黑洞社区

The housebuilder:

Greg Hill, strategy director, Hill GROUP

鈥楾he skills crisis is one of the biggest issues facing the delivery of new homes鈥�

One million homes in five years is an ambitious target - England hasn鈥檛 regularly built that many homes so quickly since the immediate post-war years.

England completed just over 120,000 homes in 2014/15, and while the number of planning approvals is up, the industry doesn鈥檛 yet have the capacity to deliver them. The skills crisis is one of the biggest issues facing the delivery of new homes, and with an ageing workforce this looks likely to continue. We are seeing a shortage of professionals such as site managers, surveyors and architects, as well as site-level staff, and although the government has made a strong push for more apprenticeships, it will take years for those workers to be trained up.

The government would also need to pull a number of policy levers to increase housebuilding, including further reform to the planning system so we can get quick decisions on planning applications. Although the announcement of Brownfield Housing Zones in July is a step in the right direction, more could be done to speed up the process. The public sector also needs to release more land for housebuilding.

I fear the one million figure is unrealistic. To get more homes built, the government and housebuilders need to work better together.

The consultant:

Richard Jones, partner, Arcadis

鈥業 don鈥檛 believe the current model will get anywhere near this ambition鈥�

Brandon Lewis鈥� recent statement compares to the target being proposed by Labour, in the run-up to the last election, of 200,000 units a year. However, the figure proposed by Labour was a gradual increase from the current level of circa 130,000 to 200,000 by 2020: Lewis鈥� figure is an average for the five years and therefore is a lot more aggressive.

To achieve this will require a step change in the sector. I do not believe the current model, reliant to a large extent on the housebuilders鈥� traditional trader model, will get anywhere near this ambition. Indeed the housebuilders themselves have made it very clear that they have no real appetite to increase capacity to the extent that would be required.

There are, however, two areas that could help to find the solution. The first is private rented housing. There is now no doubt that the influence of this particular tenure group within the sector is beginning to grow, with new money being made available from the financial institutions such as L&G. I believe as the first truly private rented sector models mature and the institutions can really 鈥渢ouch and feel鈥� how this investment model performs, there will be more money made available for this product which in turn will drive an increase in numbers. The question is, how many? Has the private rented sector the potential to deliver 50,000 new units a year? I think it still requires some proactive support from government policy on things such as planning.

The second area that I think has potential is housing associations. They have been under sustained attack from this government with a variety of policies that are affecting their traditional business models: right to buy, rent reduction, first-time buyer initiative, and so on.

All of this could lead to a fundamental rethink from these organisations in the way they operate. It is likely to drive quite an aggressive merger and consolidation agenda as they strive to become bigger and more efficient. This revised financial muscle will mean they are able to establish more ambitious development programmes. This in turn will create a new breed of bigger and more powerful residential development companies which will not be constrained by the trader model of the volume housebuilders, but instead will use an asset ownership model that will leverage growth in a much more aggressive way.

There are of course barriers, one of the biggest still being the constrained traditional supply chain. However, the housing associations have already shown their desire to invest in industrialised building methodologies which their potential growth could help to accelerate.

The economist:

Ed Stansfield, chief property economist, Capital Economics

鈥業t鈥檚 not nonsense. There is now a really strong tail wind behind the sector鈥�

Brandon Lewis鈥� comments shouldn鈥檛 be regarded as anything particularly new, and as they are implying a construction rate of 200,000 homes a year, deserve a little less scepticism than they have so far received. It鈥檚 at the lower end of some of the targets we鈥檙e seeing bandied around, such as 250,000 homes per year, and in that sense is a bit more realistic. It鈥檚 not too far above the 170,000 being built at the top of the market in 2007.

Of course there are short-term problems in terms of labour and access to materials, but these should be largely dealt with in the next nine months or so as people see the demand for work and head into the sector. Since the recession there has been a significant disappearance of smaller housebuilders, which is a big problem, and there will be a natural caution in the big housebuilders from expanding too fast given what happened to them in recession.

However, we shouldn鈥檛 be overly pessimistic about our ability to hit this target. It鈥檚 not nonsense. There is currently huge political will behind increasing housebuilding and direct support via Help to Buy, as well as a continuing focus on planning reform, none of which existed in the previous boom. There is now a really strong tail wind behind the sector. If housebuilders see there is a market there, they will respond by building more, or others will step in - particularly when they see more certainty in the planning system.

In addition we now have growth in institutionally funded private rented housing, so it鈥檚 possible the financial institutions can potentially provide a large shift in demand for new homes.

The market got very close to delivering this on its own in 2008, but there鈥檚 a lot more in its favour this time. I don鈥檛 think it鈥檚 inconceivable.