Methods to solve the UK housing crisis

10 January 2019


Housing in the UK is currently facing numerous issues. It was reported that in 2018 house prices had had the weakest rate of growth since 2010, meanwhile there are not enough homes being built to meet demand and the property ladder is becoming increasingly difficult to access, with first-time buyers struggling to save the huge deposits needed. Homelessness is on the rise and London in particular continues to have a formidably high cost of living. Solving the UK housing crisis requires industry leaders to invest in new methods of working to find innovative ways to keep Britain building.

While these new methods of working have the potential to contribute to overcoming the housing crisis, it is essential that councils and planning authorities work with those in the industry to help to solve this complex problem. In our 'Planning 2020: A new framework for modern Britain' report we identified that 'in providing safe, affordable and purpose-built accommodation for a modern Britain, housebuilders must be supported in developing a wider mix of housing and pioneering new, innovative construction methods'.

Here we set out some of the potential planning and construction methods that could contribute to solving the UK housing crisis.

Modular Construction

Prefabricated houses (prefabs) were used to address the housing shortage after the Second World War. Prefabs or modular buildings are now once again being considered as a method to tackle the housing defecit in the UK.

In a recent report, Ilke Homes opened a Yorkshire factory that will build fully-fitted three bedroom homes for as low as £65,000. The factory is able to produce eight prefab homes a day and will reduce the 40 weeks it can take to build a property to just 10 days.

While the reported low costs will inflate with the price of land and on-site assembly, they are still a more affordable form of accommodation than traditional properties. Furthermore, the speed in which they can be constructed and delivered is an attractive concept when research from Heriot-Watt University suggests that England has a backlog of 3.91 million homes with 340,000 properties needing to be built every year until 2031. The single Yorkshire factory is set to produce 2000 homes a year, eventually rising to 5000.

While prefabs can offer a lot of opportunities to benefit the housing sector, it is important to understand that the concept relies on volume and economies of scale and it has not yet matured to this stage. Businesses trying to deliver homes in this way therefore find themselves uncertain financially, leaving developers cautious due to the level of risk despite the potential reward.

Build-to-rent

In Sajid Javid's Housing White Paper, published in February 2018, it was acknowledged that the proportion of people living in privately rented accommodation has doubled since 2000. Furthermore, home ownership is at its lowest level in 30 years as first-time buyers struggle with the expensive process of getting on the property ladder.

Due to this change in the housing market, build-to-rent developments have the potential to become more prominent. In the research conducted for our report 'Planning 2020: A new framework for modern Britain', it was identified that 87% of housebuilders anticipated that their company would be involved in an increased number of build-to-rent developments in the following three years.

Build-to-rent is also seen as an attractive alternative to the traditional build-to-sell model because it attracts institutional investment from the likes of pension funds due to its long-term, low-interest model that provides an ongoing income stream. Despite this, build-to-rent initiatives still face their challenges. Developments are often faced with issues caused by commercial viability and skills shortages. Housebuilders adopting these developments need to ensure that careful planning is undertaken to secure success.

Regional devolution

While not explicitly a method to combat the problem, mayors and local authorities gaining more power could help to speed up the planning process and mean more public sector-owned land is available for development. With the ability to formulate policies, combined authorities could bring forth changes to planning frameworks and devise strategies to address affordable housing needs that support housebuilders to overcome the barriers that they face.

As identified in our report 'Housing associations: time for new rules as well as a new deal?', regional devolution has benefitted the West Midlands with the West Midlands Combined Authority's (WMCA) Housing Delivery Team being formed to help unlock the 200,000 homes needed by 2031. The WMCA will work closely with local authorities, developers and investors to access the Chancellor's £44 billion housing and infrastructure budget.

Regional devolution could not only bring increases in investment and residential development, but also potentially set aside the red tape surrounding social housing development. While it may take a number of years for authorities to access the required funding and power to make a difference there is definite potential for regional devolution to contribute to solving the housing crisis.

Solving the UK housing crisis

To kickstart the housing market, it is crucial that all stakeholders in the industry collaborate and work together to understand where opportunities can be found and supported. Housebuilders and other businesses will need assistance when developing new housing and construction methods to ensure success. Gowling WLG represents landowners, developers and public authorities in relation to all aspects of planning law, policy and procedures and has extensive experience to draw upon in this area. We are a trusted adviser to a number of top 10 developers and housebuilders including Bloor Homes, The Miller Group and Persimmon.

Our Insights and Resources are recommended for businesses wanting to keep up-to-date with developments in the housing sector. We will update you regularly with information from our legal experts in our Real Estate, Planning and Construction teams, as well as other sectors and services you may be interested in.

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