The UK's Housing Crisis: Bold Promises, But Who’s Going to Build?

 The UK's Housing Crisis: Bold Promises, But Who’s Going to Build?

The government has vowed to build 1.5 million homes in the next five years, a pledge they say will solve Britain’s chronic housing shortage. But behind the shiny announcement lies a brutal truth: our construction industry is woefully unprepared, and this bold promise risks becoming another hollow headline.

With over 150,000 children in temporary accommodation and rough sleeping up 27%, the stakes couldn’t be higher. Yet, as things stand, the UK doesn’t have the workers, the materials, or the systems in place to deliver. This isn’t just a crisis—it’s a ticking time bomb.

 

A Workforce on the Brink

Britain’s construction sites are eerily quiet—not because the work isn’t there, but because there aren’t enough skilled workers to do it. The sector is in freefall, with an estimated 250,000 new workers needed by 2028 just to meet demand.

• Bricklayers are vanishing: 37% of construction firms say they can’t find enough.
• Carpenters, plumbers, electricians: The shortages are widespread, with tradespeople retiring faster than new ones are being trained.

Without 50,000 more bricklayers, 40,000 carpenters, 30,000 plumbers, and 20,000 electricians, the industry simply cannot meet the government’s targets. And it’s not just about numbers—it takes years to train a skilled tradesperson. Where’s the investment in apprenticeships and vocational training to fill this gaping hole?

 

Where Are the Materials?

Even if the workers were in place, there’s another massive roadblock: materials. Building 1.5 million homes isn’t just about bricks and mortar— The UK's Housing Crisis: Bold Promises, But Who’s Going to Build?

The government has vowed to build 1.5 million homes in the next five years, a pledge they say will solve Britain’s chronic housing shortage. But behind the shiny announcement lies a brutal truth: our construction industry is woefully unprepared, and this bold promise risks becoming another hollow headline.

With over 150,000 children in temporary accommodation and rough sleeping up 27%, the stakes couldn’t be higher. Yet, as things stand, the UK doesn’t have the workers, the materials, or the systems in place to deliver. This isn’t just a crisis—it’s a ticking time bomb.

 

A Workforce on the Brink

Britain’s construction sites are eerily quiet—not because the work isn’t there, but because there aren’t enough skilled workers to do it. The sector is in freefall, with an estimated 250,000 new workers needed by 2028 just to meet demand.

• Bricklayers are vanishing: 37% of construction firms say they can’t find enough.
• Carpenters, plumbers, electricians: The shortages are widespread, with tradespeople retiring faster than new ones are being trained.

Without 50,000 more bricklayers, 40,000 carpenters, 30,000 plumbers, and 20,000 electricians, the industry simply cannot meet the government’s targets. And it’s not just about numbers—it takes years to train a skilled tradesperson. Where’s the investment in apprenticeships and vocational training to fill this gaping hole?

 

Where Are the Materials?

Even if the workers were in place, there’s another massive roadblock: materials. Building 1.5 million homes isn’t just about bricks and mortar—it’s about 6 billion bricks, 20 million tonnes of concrete, and 5 million tonnes of timber. Right now, the supply chain can barely keep up with current demand, let alone a massive surge in construction.

Material prices are sky-high, with no sign of stabilising. Builders are being forced to halt projects or scale back as costs spiral out of control. Smaller firms are folding under the pressure, and even larger developers are feeling the pinch.

Imports are another issue. Brexit, global supply chain disruptions, and raw material shortages mean delays of months for critical components. The industry is crying out for stability, but instead, it’s being stretched to breaking point.

 

Planning: The Ultimate Bottleneck

Think the labour and materials crises are bad? Let’s talk about planning permission—the slow, bureaucratic process that’s strangling the housing market.

Developers face years of delays navigating red tape. From nutrient neutrality rules to biodiversity targets, the system is riddled with barriers. Planning inspectors often lack independence, meaning political and local pressures create unnecessary gridlock.

The government says it wants to streamline planning, but so far, there’s little sign of action. Without faster approvals, even the most ambitious building targets are dead in the water.

 

Social Housing: A National Shame

While the government promises new homes, let’s not forget those at the sharpest end of the housing crisis. Over 1.2 million households are on social housing waiting lists, and yet, last year, just 32,834 affordable homes were completed.

