You may like to read more on this topic at these two excellent blogs, which delve a little deeper into the statistics by region. Kirkwells and Building Mag both share my concern and both wish we will be proven wrong.  Unfortunately I think Kirkwell’s have a safe bet that we won’t be.

The mild spat between Jack Dromey and Grant Shapps over the latest DCLG housing figures is exasperating. Both gentlemen want more homes to be delivered but both seem stuck in a Westminster playground punch up about whose policies are bigger.

These are the actual numbers (non-seasonally adjusted to show better the annual figures) in graphic form and with tabular data below (from House Building: December Quarter 2011, England, DCLG):

The reality of the housing figures is this: we’re not completing enough homes in the right places and we haven’t been for several years. The position now is massively worse than it was before the banking crisis and it is difficult to see how the private sector will build us enough new homes when they can only sell the relatively few they are currently building. Nonetheless the DCLG spokesman seems happy to say that housebuilding is 24% higher than in 2009. It’s true that starts are now 24% higher than the in the trough of 2009 but that only takes us to 60% of the starts in 2008, so not really good enough. Also the number of starts does not equate to the number of homes delivered – the appropriate series to look at is completions. For some reason the journalists at the FT haven’t pointed this out.

The long and short is that completions (and starts) are bumping along at about 110,000 and we need to build twice that amount. Please Mr Dromey and Mr Shapps will you address this rather than posture about the relative size of your policies.

I don’t think it’s just my mathematics, but I’m really struggling with the Coalition’s claims on their progress to “get Britain building”.  According to this press release, “…the Government’s action to get Britain building again will play a vital and central role in getting the country’s economy on the road to recovery”. Fair play you would have thought if only the numbers bandied around supported the proposition. These are the bullet points in which DCLG want us to take an interest:

• That he [Grant Shapps] has already identified enough Government land to build 80,000 homes, and is now working with organisations including the BBC and Royal Mail to find even more unused sites for housebuilding - meaning Ministers are on course to release enough land for 100,000 homes by 2015
• Details of the NewBuy Guarantee scheme to help those aspiring to buy newly-built properties to do so with just a fraction of the deposit that’s normally required; and
• That he is devolving power from Whitehall to Town Halls, ending a long-standing “tax on tenants” in a £19 billion deal enabling councils to keep the rents they collect and invest the money in their homes.

Enough land for 100,000 new homes.

When you look at the land release strategy for say the MoD, you discover that the majority of the land is targeted for release in 2015 and is expected to provide urban extensions of several thousand homes at a time. In the real world then most of the land that is being released will not result in new homes until 2015 at the earliest and taking a realistic view on phasing, it is likely that these 100,000 new homes will be delivered over the period 2015-2025 at best. In other words we can expect that the land release proposed might deliver on average 7,000 new homes per year over the next fifteen years. Just to remind you, in December 2010 DCLG estimated we need to build around 232,000 new homes per year to deal with the increase in population, (the vast majority of which (72%) is due to simple population growth and not inward migration by the way). Should we really congratulate Mr Shapps and his team at DCLG for identifying enough land for just 3% of the new housing we need? Where does he propose the remaining 97% will be built?

NewBuy Guarantee.

The details released are:

• New build homes valued up to £500,000 will be eligible
• You will have to be a UK citizen to be eligible
• The scheme will aim to help up to 100,000 borrowers to access 95% LTV mortgages

Firstly these are not details, they are the headline facts about the scheme. Details might include the cost to the applicant in terms of interest rate and fees etc or the total value the government intends to guarantee (I hope it’s not 100,000 x 95% of £500,000 = £47.5billion).

Secondly, my memory is not fantastic but I thought the banking collapse was due to banks lending too much money with too little prudence to people, who had too little equity. Am I foolish to think this scheme represents a Government subsidy to the banking system to encourage imprudent lending to people, who wish to live beyond their means?

You can’t help thinking that the housebuilder lobby have done some hard work on this one! The FT has some interesting commentary as does the Guardian.

