Opinion: Housing delivery and decent homes – we need a frank debate

I have routinely reported back on the crucial issue of the state of the housing market. 

This is critically important to Northern Devon, a viable, successful and growing market is a significant wealth creator and generates numerous jobs and stimulates/ supports many of our local businesses. 

My normal focus is on house price trends. It is however equally important to look at how successful the market is in providing adequate new residences. This will undoubtedly be one of the most significant debating points for the forthcoming General Election (my best estimate still remains October 2024). 

A huge amount of media attention has focused in on housing delivery.  The government set a target that was needed to keep pace with demand.

This is partly because we have a growing population. Partly to allow families to develop their own households and partly because there is a huge undersupply of houses to rent and for affordable housing accommodation. 

Currently, the situation is one of significant market failure. The government’s target for new homes each year was set back in 2004, requiring the delivery of 300,000 new homes (each year). Both the Labour and Conservative administrations supported this target.

The reality, however, is that this figure has never been met. Supply increased from around 185,000 in 2004 to a peak of 249,000 in 2019.

The predictions regarding population growth however show the stark reality of this failure to deliver. Because we have never built enough each year and because of the new predictions regarding housing demand, it is now estimated that the annual target needs to be increased to 385,000 new homes per year. 

It is a sad reality that during the 14 years of Conservative rule, the situation has continued to deteriorate. The latest predictions are that annual delivery for each of the next three years will not exceed 180,000.

Many within the industry regard even this assessment as heroically optimistic. Some of the most dire predictions indicate that the real number could be less than 150,000 per year.

This market failure is a serious indictment of bad policies and a heavily bureaucratic processes. There are always claims that any freeing up of controls will result in a ‘builder’s charter’ to build over green fields. The simple truth, however, is that this is a gross misrepresentation of the real constraints. 

The finger of blame can be pointed in a number of directions. Sadly, one of the main culprits is the planning system. Local Authorities who deliver planning services have had to cope with a 44 per cent cut in their planning department budgets since 2010. 

This has effectively paralysed the market. There is a huge log jam. It is not unusual for planning applications to take between 2-5 years to resolve. 

We need also to be realistic about the suppliers of new homes. Currently, the UK is reliant upon around 11 major house builders. These include well known names, such as, Barratt, Persimmon and Taylor Wimpey. Collectively, these build around 25 per cent of all our new housing stock.

The government’s Levelling-Up department have been probing to see if house builders are guilty of land banking. The results of this have proved to be largely negative. 

Most of the sites owned by house builders that have not commenced, are stalled either because of planning delays or because of increasing difficulties of securing adequate utility connections. 

In Somerset, for example, the new housing market has virtually ground to a halt because of regulations regarding Phosphate pollution in watercourses (phosphate emissions from new houses is around 20 per cent of the problem. Farming and industrial practices are around 80 per cent of the problem, but the restrictions only fall on new house builders).

Another major delaying factor which is increasingly being experienced, is an adequate electricity supply. This problem is going to get much worse because of the drive towards all electric heating systems (ground and air sourced) and the need to provide for electric vehicle charging points for each dwelling.

Additional problems are in trying to stimulate smaller regional companies to provide new stock. Before 2008, smaller developers built around 40 per cent of new homes, this has now fallen to around 15 per cent.

Another huge problem is that the UK lacks skilled construction trades workers. The current deficit is estimated at around 937,000 with no prospect that this will improve within the next 10 years. Cutting off the skills lifeline of skilled European construction workers has also been a major disruption to the market.

These are huge problems but they equally bear down on the Northern Devon economy. We have more than our share of poorly insulated properties. 

We also desperately need new homes for first time buyers, those trying to get off the rental ladder and to support the growth of expanding businesses with the provision of key worker accommodation. 

I could have written a lot more on this subject and will return to it. There are no easy answers here, but a frank debate is essential.