The country needs 145,000 affordable homes every year, including 90,000 for social rent. This isn’t just about numbers—it’s about families living in temporary accommodation, children growing up without stability, and people being priced out of their own communities.

Since 1980, the UK has lost 1.4 million social homes. If the government is serious about tackling this crisis, they need to stop the bleeding and start building. Affordable housing must be at the heart of any solution, or these promises will do nothing for the people who need help the most.

 

A Call to Action: Ian Hodgkinson’s Urgent Warning

As someone who’s spent decades in the construction industry, I’ve seen firsthand how quickly ambition collapses without action. Right now, the government’s promises are teetering on the edge of disaster. If we don’t actimmediately, the housing crisis will spiral further out of control, leaving thousands more families in temporary accommodation and countless others priced out of a secure home.

Apprenticeships and Training: Who Will Build?

Where is the workforce to deliver this ambitious target? We don’t have it. The construction industry is running on fumes, with bricklayers, carpenters, plumbers, and electricians in critically short supply. Without a national campaign to bring young people into the trades, we’ll be staring at empty sites instead of new homes.

The government needs to invest now in apprenticeships and training programmes. No workforce, no homes. It’s that simple.

Supply Chain Stability: Where Are the Materials?

It’s not just workers we’re short of—the materials aren’t there either. Bricks, timber, and concrete are in short supply, with builders waiting months and prices spiralling out of control. Small firms are being crushed under the weight of rising costs, while even major developers are struggling to stay afloat.

The government must take control. Work with manufacturers and merchants to secure a steady supply of materials. Without this, projects will stall, costs will skyrocket, and the housing crisis will deepen.

Independent Planning Inspectors: Red Tape Strangling Progress

Planning bottlenecks are a national disgrace. Projects are being strangled by bureaucracy and red tape, with delays stretching into years. Every moment wasted in planning is a home delayed, a family left waiting, and a crisis that worsens by the day.

We need independent planning inspectors with real power to approve projects quickly and fairly. Cut the red tape. Clear the backlog. Every early decision means quicker action on-site, and every delay costs lives.

The Clock Is Ticking

The housing crisis isn’t just a policy failure—it’s a human tragedy. 150,000 children are trapped in temporary accommodation, their futures slipping through the cracks. The government’s housing targets are bold, but without immediate investment in skills, supply chains, and planning reform, those targets will fail.

The time for talk is over. The clock is ticking, and Britain’s housing crisis is only getting worse. If the government doesn’t act now, it will leave a legacy of failure that no amount of ambition can erase.

 

Can the Government Deliver?

Let’s crunch the numbers. To meet the target, we’d need to build 900 homes a day—an increase of 30% over current rates. But at the current pace, experts predict a shortfall of388,000 homes by 2029.

Even if these homes are built, affordability remains a major issue. Rising mortgage rates and the cost-of-living crisis mean fewer people can afford to buy or rent. Without targeted action, these houses risk becoming unaffordable ghost towns.

 

Conclusion: From Promise to Pipe Dream

The government’s pledge to build 1.5 million homes could transform lives—but only if it’s backed by real action. Right now, the construction industry is overburdened, underfunded, and crying out for help.

If ministers don’t address the workforce shortage, fix the supply chain, and overhaul planning, this bold promise will end in failure. The UK’s housing crisis needs solutions, not soundbites. Time to put the tools where the talk is. about 6 billion bricks, 20 million tonnes of concrete, and 5 million tonnes of timber. Right now, the supply chain can barely keep up with current demand, let alone a massive surge in construction.

Material prices are sky-high, with no sign of stabilising. Builders are being forced to halt projects or scale back as costs spiral out of control. Smaller firms are folding under the pressure, and even larger developers are feeling the pinch.

Imports are another issue. Brexit, global supply chain disruptions, and raw material shortages mean delays of months for critical components. The industry is crying out for stability, but instead, it’s being stretched to breaking point.

 

Planning: The Ultimate Bottleneck

Think the labour and materials crises are bad? Let’s talk about planning permission—the slow, bureaucratic process that’s strangling the housing market.

Developers face years of delays navigating red tape. From nutrient neutrality rules to biodiversity targets, the system is riddled with barriers. Planning inspectors often lack independence, meaning political and local pressures create unnecessary gridlock.

