Next year will be 80 years since the New Towns Act (1946) was passed through Parliament.
As a result of the destruction during WWII, this Act detailed where and how new towns should be built across the UK to replace existing housing stock lost during the war.
Common sense indicated this had to be done, and if an area was deemed right for development – and yes greenfield was a consideration but not the showstopper it is today – planning was fast-tracked (albeit through a very different process) and developments began.
Around 800,000 social housing properties were built by 1951, even in the aftermath of a world war. Let’s fast forward to today.
FALLING SHORT
The Government has pledged in its manifesto 1.5 million new homes. While the OBR forecasts housebuilding will reach its highest level in over 40 years by 2029/30 as a result of planning reforms, it will still fall short of the 1.5 million homes target (although if it reaches 1.3 million homes as claimed, that would still be an excellent result).
It has also pledged £2 billion for affordable housing and £600 million for training construction workers.
However, this 1.5 million target is facing increasing cross-industry scepticism as the elapsed time since the pledge continues with no real detail on how it is going to be achieved, leaving especially the housing and mortgage industries uncertain.
On GMB Breakfast News, Matthew Pennycook MP tried to convince viewers that 1.5million homes would happen in five years from the formation of the Government.
But as usual in terms of political communication (all parties historically have been the same) couldn’t put any real meat on the bones as to how this would be achieved.
Uncertainty seems to be a pretty common theme in the current government deliverables at the moment, but that’s not really unusual of any Government over recent decades to be fair.
JUST RHETORIC
We are nine months into the new Government’s tenure, and there has been a lot of rhetoric about housing, but nothing demonstrable to show for it.
One of the ideas, the proposed ‘new towns’, with construction planned before the next General Election would not deliver any housing until the latter part of Labour’s tenure.
Given historical delays and planning bottlenecks, most commentators are cautious about whether these promises will translate into meaningful results in five years. Finding resources to build new housing is a huge issue in itself post-Brexit.
I remember having a few chats with the then Liberal Democrat MP Matthew Taylor (now Lord Taylor of Goss Moor) at various industry shindigs (probably 10-15 years ago now) regarding his Garden Village scheme, which effectively needed each rural council in England to allow planning for new villages of up to 5000 homes, with associated infrastructure included.
This was targeting one million new homes in 10 years and is probably the only genuine piece of lateral thinking on housing policy for a generation.
PLANNING BLOCKERS
Alas, although announced as a Government scheme in 2017, most projects started under this scheme haven’t got through planning, which shows one of the major blockers to the 1.5 million housing agenda.
For the economy, the absence of a realistic housing delivery strategy, coupled with high demand, will continue to push up house prices leading to affordability issues.
Lack of available housing stock will keep house purchase volumes lower than required to boost the economy and so for the mortgage industry remortgaging and product transfers will remain the main transactions for some time to come.
“Undoubtedly, more borrowers will stay in their properties and develop or improve what they have.”
Undoubtedly, more borrowers will stay in their properties and develop or improve what they have.
This will assist the second charge market, which is a higher margin product when a further advance may not be available.
The reality of this Government’s issue is that they have promised industry and voters the world in their manifesto and we are seeing either a lot of back-tracking on some major policies or a realisation that what they have promised in so many areas is just undeliverable.
COUNTDOWN CONUNDRUM
The additional conundrum this causes is that when the public understand the full extent of fiscal policy through their pockets we could see a one-term Government and this in itself could create further economic uncertainty.
Ultimately, while the Government’s housing commitments signal intent, execution remains the key challenge as it has done under every Government since the 1970s.
We wait with bated breath for concrete action and realistic timelines to gauge whether these promises will result in genuine, long-term solutions for housing supply and homeownership.
After initial hope, unfortunately, the signs are not looking positive.
Richard Pike is chief sales and marketing officer at Phoebus Software
