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26/11/2015

Comprehensive Spending Review reaction: Housing

Words: Laura Edgar

Chancellor George Osborne’s Comprehensive Spending Review aims to support working people to buy their own home and address a home ownership “crisis” in the country. Reaction to the housing measures announced from across the planning sector has been collated here.

“Devolution revolution” harming housing delivery

 

Charles Mills, head of planning at property consultancy Daniel Watney, said some “good progress has been made by the government, with housing “topping the agenda in a way not seen in decades”.

However, Mills said the government is yet to recognise that “its 'devolution revolution' in some cases is actually harming housing delivery”.

"Local and neighbourhood plans are increasingly being used to stop rather than enable development. Centrally-mandated house building targets, based on local housing need, may be the only way forward.”

Revisiting of s.106 agreements

 

Peter Tooher, director at planning consultancy Nexus Planning, said that the review marks a shift away from affordable to rent to affordable to buy.

“It will be interesting to see how the continued possibility of a full scale extension of Right to Buy will affect house building in that sector and whether the increasingly self-financing local authorities can step up and continue to play their part in planned housing growth.

“The emphasis on affordable to buy will, subject to the detail in the housing bill, be welcomed by the home building industry - a lot of s.106 agreements will be revisited in the months ahead.”

Presumption in favour of residential development created

 

The steps taken by the chancellor to release land for residential development which has been allocated for retail or commercial use but has not been developed could be “hugely important,” according to Vicky Fowler, partner in the planning and environment practice at law firm Berwin Leighton Paisner. “It effectively creates a presumption in favour of residential development, as long as that land contributes to starter homes.

“The measure would overrule a local authority’s local plan, meaning that if a council has not been able to attract investment for retail or employment then it opens the door to residential development. The impact of this policy could be highly significant in bringing forward good quality land for housing.”

Housing needs to be less of a “political football”

 

Martin Bellinger, chief operating officer at Essential Living, a developer and operator of private rental homes, said enough homes are not being built because “state-funded construction isn’t happening”.

“House builders aren’t about to double their output and the hundreds of smaller developers we once had were largely killed off by the last recession.”

Bellinger said that while starter homes are “well intentioned”, on the ground people know that even with a 25 per cent discount, buying a house for many still won’t be affordable. “Even if it were, the chances are these won’t be the sorts of places we want to live. Similarly, grants for shared ownership are more tinkering around the edges.”

Building for rent, he said, relieves pressure from the ownership sector and helps to raise standards across the market, replacing rogue landlords and amateur investors with companies whose sole purpose is to provide housing as a service”. For consumers, this means, “homes fit for purpose”.

“Housing needs to be less of a political football and more about coherent long-term policies that deal with the actual issues,” Bellinger said.

National housing reforms hamper councils

 

Peter Box, the Local Government Association spokesperson for housing, said an increase in all types of housing, including affordable to buy and affordable to rent, is needed to tackle the housing crisis. He emphasised that not everyone is ready to buy, with 60,000 people currently living in temporary accommodation. “It is crucial that councils are still able to ensure there is a mix of affordable homes right for everybody.”

“National housing reforms actually risk severely hampering the ability of councils to build new homes by taking £12 billion out of local investment in affordable rented housing by 2020.”

Box added that planning is not a barrier to growth. Instead, skills are. “If we are to see the homes desperately needed across the country built and jobs and apprenticeships created, councils must also be given a leading role to tackle our growing construction skills shortage. The industry is clear that skills gaps are one of the greatest barriers to building.”

Land availability an issue

 

Jon Over, managing director at Goldstone Homes, a construction company based in the South East, said: “The Autumn Statement was very positive for the construction industry, however it's going to put huge added pressure on already overstretched planning departments causing backlogs and time delays. The demand for property is absolutely there but it's the availability of land which is going to be the issue."

Importance of those at the top of the ladder

 

Spencer McCarthy, chairman at Churchill Retirement Living, a retirement accommodation developer, said: “We’ve been banging the drum for a long time on the importance of housing for those at the top of the ladder, not just those at those at the start. We’re pleased to see government recognising the real need for specialist homes for older people.”

However, McCarthy said more detail is needed on the proposals and the type of housing Osborne has in mind.

“With an ageing population, ‘housing for older people’ isn’t a one size fits all, and we need to ensure there are the right options for everyone.

“While any initiatives that help boost the supply of housing are to be supported we’ll be interested to see how the government envisages the 8,000 might be split between housing for older people, and people with disabilities. Relatively this could still mean small numbers, a drop in the ocean when you consider that the number of over 85s will double by 2030.”

Increase in land prices

 

James Fennell, managing director of planning consultancy Nathaniel Lichfield & Partners, said: “The chancellor has put housing at the forefront of the Spending Review by committing to one of the largest housing budgets in recent times. This could be game changer in solving the housing crisis.

“However, the Chancellor’s announcements highlight a change in emphasis from subsidised rent to subsidised home ownership and this raises many questions.”

The shift to starter homes however, may push up land prices. The planning consultancy said development land with designated affordable homes depresses long-term value, but "if the landowner recognises the land can now have starter homes built on it, the price of the land will be raised which could make some schemes unviable, unless the captured planning obligation savings and/or margin of the developer can plug this gap.”

Plethora of part-ownership tenures

 

Jon Manns, director at Colliers, said the Spending Review pursued an approach that will see affordable housing, as a traditional social rent product, "become a thing of the past, replaced by a plethora of part-ownership tenures".

"Truly “affordable” homes which currently exist appear destined for sale into a market fuelled further by additional cheap home-owner debt, not only continuing to drive up prices but potentially replaced by less affordable alternatives in less appropriate locations. Delivering its aspiration for home ownership may well come at the cost of precisely the mixed and balanced communities which the government is eager to foster and create.”

New jobs and apprenticeships

 

Stewart Baseley, executive chairman at the Home Builders Federation said: ”The industry has been gearing up to boost its capacity to a level where it can deliver the increases in housing supply that are so desperately needed. Over the past two years the industry has initiated a huge recruitment and training drive, taking on tens of thousands of new staff to achieve the 30 per cent increase in output seen over that period. Today’s announcement could lead to thousands of new jobs and apprenticeships created in the sector.

“Boosting home ownership and creating additional actual demand for new homes enables builders to invest in the people, land and materials necessary to accelerate supply. If buyers can buy, builders will build.”

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