The government says it wants to streamline planning, but so far, there’s little sign of action. Without faster approvals, even the most ambitious building targets are dead in the water.

 

Social Housing: A National Shame

While the government promises new homes, let’s not forget those at the sharpest end of the housing crisis. Over 1.2 million households are on social housing waiting lists, and yet, last year, just 32,834 affordable homes were completed.

The country needs 145,000 affordable homes every year, including 90,000 for social rent. This isn’t just about numbers—it’s about families living in temporary accommodation, children growing up without stability, and people being priced out of their own communities.

Since 1980, the UK has lost 1.4 million social homes. If the government is serious about tackling this crisis, they need to stop the bleeding and start building. Affordable housing must be at the heart of any solution, or these promises will do nothing for the people who need help the most.

 

A Call to Action: Ian Hodgkinson’s Urgent Warning

As someone who’s spent decades in the construction industry, I’ve seen firsthand how quickly ambition collapses without action. Right now, the government’s promises are teetering on the edge of disaster. If we don’t actimmediately, the housing crisis will spiral further out of control, leaving thousands more families in temporary accommodation and countless others priced out of a secure home.

Apprenticeships and Training: Who Will Build?

Where is the workforce to deliver this ambitious target? We don’t have it. The construction industry is running on fumes, with bricklayers, carpenters, plumbers, and electricians in critically short supply. Without a national campaign to bring young people into the trades, we’ll be staring at empty sites instead of new homes.

The government needs to invest now in apprenticeships and training programmes. No workforce, no homes. It’s that simple.

Supply Chain Stability: Where Are the Materials?

It’s not just workers we’re short of—the materials aren’t there either. Bricks, timber, and concrete are in short supply, with builders waiting months and prices spiralling out of control. Small firms are being crushed under the weight of rising costs, while even major developers are struggling to stay afloat.

The government must take control. Work with manufacturers and merchants to secure a steady supply of materials. Without this, projects will stall, costs will skyrocket, and the housing crisis will deepen.

Independent Planning Inspectors: Red Tape Strangling Progress

Planning bottlenecks are a national disgrace. Projects are being strangled by bureaucracy and red tape, with delays stretching into years. Every moment wasted in planning is a home delayed, a family left waiting, and a crisis that worsens by the day.

We need independent planning inspectors with real power to approve projects quickly and fairly. Cut the red tape. Clear the backlog. Every early decision means quicker action on-site, and every delay costs lives.

The Clock Is Ticking

The housing crisis isn’t just a policy failure—it’s a human tragedy. 150,000 children are trapped in temporary accommodation, their futures slipping through the cracks. The government’s housing targets are bold, but without immediate investment in skills, supply chains, and planning reform, those targets will fail.

The time for talk is over. The clock is ticking, and Britain’s housing crisis is only getting worse. If the government doesn’t act now, it will leave a legacy of failure that no amount of ambition can erase.

 

Can the Government Deliver?

Let’s crunch the numbers. To meet the target, we’d need to build 900 homes a day—an increase of 30% over current rates. But at the current pace, experts predict a shortfall of388,000 homes by 2029.

Even if these homes are built, affordability remains a major issue. Rising mortgage rates and the cost-of-living crisis mean fewer people can afford to buy or rent. Without targeted action, these houses risk becoming unaffordable ghost towns.

 

Conclusion: From Promise to Pipe Dream

The government’s pledge to build 1.5 million homes could transform lives—but only if it’s backed by real action. Right now, the construction industry is overburdened, underfunded, and crying out for help.

If ministers don’t address the workforce shortage, fix the supply chain, and overhaul planning, this bold promise will end in failure. The UK’s housing crisis needs solutions, not soundbites. Time to put the tools where the talk is.

A Double Hit to the UK Housing Market

Labour’s Budget and Stamp Duty: A

Double Hit to the UK Housing Market

The UK housing market has long been a cornerstone of the economy, but recent government decisions, particularly in the Labour Party’s new budget, have put this vital sector under significant strain. With stagnant growth, an affordability crisis, and relentless tax burdens, the housing market is seeing demand cool dramatically. The latest budget and stamp duty policies seem to have turned a challenging market into an almost hostile environment for buyers and sellers alike.

