Making more land available, supporting smaller housebuilders and channelling both public and private investment into affordable homes will solve Britain’s housing crisis, experts said this week.
Speaking at a roundtable hosted by Brewin Dolphin, the leading wealth manager, experts from housing advocates Shelter, housebuilder Galliford Try and Brewin Dolphin discussed ways of dealing with the gap between the 110,000 estimated new homes that are being built every year and the 232,000 that are actually needed.
Brewin Dolphin equity analyst Stephen Williams said that, investing in affordable housing should be “a win, win situation for those in need of a new home, investors and the housebuilders.”
“The majority of volume housebuilders are not interested in affordable housing but those companies considering partnerships and joint ventures into affordable housing indicate the significant potential for investors. There is a huge opportunity and new ventures are opening to respond to this. ”
Solutions that the experts discussed included:
Building new garden cities
Deputy Prime Minister Nick Clegg is expected to announce a string of new garden cities between Oxford and Cambridge within weeks, while Shelter has proposed a garden city on the Medway in Kent.
Peter Jefferys, Senior Policy Officer at Shelter, said these developments are crucial not just in making affordable housing available to those most in need but also in creating crucial jobs, by building homes on attractive, yet complex, sites as well as mixed use projects with commercial elements. Every facet of the development process benefits, including the preparation that goes into making a site developable in the first place.
Giving cities greater powers to manage their own housing solutions
Jefferys said that the key to solving the crisis was to “give cities the power to be able to grow effectively to meet their housing need.”
“There are other countries that are excellent at doing this. Germany and the Netherlands in particular have built affordable, quality homes in densely populated areas by giving their cities the power to zone land and set up joint public/private development partnerships. The UK has done similar things – for example the Olympic Park – but never at scale across the country,” he said.
A hybrid public private business model for housebuilding
Public land should be brought in at low or nil-cost, with rental income generating a yield over the investment period instead of up-front payments. This is a particularly good method for dispersed public land, said Stephen Teagle, MD of Affordable Housing and the Regeneration Division at Galliford Try.
“How can the private sector help to develop something traditionally provided by the public sector?” Teagle asked.
“The demand is there, affordable housing is fundamental to UK infrastructure and the city can provide the means for supply to meet demand. Viable schemes will attract the investment and the investors are ready to commit. The housing supply crisis can begin to be addressed by housebuilders using a blended model and delivering mixed tenure solutions with housing associations.”
A longer term perspective on current housing
Shelter said there needs to be greater fiscal incentives put in place by policy makers to encourage investment into the sector, recognising the shortage. If people are to be living in these new builds for the next few centuries, they can’t survive on “rabbit hutch” 1 and 2 bedroom houses alone, so larger variety of housing categories need consideration. Further, recent schemes such as the “help to buy” scheme find people getting stuck; leveraging themselves heavily without any ability to move on once their families grow.
Waiving stamp duty for older people
Williams raised the question of whether, by waiving stamp duty for empty nesters with larger homes, they might be encouraged to downsize.
The key is land supply
All of the experts involved in the roundtable agreed that land supply is the real key to solving Britain’s housing shortage.
When asked for a wish list from the next government, Teagle wanted to see reform of planning permission, fiscal incentives for investors and the freeing up of registered providers and local authorities to release more land at a faster pace. Shelter agreed land is the biggest issue.