Planning reform on its own will not deliver the increase in housebuilding the government is seeking unless ministers also address the growing viability challenges facing developers, according to property consultancy Colliers.
In response to the appointment of Andy Burnham as prime minister and Angela Rayner as housing secretary, Andrew White, head of UK residential at Colliers, said there was likely to be renewed momentum behind planning reform and higher levels of housing, but warned that the economics of residential development had changed significantly.
“The challenge is no longer simply identifying enough land for development or setting higher housing targets,” White said. “Instead, it is about restoring the economic conditions that allow homes to be built in sufficient numbers.”
According to White, slower sales rates for new-build homes reflected commercial realities facing developers rather than any reluctance to build.
“Housebuilders have always aligned construction with demand, and when sales slow, build-out rates inevitably follow; this is not a reflection of a lack of willingness to build, but of the commercial reality that developers cannot continue to produce homes at a pace that the market is unable to absorb,” he said.
White also highlighted rising build costs, more expensive development finance, lengthy planning delays and increasing regulatory requirements as factors putting pressure on the viability of new housing schemes.
He said obligations such as affordable housing requirements, Section 106 agreements, the Community Infrastructure Levy, Biodiversity Net Gain and building safety legislation all served legitimate policy objectives but had collectively added significant cost and complexity to residential development.
White stressed that the solution was not to abandon environmental or quality standards but for ministers to recognise the cumulative impact of policy on development viability.
He urged ministers to look beyond planning reform if they are serious about increasing housing supply.
“Planning reform remains essential and better-resourced local planning authorities would undoubtedly improve confidence across the market,” White said.
“But planning reform alone is unlikely to unlock the level of housing delivery that the government is seeking. Increasing affordability, providing greater policy certainty, supporting infrastructure investment and maintaining a clear understanding of development viability will all be equally important if ministers are to achieve a sustained increase in housing supply.
“If the new government can restore confidence that development remains commercially viable while creating a planning system that is faster, more consistent and better resourced, there is every reason to believe that delivery will increase,” he said.
“If it cannot, ambitious housing targets may once again prove easier to announce than to achieve.”
Comments (1)
The housing shortage has been put down to lack of land. Freeing up land for building does not automatically mean that it will get built on. In fact about 50% of land with planning permission actually never gets built on. This includes sites never built on at all or not built out to completion.
Most building is by property developers they essentially build to demand. No demand, no build. They don’t want money tied up in empty houses, they would rather have it liquid in the bank. Building costs and other regulations means that the so-called affordable homes they can build are unaffordable for the vast majority of people. They are commercial companies they cannot sell houses at a loss. There are still “top notch” customers around so most builds are 4-5 bed detached properties for these buyers. They just can’t build at lower enough cost to accommodate average people. If the Government want them to build this type of property they will have to subsidise the developers.