own Surrey Heath constituency being one of the latest to announce a delay. All are hoping that the proposed changes will allow them to plan for less rather than more homes.
‘Affirmative and immediate action is needed to amend planning policy’
Brocklehurst added: “The Government still has sufficient time through the consultation process to reconsider its position and move away from changes which in the context of its 300,000 aspiration are frankly irrational, as highlighted by the Lichfields research.
“At a time when the industry is contending with the impact of higher interest rates on demand, leading to slower sales rates per outlet, the industry is likely to need more planning consents not less to deliver the volumes required by policy makers.
“Government should therefore be taking positive, affirmative and immediate action to amend planning policy to ensure that we build the new homes and affordable homes that this country so desperately needs.”
