The way forward

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The UK’s recent track record on housing delivery reads much like a school report card - much room for improvement. Inside Housing, in partnership with Keepmoat, hosted a breakfast briefing discussion at the Homes 2016 conference in London to explore how best the sector can quickly ramp up delivery of homes across the country to meet the UK’s housing demand.

Confused marketplace

There is evidence that we are moving in the right direction as the number of new homes built per year is on the rise.

According to figures from the Department for Communities and Local Government (DCLG), 189,650 dwellings were completed in England in the financial year ending March 2016, up 11% on the year before.

This is still less than the government needs and decades of undersupply means that housing providers are having to play catch-up and deliver significantly more homes than they currently are.

“I joined this industry in 1979 and there’s been a housing crisis since then,” says Dave Sheridan, chief executive of Keepmoat, as he opens the session. “We’ve never built enough homes.”

The challenge for the sector, he concedes, is where all these homes will actually come from. Developers, councils and housing associations all face a range of challenges that will impact their ability to deliver homes, from capacity to planning restrictions and land availability.

A further complication, he says, is the lack of clarity from the government over the type of homes it wants the sector to deliver to the market.

“As a developer, trying to follow which way the government is going at the moment is really difficult with mixed messages. It’s a confused marketplace,” Mr Sheridan admits.

Peter Martin, group director - development at Sanctuary, says there are even disagreements over how many hours are needed to actually have an impact.

“The picture’s not clear at all - some people claim we should be building 250,000 houses [per annum], others say 400,000 houses - it’s a big gap,” he notes.

How the sector uses the existing market will be important to plugging that shortfall, says Mr Martin.

Population projection statistics from the ONS suggest that by 2024, there will be 25 million people in the UK aged 60-plus, so there’s a real need to deliver housing that works for an older population.

By moving older people out of accommodation that is unsuitable for them and into more tailored solutions which can facilitate proper care, it should start to free up more homes for larger families, according to Mr Martin.

“We have the ability to solve another impending crisis which is in the care and support of an older population by delivering products to the market which are actually suitable,” he adds.

The gap could also be closed if the sector gets to work on sites that have already received planning permission, or those owned by local authorities.

“There are 600,000 plots of approved land sitting with developers. There are 160,000 plots under public ownership. So if you take 60,000 [per year] as a missing number, that’s 12 years’ supply that’s got planning already,” he says.

Thurrock Council is one local authority which is working to unlock sites which have planning consent in its own region, however there have been challenges.

“We’ve got about 8,000 consented homes in Thurrock that are not coming forward,” says Steve Cox, corporate director of environment and place at Thurrock Council.

“Values have been low, but I think that’s beginning to change because of the pressures from employment growth and business growth, creating the demand for housing.”

Thurrock Council has ambitions to create 26,000 new jobs in Thurrock over the next 20 years. Mr Cox says, as part of that drive, the council wants to deliver high-quality housing which it believes will help attract people to live and work in Thurrock.

The council has set up its own housing company, Gloriana Thurrock, to deliver new homes in the region. So far it has delivered 128 homes, with a further 80 on the way.

The vehicle has also opened up new options for the local authority in terms of funding development programmes.

“The local authority can borrow at very cheap rates, lend across to the housing company, see a return straight away from a general fund from that lending arm, and then take a 5% or 6% profit from sales that Gloriana achieves at the end of its working cycle,” Mr Cox explains.

He hopes Gloriana will become a catalyst for further growth in Thurrock, delivering homes in locations that “the market won’t go near”.

“The relationship with the council is important for the company, so we use the expertise within the council’s housing partner to help move forward some of those sites,” he adds.

Considering tenure

Another local authority which has opted to set up its own housing company is Sheffield City Council. Sheffield Housing Company (SHC) is a developer operating in the North East of England, formed through a joint venture between Sheffield City Council, Keepmoat and Great Places Housing Group.

The region faces similar issues to Thurrock in that land values in the region are low, which is stifling levels of development.

SHC has so far built 320 homes and is taking steps to develop in areas that other developers are currently avoiding.

“The areas [we target] are challenging in terms of viability; ordinarily these sites don’t stack up financially,” says John Clephan, director at Sheffield Housing Company.

“But there are some early signs that the company is starting to change the housing market in those areas because of the work and the models of how it goes about doing that.”

Mr Clephan says that consideration of tenure has an important role to play in the delivery of new homes in the region. SHC has 2,000 homes in its pipeline, of a varied tenure mix.

“The majority of those homes will be open market sale, but there will be some affordable rented homes,” he says.

“We’ve just started a shared ownership product, also we’re dipping our toe in the water of private rented and we’ve got the flexibility to do that.”

Rosie Batty from the Cabinet Office asks the panel for their thoughts on why France, with similar levels of population to the UK, is capable of building almost double the homes the UK does on an annual basis.

“I suspect that tenure is a big factor there, meaning the investment model is therefore different,” Mr Clephan responds.

Mr Martin agrees: “They don’t have the same obsession with homeownership. The desire to keep house values high in the UK means people are scared of increasing supply; they’re scared of the impact on the market.”