Housing Finance Reform

Some good news, I guess, in that councils will once again have control of their housing stock, the revenue generated from it and the costs associated with repairing it. Mrs Thatcher wouldn’t have liked it but there we are. What I fail to see is how this will get more homes built so as to get “…the country’s economy on the road to recovery”. Answers on a postcard?

Mr Shapps also mentioned £420 million ‘Get Britain Building’ investment fund, which might help deliver 16,000 new homes, or about 6% of one year’s new homes requirement and the £500 million Growing Places Fund, money LEPs will hopefully spend on infrastructure projects which might impact on housing schemes perhaps. Presumably these were not headline bullet points in the press release because they are relatively minor. Finally he also announced the New Homes Bonus allocations, which will see £432million paid out to councils apparently reflecting 159,000 net additions to the council tax register. Little of this money will be used to provide further housing, nor was it ever intended to, so again I’m not sure how this policy will deliver more homes. A small aside on the maths, DCLG latest housing supply figures show that only 121,000 new homes (including reused empty homes) were delivered between April 2010 and March 2011, so it’s unclear what 24% of NHB will be paid out for. Perhaps someone can be bothered enough to put in a FoI request.

I suppose in time we will see what effect these much vaunted strategies will actually have. Of course housebuilders will eventually increase housing delivery as the economy improves but all forecasts suggest that won’t happen for several years and meanwhile government policy seems toothless. I might be surprised but sadly I’m reasonably confident I won’t be.

Meanwhile, my own housing strategy is on the verge of delivering four stunning new homes in Faversham. Do please take a look!

2012, a New Year and perhaps a brighter one? As I’m sure you’ve guessed from my lack of posts, in the last quarter of 2011 I found it increasingly difficult to find anything bright to write about current housing design and planning matters. Housing starts and completions in England were drifting downward through each of the first three quarters of 2011 and it seems unlikely that the fourth quarter will be different. I’m afraid I don’t see 2012 being any different, not even with the stingy incentives the government can afford, because demand is so weak. That won’t change for a while, given the weak outlook for the economy resulting in a lack of confidence coupled with the lack of cheap mortgage finance. I fear that the government’s tinkering with the planning system is just that and will do little other than make negotiating the planning system an even more obscure and risky pastime.

However there is still a housing market out there, and personally there is a bright spark on the horizon. My first development, The Chapel at Abbey Place Faversham is reaching completion, so I have personally contributed to CLGs housing starts statistics for the third quarter of 2011. I am very much looking forward to seeing those figures translated into housing completion statistics in the first quarter of the current year, not to mention sales statistics in my Profit and Loss!

Please do have a look and if you sign up on our website, I promise to invite you to our launch weekend, which we hope will be towards the end of February.

All the best for 2012 and if you are looking for a stunning one or two bed flat, located in a beautiful and historic Kentish market town a mere 60 minutes from London, you know where to look!

My apologies for the gap since my last post; this was partly due to a family bereavement but mostly due to boredom with the debate (see here or here for example) over NPPF. Clearly the “general presumption in favour of sustainable development” represents a return to pre-1984 and is at least a shift in emphasis if not a radical change in direction. The rest of the document appears to be little more than a précis of the current PPSs and PPGs, so much so that the PINS has suggested there are only eighteen policy changes besides the “presumption”, few if any of which will have a major impact on the ability of the planning system to enable the sustainable development we need.

The aim of NPPF is to simplify the planning system and clearly fewer words in policy might help a little. However it is clearly a mistake for Messrs Osborne and Pickles to conflate policy and guidance, as they do in the second paragraph of their recent joint letter. Whilst the NPPF might reduce central policy to 50 pages, all of the helpful guidance produced in the last fourteen years, such as By Design, Manual for Streets, Building for Life, Code for Sustainable Homes etc, will remain vital tools to assess whether proposals meet the broad policy objectives. For example, NPPF reaffirms that “Good design is indivisible from good planning” and the chapter on ‘Design’ repeats much of the similar chapter in PPS1. I don’t suppose that the guidance on what was “good design” last year is no longer intended to apply this year.

