Philip Barnes – Blog

DO WE HOUSEBUILDERS MOAN TOO MUCH?

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I sense a mismatch between us housebuilders and many others in the housing and policy sphere. It seems that we builders are too often moaning about how the public policy treats us whilst others argue that we have been supported by Government too much, especially as the market and our profitability strengthens.

So where does the truth lie? Clearly that depends on your standpoint and political priorities. Let’s explore.

There is no doubt that with housing output collapsing to less than 30% of need the Government needed to kick start private sector housebuilding activity. The credit crunch and subsequent price falls meant it was almost impossible, in many parts of the country to build and sell a house profitably. Costs were static but there were virtually no purchasers able to secure a mortgage. Firstbuy and Kickstart blew air on the embers and arguably prevented a wholesale collapse of the housebuilding sector north of Watford. From there Help to Buy came and stimulated both demand and supply of new homes. Its continuation until 2020 provides confidence to continue investment in the process of land purchase, planning promotion, construction and sales. Starts are up and planning consents are their highest since 2007.

Alongside the financial assistance a wide range of other policy levers have been pulled relating to inter alia, planning, public sector land and small builders.

So no housebuilder could reasonably claim that we haven’t been targeted for help or that this hasn’t positively affected our balance sheets. Why? – because we provide a public good for which there is a calculated and recognised need related to household growth.

And it is this “calculation” or regulation of need which is usually the cause of housebuilder concerns.
Our product is considered by many to cause harm. Especially by those who do not wish the area of the UK covered by homes to rise above the current 2-3% of our land mass. The state (nationally) created the planning system to provide nationalised state control of our output – operated both locally and nationally. The problem is that the calculated needs are rarely met as the state (locally) focusses on the overriding electoral pressure to prevent the perceived local harm rather than meeting the wider need.

There is no sanction for not having a plan let alone failing to meet need. Many applications are a battle – for Barratt it takes an average of 70 weeks from the first pre application meeting to being able to start construction. Longer than the whole construction and sales process for our smaller sites. The crux of the housebuilders constant lament is not the existence of the planning system but the need to turn the dial slightly more towards meeting the housing need rather than simply avoiding the perceived harm. NPPF has helped enormously but the uniquely English obsession with the urban containment (aka stranglehold) around most of our key cities is simply not a sustainable approach to assist future generations.

Time and time again I hear people who don’t actually build houses say the planning system is not the key issue. They are wrong. In a recovering market we can and will build more houses if we have confidence that land will be released where it will meet need and address demand. At present the planning approach to the edges of our major cities of London, Manchester, Birmingham, Oxford, Bristol and others gives no confidence in this regard. I would urge those cities to look at the examples provided by York and Newcastle recently.

So back to the question – do we housebuilders moan too much? Unquestionably yes but perhaps slightly understandable as we get lambasted for not building enough, for making too much profit, for not providing enough affordable units and receiving too much Government support. Yet the way we see it is that we could and would build more if, as Cameron Robb of Shelter said recently, the system could provide more land more quickly and more cheaply into the hands of those who actually build houses.

Author: philipbarnesblog

Group Land and Planning Director for Barratt Developments PLC. FRTPI, FRICS

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