A Bleak Outlook for Housing Demand

Housing demand in the UK was already facing pressure due to high interest rates and inflation-driven cost-of-living issues, but Labour’s recent budget has delivered a near-knockout punch. While the government claims its policies aim to level the playing field and tackle affordability issues, the reality is that these changes are making homeownership harder to achieve and deterring market activity.

The Labour budget refrained from addressing the existing stamp duty thresholds and, more critically, introduced new restrictions and additional taxes on buy-to-let properties and second homes. These changes have had a ripple effect across the market, dissuading both buyers and sellers from making a move and, in some cases, eroding housing stock availability altogether.

The Heavy Hand of Stamp Duty

Stamp duty has always been an expensive barrier, but Labour’s refusal to reform it or offer any meaningful relief has only compounded the problem:

1. Locking Out First-Time Buyers

Instead of expanding opportunities for first-time buyers, stamp duty remains a daunting expense, particularly in urban centres where even modest homes surpass the tax threshold. Labour’s budget ignores this reality, offering no new exemptions or support. First-time buyers, facing rising mortgage rates and inflation, are increasingly choosing to delay or abandon plans to buy, creating a bottleneck in housing demand.

2. Squeezing Out Investors and Landlords

The new budget introduced further stamp duty surcharges on buy-to-let properties, effectively punishing investors who help maintain rental housing stock. This surcharge, along with interest rate hikes, has led many landlords to sell off properties, reducing rental options for those unable to buy. The result? A restricted rental market, rising rents, and a shrinking pool of affordable homes—directly undermining Labour’s claims of housing support.

3. Dampening Downsizing Activity

Labour’s budget fails to address the needs of older homeowners who might consider downsizing but are discouraged by stamp duty costs. Without incentives, many opt to stay put in larger homes, which could otherwise free up properties for families. Labour’s lack of flexibility in stamp duty policy has led to a stagnation in property flow, restricting available housing stock and hindering natural movement within the market.

The Real Cost of Labour’s Policies: Stagnation and Decline

Labour’s budget may have aimed for fairer housing, but its approach has largely backfired. By failing to reform stamp duty and adding extra costs to property ownership, they have discouraged a critical demographic of buyers and investors from participating in the market. While property taxes generate revenue, they are also causing significant damage, slowing demand and pushing homeownership further out of reach for many. This approach risks long-term stagnation, leaving the market vulnerable to a decline that could affect everyone, from first-time buyers to retirees.

What Needs to Change?

If Labour truly wants to support the housing market, urgent reforms to stamp duty are essential. Increasing the tax threshold, introducing relief for downsizers, and reconsidering punitive surcharges on investors would create a more balanced environment. Until these changes are made, the UK housing market will continue to bear the brunt of policies that appear to prioritise revenue over revitalisation.

Conclusion

Labour’s recent budget and stance on stamp duty are proving detrimental to the housing market, turning an already challenging environment into a near no-go zone for many prospective buyers and investors. Unless serious reforms are considered, we risk seeing the UK housing market slow even further, ultimately leading to a landscape where homeownership becomes a distant dream rather than a realistic goal.

Fixing the property market will be hugely beneficial to the overall economy. With 16 housing ministers since 2010, the outgoing government hasn’t taken the property industry and its impact on the wider market seriously enough. Only time will tell whether the new government will do anything radical to reverse the current housing crisis.”

 UK house prices remained flat in June, with the average price of a residential property dipping by 0.2% monthly, according to the latest Halifax House Price Index. The annual house price growth rate was unchanged at +1.6%. The typical UK home now costs £288,455, down from £288,931 in May.

Northern Ireland saw the strongest property price growth in the UK, rising by 4% annually to £192,457. In England, the North West had the steepest house price inflation at +3.8%, now at £231,351. Scotland's house prices increased by +1.6% to £204,663, while Wales grew by +2.7% to £220,197.

Eastern England was the only UK region to register a decline, with prices down -0.9% to £328,747. London remains the most expensive, averaging £536,306, up +0.9% from last year.

Amanda Bryden, head of mortgages at Halifax, noted that UK house prices stayed relatively flat for the third month in June, reflecting a subdued market. She highlighted that mortgage affordability remains the biggest challenge but expects gradual easing through lower interest rates and rising incomes.

Industry reactions:

- Amy Reynolds (Antony Roberts): Falling prices are a correction from 2021 highs. Higher borrowing costs make homeownership challenging, and potential increased capital gains tax may lead to more ex-rental properties entering the market.

