The National Housing Federation’s 2017 National Development Conference addressed the shortage of housing provision, and what can be done to increase supply. LABM’s Sophie Taylor discusses the options presented by some of the key figures within the sector.
Housing is currently the most important political issue outside of Brexit. The Government’s February White Paper, entitled Fixing the Broken Housing Market, makes clear the urgency with which this problem needs to be addressed.
Sajid Javid, Secretary of State for Communities and Local Government, recently said that 300,000 homes need to be built every year to tackle this issue. However, as Chief Executive of the National Housing Federation David Orr said: “This cannot happen without a significant and growing contribution from the housing association sector. As our sector grows, changes and develops, we are in a position now where we have, for the first time ever, large-scale housebuilders whose fundamental business model is a mixed-tenure one.”
How did we get here?
Since 1992, annual household growth has outstripped the supply of net housing additions. For this reason, median house prices have been growing whilst median earnings have more or less stagnated, leading to the current affordability crisis — today, for the average person a house will cost eight times as much as their annual earnings.
As Isobel Stephen, Director of Housing Supply for the Department for Communities and Local Government, stated: “The housing market is broken, and it’s broken because housing is not affordable enough, and that is why more homes need to be built.”
Although owner occupation increased over the last century, it has flattened in the last few years. Today, around 63% of people own their own homes, half of whom don’t have a mortgage. Looking at the demographics, it is younger people who are most struggling to get into the housing market, as the cost of stepping onto the first rung of the property ladder is much higher than it was for older generations.
Moving on from the White Paper
The White Paper outlined four main commitments:
- Providing more land and making planning processes more straightforward.
- Increasing the transparency of the build-out process and housing delivery.
- Diversifying the market: helping small and medium builders access loan finance.
- Increasing support for new homebuyers and renters.
Since February: land for 13,000 homes has been released, £9bn has been pledged to the Affordable Homes Programme, the Housing Infrastructure Fund has been launched, and a further £10bn has been invested in Help to Buy.
Following the disaster at Grenfell Tower, the Government has been re-evaluating its relationship with social housing and how it influences the decisions that are made. Many questions have arisen regarding building safety, the design of buildings, and how they are maintained and managed. As a result of the renewed interest in social housing, the Government has pledged to release a social housing Green Paper at the beginning of next year.
Isobel Stephen added that the Government needs housebuilders to play their part in fixing the housing market: “We need you to deliver increased capacity and diversity within the sector – that’s about diversity of tenure, of developers, and of construction. But also, ultimately increasing the number of homes built”.
Does UK construction have the capacity to deliver the sector’s ambitions?
A discussion held between Peter Andrew, Deputy Chairman of the Home Builders Federation; Bunmi Atta, Development Director at Optivo; Ben Derbyshire, Chair of HTA Design LLP and President of RIBA; Mark Farmer, Founding Director and CEO of Cast Consultancy; and Nick Walkley, CEO of the Homes and Communities Agency, debated whether these housebuilding targets can be reached.
Peter Andrew revealed that although output has increased in the last year — around 210,000 net additions are expected in 2017 compared to 190,000 in 2016 — it is still not enough to cater for the needs of the country. Planning consents have also increased, but they are occurring on a smaller number of (larger) sites, which is a problem for smaller builders.
Mark Farmer and Ben Derbyshire agreed with Peter that attention must be given to skills development, and Mark noted that the sector needs to understand “how to do more with less workers, whilst improving the quality of buildings”. This must take into consideration new technology by translating digital enablement into physical delivery.
Bunmi Atta was positive about the future of the sector: “We are looking to double output, and in some cases triple output. We’ve got to approach this by looking at ways in which we ensure that we achieve efficiencies and achieve capacity.
“At Optivo, we are a merged company and we are, at the moment, planning to generate a capacity of £3.5bn over the next 10 years to generate 15,000 homes. We could not have that ambition without merging.
“A lot of the clients are becoming developers and vice versa. We use that opportunity to generate more homes — not just your traditional products of affordable housing, we are also generating an increase in mixed-tenure, and we are looking at cross subsidising with open market sale.”
However, there was a stark warning about prioritising scale over quality. Since the Grenfell fire, some warned about a potential ‘race to the bottom’. Nick Walkley shared the concern about quality, whilst adding: “it’s not just about quality, it’s about place.
“We all have a responsibility to ask some questions about what’s being delivered that’s right for that location, because that will begin to ask questions right through the supply chain about quality.”
Inspired by innovation within the automobile industry, Nick pointed to the need for delivering high-quality products whilst allowing others to iterate the design, in order to further the development of machine-precision standardisation. “The HCA is really interested in either regionally, or in large groups, talking to housing associations about how we might co-invest in products, and what we might do together to drive the standard of that product up.”
The panel concluded that change needs to happen within the sector. A key theme throughout the conference was an interest, on all sides, to increase the number of long-term partnerships between councils and housing associations. The speakers argued that there needs to be a move away from doing things as they’ve always been done — a mechanism that has not served particularly well — to a transformational mechanism that is still very focussed on delivering the homes needed.