Tag Archives | Housebuilding industry

Help to Buy?

/ March 20, 2013 / Economics, Housing, Politics / Permalink

House front in scaffoldsThe objections to George Osborne’s latest wheeze to assist the housing market are hardly worth discussing. They are almost too obvious. And they have been rehearsed at length in relation to similar, smaller scale initiatives that have already been tried.

The new “Help to Buy” scheme, announced in today’s Budget, aims to provide equity loans of up to 20% of the value of new properties worth less than £600,000. Households have to come up with a 5% deposit to participate. The Chancellor is proposing that the scheme be backed up with government guarantees sufficient to support £130 billion of mortgages. The guarantee scheme will start in 2014 for a period of three years.

Just about the only perspective from which this initiative makes sense is carrying through on an absolute determination not to add directly to the public sector deficit, but not minding too much if the guarantees get lost amongst everything else in the public debt.

So it probably makes perfect sense to the Treasury.

Otherwise, the scheme has almost nothing to commend it. The economic illiteracy it displays is remarkable. The fact that, coming from the current occupant of No 11, this is no great surprise is perhaps equally remarkable. Continue Reading →

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In a pickle over planning

/ December 28, 2012 / Housing / Permalink

ProgettazioneOne of the Coalition government’s first acts was to signal the intention to get rid of Regional Spatial Strategies (RSSs). They were seen as the embodiment of Labour’s centralising, top-down approach. In their stead we were to enter a new era of localism. Or, possibly, Localism. Spatial planning would have a much stronger bottom-up component. Local people would have a greater say in shaping the way their area developed, including levels of new housing construction locally. The rhetoric may have been of the removal of the dead hand of the State and of local people warmly embracing housebuilding in their neighbourhood, enticed by financial initiatives such as the New Homes Bonus. The reality was never going to be quite like that. And the claims that power is being localised have become ever harder to sustain. Mr Pickles seems to be placing ever more weight on the role of the Planning Inspectorate in overruling and overriding local plans that he doesn’t consider to be acceptable.

It was pretty obvious to anyone who knew anything about planning that removing the RSSs was going to lead to a reduction in housebuilding targets. Local authorities didn’t like the strategies precisely because they imposed higher housebuilding targets than those preferred locally. So removing the RSSs was going to see targets adjusted downwards in many areas. It seemed equally obvious that the sorts of incentives on offer through the New Homes Bonus or other mechanisms – such as the Community Infrastructure Levy – were not going to be sufficiently powerful to counteract this.

Anecdotally we’ve been hearing that this is precisely what has been happening across the country. Today the Policy Exchange produced a brief note, based on research by Tetlow King, that provides some more systematic evidence. It reports that as at mid-2012 some 57% of responding local authorities had reduced their house building targets. And that since 2010 local authorities in England have reduced the number of new homes they were planning by 272,720. Continue Reading →

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Housing and the economy

/ September 12, 2012 / Housing / Permalink

[This text was prepared to accompany my presentation to the All Party Parliamentary Group on Housing, 10/09/12]

Many people appear to be coming round to the idea that investment in housing could be the way forward in attempting to revive the economy. There are good reasons for thinking that housing investment is a promising avenue to pursue. Even though the estimates differ somewhat in magnitude, the direct impacts of investment in terms of increasing employment and taxation and reduced unemployment benefits are now relatively clear. And import leakage is low. The multipliers and indirect impacts of housing investment compare very favourably with those for other types of investment.

Intersections

It is very welcome that greater policy attention has focused upon housing, but we should recognise that we face intersecting issues here. There is the urgent need to identify an effective macroeconomic lever. House building may well do the job.

But there are longstanding concerns about the housing supply system in the UK. Continue Reading →

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Tory Green Belt Housebuilding Conniptions

/ August 28, 2012 / Housing, Politics / Permalink

We’re all pretty much agreed that it would be good if housing supply were a bit perkier. That is, perhaps, an understatement. The housing world is broadly united in the view that residential construction is currently in a parlous state, the housing supply deficit is chronic, and it lies at the heart of many of the housing affordability problems that have afflicted the UK housing system for a long time.

Affordability is improving in many parts of the country and for certain types of household. But the continued shortage of mortgage finance means that many potential buyers are shut out of the market.

The housing wonks have been joined in their aspiration to see an increase in housing supply by those more preoccupied with the enfeebled state of the marcoeconomy. They are looking for capital investment projects that could get up and running quickly. Housing fits the bill perfectly.

All that’s left now is to determine is what to build, where to build it, and who’s going to pay for it. So we’re almost there. Continue Reading →

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Cramped, crammed and crap

/ May 19, 2012 / Housing / Permalink

We are heading towards a degree of consensus regarding at least one part of the mess that is the UK’s housing system. Pretty much everyone agrees that there needs to be a significant increase in the supply of new properties. Some have arrived at this view from the perspective of the potential positive impact it could have on macroeconomic performance and national infrastructure. Others would seek to highlight that some of the problematic characteristics of the housing market flow from poor housing supply response.

There isn’t quite so much agreement on the solution. The Government gives the appearance of believing that it’s doing enough to deal with the problem. Almost everyone else thinks that more could, and should, be done. Many believe that more far-reaching structural reform is necessary.

One of the Government’s key innovations has been the NewBuy scheme, which provides guarantees that allow purchasers to access 95% loans on new properties. The principle behind this scheme has been roundly criticised by many commentators and academics because it artificially supports prices when what is needed to restore affordability is more price deflation. But, leaving aside problems with the underlying principle, the scheme is now up and running so we might ask whether, in its own terms, it is working. Here again there is a divergence of opinion. Continue Reading →

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Laying the foundations?

/ November 22, 2011 / Housing, Politics / Permalink

Yesterday saw the publication of the Coalition’s housing strategy. It brought together policy touching upon housing from across a range of Whitehall Departments. The document represents a welcome recognition of the importance of housing to the broader economy and society. It covers quite a lot of ground, although not a lot of it represents news. There were, however, some high profile new proposals.

I have decide not to post an exceptionally long blog – even for me! – on the whole document. For a change I’ve written some of my initial thoughts up as a paper. I hope some of it is of interest. Continue Reading →

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Will it take more than fixing the planning system to improve housing supply?

/ November 18, 2011 / Housing, Politics / Permalink

[Originally posted on Liberal Democrat Voice, 18/11/11, under a slightly different title]

It is a truth universally acknowledged that Britain has a housing problem. There are problems of shortage and, consequently, access and affordability.

There are three principal mechanisms for dealing with significant housing shortage and indirectly reducing the affordability problems that go with it: (1) You can reduce the number of households needing to be housed; (2) You can increase the number of properties available; and (3) You can improve the utilization of the existing stock of properties.

You can try to do something on all three fronts. A couple of weeks ago LibDemVoice co-editor Mark Pack identified six options, covering all three of these mechanisms. The options differ in their desirability and political feasibility.

Government efforts to increase supply have so far focused on the planning reforms ushered in by the Localism Act, while the New Homes Bonus is intended to incentivise communities to welcome such development. Whether the planning reforms will deliver is still open to question. On the day the Localism Bill was signed into law the Federation of Master Builders warned that top-down targets may need to be re-introduced if sufficient supply is to be secured. They are, it appears, expecting localism to equal NIMBYism.

One issue that has received limited attention in the debate so far is the construction industry. Developers and the Government are happy to point the finger at planners being the major barrier to new build. But planning is at best facilitative. Designating land for residential development doesn’t, in itself, get properties built. Continue Reading →

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