- Myles Moloney (Chase Buchanan): June’s market remained positive, driven by buyers with larger equity, though first-time buyers are cautious due to political uncertainties.

- Nicky Stevenson (Fine & Country): Despite elevated interest rates and political uncertainty, the property market is expected to remain buoyant, with improved consumer confidence and reduced time to sell properties.

- Jeremy Leaf: The election added to market nervousness, but resilient activity is expected to continue.

- Richard Vickery (Fulfords): June sales were subdued, but July looks promising post-election.

- Iain McKenzie (The Guild of Property Professionals): Despite high interest rates and election run-up, the market has been resilient. Confidence is returning, supported by sustained demand and potential interest rate cuts.

- Sharon Donaldson (Countrywide Scotland): The Scottish market remains resilient, driven by significant demand and strong competition, particularly for family homes.

Planning permissions have plummeted to their lowest level since 2005 4.3 million homes short !

Planning permissions have plummeted to their lowest level since 2005, with Labour councils among the most frequent rejecters. The Department for Levelling Up, Housing & Communities (DLUHC) reported a 10.4% decrease in approved applications in England between January and March compared to the same period last year. Over the past 12 months, seven of the top ten councils for rejecting planning permissions were Labour-controlled.

 

In the first quarter of this year, only 67,380 applications were approved by local authorities, down from 75,173 last year. Over the past three years, planning requests have dropped by a third due to rising interest rates and construction costs. Despite his pledge to build 1.5 million new homes, Sir Keir Starmer’s promise was outstripped by the Conservative manifesto's goal of 1.6 million homes over five years.

 

Rishi Sunak acknowledged this week that homeownership has become more challenging under Conservative governance. Labour deputy leader Angela Rayner called this admission a "damning indictment of 14 years of housing failure." The number of approved planning applications for major residential projects, those creating 10 or more homes, hit a decade low in the 2023/24 financial year, with only 3,721 granted in England.

 

Ant Breach from the Centre for Cities indicated that the UK's poor record on house building might worsen without planning reform. He advocated for a rules-based system, like those in other G7 countries, to reduce uncertainty in house building.

 

In Barking and Dagenham, only 61% of planning applications were approved in 2023/24, the lowest rate in England. Across the country, 24 councils, mostly in London, rejected at least a quarter of all applications. In contrast, Liberal Democrat-run Gosport council approved 99% of requests last year.

 

The Labour manifesto promises to use intervention powers to override councils blocking house building. Anna Clarke from The Housing Forum supported this move as necessary despite its potential unpopularity.

 

The Conservative plan includes abolishing EU "nutrient neutrality" rules, introducing a one-off environmental impact mitigation fee for developers, fast-tracking brownfield site development, and requiring councils to allocate land for small, local builders.

 

The Centre for Cities found that the UK housing market lacks 4.3 million homes compared to European counterparts, leading to an average house price of £302,000 in England by the end of 2023, which is 8.3 times the median annual wage—double the affordability ratio of 20 years ago.

My Building manifesto

 My Building manifesto @Brickies !!!! now listen here !! 

1. Fluid Planning System

• Digital Planning Portal: Create a centralized digital platform for planning applications, accessible to both developers and local authorities. This portal should streamline the submission process, automate routine tasks, and provide real-time updates on application status.
• Predictive Analytics: Utilise AI and data analytics to forecast demand for housing and infrastructure, helping local authorities make informed decisions on planning permissions and land allocations.
• Community Engagement: Implement digital tools for community engagement, such as interactive mapping and online forums, to facilitate public input and increase transparency in the planning process.

2. Skills Crisis Solution

• National Skills Strategy: Develop a comprehensive national strategy to address the skills shortage in the construction industry. This should include initiatives to attract young people to the sector, upskill existing workers, and promote diversity and inclusion.
• Partnerships with Educational Institutions: Forge partnerships with universities, colleges, and vocational training centers to tailor education and training programs to the needs of the construction industry. Offer incentives for students pursuing careers in construction-related fields.
• Apprenticeship Schemes: Expand apprenticeship schemes in collaboration with industry stakeholders, providing financial incentives for companies to take on apprentices and offering flexible training pathways.