So overall I can see little either to cheer or despair about in the draft NPPF. Instead, as with the Localism Bill, it is difficult to see how the NPPF will significantly change the planning system. Firstly, in itself, a presumption in favour of sustainable development changes only the burden of evidence (the council have to demonstrate harm to refuse a proposal, rather than the applicant demonstrating compliance with policy to entitle him to approval). In reality developers will still have to convince an Inspector at appeal that their proposal is “sustainable” and I am sure they and their expert witnesses will continue to use the existing reams of guidance to organise their evidence. It is not quite fair for CPRE/National Trust et al to suggest the NPPF alone will result in concreting over swathes of the countryside, which current policy protects: it won’t and anyway current policy doesn’t offer any significant additional protection over NPPF.

What they should be much more concerned about is DCLGs recently published statistic confirming that more than 70% of the Local Authorities do not yet have a Core Strategy in place. Paragraph 26 of the Draft NPPF requires Local Authorities to maintain an “… Up-to-date Local Plan… which is consistent with this Framework“. It goes on to state, “In the absence of an up-to-date and consistent plan, planning applications should be determined in accord with this Framework“. So, when the NPPF is adopted, in 70% of the country one might argue that much of the extant ‘saved’ Local Plan can be ignored! Whilst I don’t suppose Local Authorities will simply roll over and accept that their Local Plan is irrelevant, I am sure there will be much fruitful debate at appeal as to how relevant a Local Plan might be when it fails to include a presumption in favour of development, as none of them do currently (incidentally, I see that Adrian Penfold of British Land agrees with me on this). Once NPPF is adopted and until Local Authorities address the current lack of up-to-date Local Plans, it will be much easier to obtain planning permissions for questionable proposals in the wrong places.  Whilst this might result in the potential for more homes (albeit in the wrong places and of questionable ‘sustaianability’), on balance, this is probably not a good thing.

Secondly, I don’t understand how Messrs Osborne and Pickles think that their tinkering with the planning system will result in more new homes actually getting built.  At the moment, the only significant providers of new housing are housebuilders.  For the last two decades, they have been responsible for well over 80% of annual completions, whilst in those two decades, state intervention, channelled through Housing Associations and HCA/ Housing Corporation, has never produced more than 30,000 new homes, about 13% of the number of new homes we need (see DCLG Housing Stats).  This is not likely to change given that HCA’s budget has been halved.  As anyone in housebuilding can tell them, housebuilders match their start rate to their sales rate.  Sure you need planning permission before you can start and that’s why housebuilders maintain a pipeline in the form of a land bank of between two and four years anticipated supply.  But the principle rule remains “Don’t build it until you can sell it”.  Messrs O and P hold up the paltry housing completions figure for 2010 as proof that Labour’s top-down targets didn’t work, when in reality it simply reflects that housing transactions stood at about half their pre-crash rate (see figure 2 on page 5).  The press is awash with stories about how difficult it is to secure a mortgage and the National Housing Federation sponsored Oxford Economics report demonstrates how home ownership rates are falling as it becomes increasingly unaffordable to first-time buyers.  Grant Shapps response to this latter report is surprisingly thin and doesn’t mention the proposed changes to planning as one of the measures aimed at increasing access to the housing market (possibly because it isn’t!).  Even if the proposed policy tinkering might make the planning system easier and faster, it would not result in more homes being built, since the number built reflects the number sold. 

Given that housebuilding is almost entirely dependent on the market, the only way to increase housing starts will be to increase demand.  For that to happen, either lending to individuals will need to become easier or we must embrace tenures other than home ownership.  At the moment our banks are struggling to rebuild and bolster their balance sheets and are avoiding additional lending, particularly risky lending on property with high loan to value rates (not surprising bearing in mind that’s what got them and us into this mess).  On the other hand, the dream of a “Home-Owning Democracy” has become so ingrained in our national psyche, that it seems improbable that any of the main political parties will drop policies, which promote it.  However, there are some signs that corporate money is beginning to find its way into residential rental property, particularly in London, and as the NHF/Oxford Economics report suggests, perhaps rental property is where real demand currently lies.  Would it be foolish to suggest that rather than tinker with planning, some fiscal stimulus of the residential rental market might be a much better way to get more housing delivered in the medium term?