3. Stamp Duty Cut and Help to Buy Scheme

• Targeted Support: Evaluate the effectiveness of the stamp duty cut and NEW Help to Buy scheme to ensure they are reaching their intended beneficiaries. Consider targeted adjustments or expansions based on market conditions and demographic needs.
• Affordability Measures: Supplement stamp duty cuts and Help to Buy schemes with additional measures to address housing affordability, such as rent-to-own schemes, shared ownership programs, and affordable housing quotas for new developments.

4. Tax Cuts for Landlords Selling to Tenants

• Incentivise Sale-to-Tenant Transactions: Expand tax incentives for landlords who sell properties to their tenants, encouraging homeownership and tenant stability. Consider additional support, such as low-interest loans or grants, to facilitate these transactions.
• Tenant Protections: Implement policies to protect tenants' rights and improve rental conditions, including rent controls, longer tenancy agreements, and measures to combat discrimination and unfair eviction practices.

5. BNG and Nutrient Neutrality Relaxation

• Review Regulations: Conduct a comprehensive review of regulations related to BNG (Biodiversity Net Gain) and nutrient neutrality to identify opportunities for relaxation without compromising environmental sustainability.
• Flexible Compliance Options: Introduce flexible compliance options for developers, such as off-site mitigation, habitat restoration credits, or contributions to conservation funds, to meet BNG and nutrient neutrality requirements.
• Innovation and Technology: Encourage the adoption of innovative technologies and best practices in ecological restoration and nutrient management to achieve environmental goals more efficiently and cost-effectively.

Conclusion

By addressing these key areas comprehensively, the government can create a more conducive environment for house builders and promote sustainable development in the UK. This holistic approach should balance the need for regulatory oversight with measures to stimulate growth, innovation, and social equity in the housing sector. Ongoing monitoring and evaluation will be crucial to ensure the effectiveness and fairness of these policies.

 

Inflation down ! What will happen to interest rates now ? Will history repeat itself?

 Lower inflation rates in the UK can have significant implications for the economy, including the housing market. Here's my thoughts and

breakdown of the potential impacts:

### Lower Inflation Rates and the Economy

1. **Interest Rates**: Lower inflation often leads to lower interest rates. The Bank of England might reduce interest rates to stimulate borrowing and investment, making mortgages cheaper for potential homebuyers.

2. **Consumer Confidence**: Lower inflation can boost consumer confidence as the cost of living stabilizes. This can lead to increased spending and investment, including in the housing market.

3. **Investment**: With lower inflation, investors may feel more confident about the economic outlook, potentially increasing investment in housing and other sectors.

### Housing Market Impact

1. **Housing Demand**: 

   - **First-Time Buyers**: Lower mortgage rates can make buying a home more affordable for first-time buyers, increasing demand.

   - **General Demand**: Lower interest rates and higher consumer confidence can boost overall demand for housing.

2. **House Prices**: Increased demand can lead to higher house prices, particularly if supply remains constrained.

3. **Building Activity**:

   - **Increased Construction**: With improved economic conditions and potentially lower borrowing costs, developers might be more inclined to initiate new housing projects.

   - **Supply Constraints**: If the recent lack of house building persists, there could be a supply shortage, further driving up prices as demand increases.

### Long-Term Effects

1. **Supply-Demand Balance**: If the supply of new homes doesn't keep pace with demand, prices will continue to rise, making it difficult for first-time buyers despite lower interest rates.

2. **Affordability Issues**: Persistent supply shortages can exacerbate affordability issues, particularly in high-demand areas.

3. **Government Policies**: Government interventions, such as incentives for first-time buyers or policies to boost construction, can also significantly impact the market.

### Recent Lack of House Building

1. **Supply Shortage**: A continued lack of new house building exacerbates the supply-demand imbalance, driving up prices and rents.

2. **Market Pressure**: Limited housing supply puts pressure on the existing stock, which can lead to higher competition for homes and increased prices.

3. **Economic Strain**: The strain on housing can affect broader economic stability, influencing migration patterns, labor markets, and regional economic development.

### Conclusion

Lower inflation rates can positively influence the housing market by making borrowing cheaper and boosting consumer confidence. However, the recent lack of house building presents a significant challenge. If supply does not increase to meet demand, house prices will continue to rise, potentially making it difficult for first-time buyers and exacerbating affordability issues. Government policies and incentives will play a crucial role in addressing these challenges and ensuring a balanced and accessible housing market.

Business Failure down but interest rates stay the same ?

 The decline in the number of business failures, particularly in the construction industry, to a two-year low in April signifies a positive trend amidst the broader economic recovery. With only 13 construction firms facing administrations, down from 29 in March, it suggests a notable improvement in the sector's resilience. This reduction in business failures can be attributed, in part, to easing inflationary pressures, which likely alleviated some of the cost burdens on businesses.

The significance of this decline becomes more pronounced when considering that it marks the lowest level of construction industry administrations since May 2022, when only 11 construction firms faced similar challenges. This indicates a gradual but tangible improvement in the stability and sustainability of construction businesses, which are often sensitive to fluctuations in economic conditions.

Such a trend is not only encouraging for the construction sector but also for the broader economy, as the construction industry plays a crucial role in driving economic activity and employment. A reduction in business failures suggests increased confidence among construction firms, potentially leading to greater investment, hiring, and overall economic expansion.

However, while this decline in business failures is a positive sign, it's essential to continue monitoring economic indicators to ensure sustained recovery and growth across all sectors. Factors such as interest rates, consumer spending, and global economic conditions can still influence the trajectory of businesses in the construction industry and the economy as a whole.

Permitted Development Rights ? What is it ?

As we enter the final months of the government’s tenure, the pressure is on to make each department appear as shiny as possible ahead of the election. Those responsible for housing are counting on a further expansion of existing permitted development rights (PDRs).

The world of PDRs is a little complex

There are two main types of PDR with the first relating to the extension of one’s own home. For example, subject to certain size restrictions, you have a PDR to put an extension on the back of your house without asking the council for permission or even telling your neighbours. The second type relates to the change of use of existing commercial buildings, in particular into residential use, and it’s this type that the government hopes tweaking will result in more homes being built.

According to countryside charity CPRE, some 1.2 million new homes could be built using the country’s current stock of unused commercial buildings. The government has stated that we need to build 300,000 new homes every year, but in recent years, that target hasn’t come close to being met. Wholesale planning changes that would have many voters worrying about a new affordable housing estate being built at the bottom of their gardens is a little too turkeys-voting-for-Christmas. However, using permitted development rights to recycle existing commercial buildings is far more palatable to the electorate and allows the government to be seen to be addressing the housing crisis.

PDRs have been around for decades, but they came into their own in 2015 when the government allowed developers to convert office buildings into residential use. Since then, the number of permitted development rights has increased significantly. You can now also convert gyms, doctor’s surgeries, light industrial units, banks, cafes, and restaurants into residential, as well as add new storeys to existing blocks of flats.

All buildings have what’s known as a use class, and you would normally need to apply for planning permission to change a building’s use class (e.g. to turn an office building into a block of flats). Because applying for planning permission can be slow and tortuous, the government decided to create a streamlined process whereby the change of use was automatically approved, subject to some basic checks. Called ‘prior approval’, developers can make a PDR application for a change of use, and the council would have up to eight weeks to assess it against a short list of fundamental criteria. If they didn’t respond in that time, permission was automatically granted, making things a lot quicker and far less risky for developers.

What exactly is being proposed? 

The government has put forward several changes to the current PDR arrangements to try to woo voters. On the home front, it’s looking to let homeowners build wider and taller extensions, including wraparounds, loft conversions and kitchen extensions, all without planning permission. They also plan to scrap rules that dictate a home and any extension cannot make up more than 50% of the land surrounding it, as well as allowing homeowners to convert as much loft space as they like, again without needing permission. There’s been a fair amount of doom-mongering since the announcement, with certain sections of the media predicting pitched battles between neighbours. While there will be instances of neighbourly objections, I think most people will see this as a sensible proposal. The cost of moving home for many is prohibitive and, of course, is currently subject to stamp duty. Having the option to substantially extend one’s current home is, therefore, an attractive proposition for many people.

On the commercial conversion side of PDRs, the government is also looking to make some changes. Many commercial properties currently need to be vacant for three months before PDRs can apply, and the government is proposing to remove this restriction. This is excellent news for developers because it means they can start developing more quickly and with greater certainty. It also means they can secure the finance they need to acquire the property they’re about to convert. The government is also proposing to lift the 1,500m2 maximum size restriction of commercial properties that can be converted under one of the most significant PDRs.

Hold the champagne 

So, while all of these proposed changes sound positive, on their own, they won’t be a magic wand that fixes the housing crisis. Building 1.2million new homes from unused brownfield land would give us the equivalent of four years’ new housing, and we wouldn’t need to touch the green belt in order to do it. But the question is, who will be doing all this development? And that’s where we hit a snag, because brownfield projects are not a good fit for the major housebuilders.

If we look at the Persimmons, Barratts, and Taylor Wimpeys of this world, they have a simple, cookie-cutter model which involves rolling out standard house designs on empty building plots. Give them a plot of land anywhere in the country, and they can build some houses from their existing range of designs, and they’ll make a tidy multi-million pound profit. But give them an unused commercial building, and the model doesn’t work. They could, of course, demolish it and start again, but that’s considerably more expensive than building on virgin land. If they were to convert what’s already there, they’d have to employ architects to create a one-off design for each building. They’d also have to retrain their workforce since converting an existing building requires a different skill set than building a standard design on a vacant plot. Finally, most of these sites wouldn’t make them enough profit – they’re simply not big enough.

Who will transform unused commercial property?

If the scale housebuilders are out of the frame, who is best placed to convert these buildings? The answer lies with the much smaller operators, known as small-scale developers. These range from individuals like you or me to relatively small SME enterprises. Putting some flats above an unused shop can net you a six-figure profit in relatively short timescales. It’s not very exciting to the likes of Persimmon, but it’s highly attractive to an individual landlord, investor, or entrepreneur – experienced or otherwise. The government has made life increasingly difficult for property investors (particularly regarding buy-to-let) over the last decade, but it now needs to encourage new small-scale developers to enter the market. SME developers used to account for 30% of new housebuilding, but today that figure has dropped to just 12%.

Another critical challenge 

The local planning authorities who must give prior approval to PDR applications before works can begin, are massively under-resourced, often lacking in experience (due to many senior planners departing) and are not predisposed to like PDRs, which they often see as undermining their authority. As a result, councils can still make it difficult for prior approval to be granted, despite the government’s intention of making PDRs a streamlined and unbureaucratic process. It’s imperative that the government gets planning authorities on side and starts reinvesting in this vital area.

The proposed PDR changes will undoubtedly create more opportunities to unlock more housing by recycling and improving our existing building stock – which has to be a good thing. But it will only happen if the government also encourages new small-scale developers to come to the party and once again account for a larger share of the market. And the government also needs to get local planning authorities on side so that they view PDRs as an opportunity to solve the housing crisis in their area, rather than something that undermines their authority.

What 99% mortgages could mean for first-time buyers... and the housing market

 Exploring the Impact of 99% Mortgages on First-Time Buyers and the Housing Market

Reportedly, Jeremy Hunt is crafting plans to enable first-time buyers to enter the property market with only a 1% deposit, potentially to be unveiled in the March 6 Budget by the Chancellor. This initiative, akin to the existing Mortgage Guarantee Scheme but covering 99% of a home's value, aims to assist those facing difficulties accumulating enough savings to purchase a home.

While this policy could be advantageous for some first-time buyers by reducing the deposit requirement, critics express concerns about potential repercussions. They argue that it might inflate house prices and pose challenges for buyers managing the monthly repayments, especially amid relatively high interest rates.

The proposed scheme lacks detailed information, but in principle, it could lower the barrier to homeownership for aspiring buyers. For instance, purchasing a £300,000 property with a 5% deposit currently demands savings of £15,000, while under the new scheme, this could decrease to as little as £3,000, alongside additional expenses like solicitor fees and surveys.

Mark Harris, CEO of SPF Private Clients, views any initiative aiding first-time buyers positively, emphasizing its significance for market functionality. However, critics caution against the risks of negative equity if property prices decline, potentially trapping borrowers in financially precarious situations.

Peter Stimson, from MPowered Mortgages, critiques the move as irresponsible, arguing that it may exacerbate financial risks for buyers and conflict with the government's encouragement of prudent financial behavior.

In summary, while the 99% mortgage proposal may offer a pathway to homeownership for some, its implementation warrants careful consideration to mitigate potential downsides and safeguard buyers' financial stability.