Former secretary of state for housing Robert Jenrick spoke at the 2021 RESI Convention last week. As well as discussing the government’s housebuilding target, the minister talked about economic recovery and progress around introducing commonhold to replace leasehold.
The full transcript of Jenrick’s speech, along with a Q&A with conference chair and BBC home editor Mark Easton, is below:
Good morning, everyone. When we met virtually last year, I said that I hoped it would be the last time and I’d be able to be with you physically on this occasion, but I apologize that once again I’m joining you virtually. I’m delighted to see and hear that so many of you are back in the room and enjoying RESI in the usual way.
Like you, I think I have enjoyed the last year where we’ve seen virtual backgrounds of people on their zoom calls, unexpected children running in behind the kitchen table, pets. Here at MHCLG, we enjoyed seeing a particular councillor, who I think is in the room today, with his Star Wars background. But I’m sure my friends at BBC breakfast will be happy that I played it safe today and stuck to the flag and a picture of the Queen that became so famous earlier in the year.
In truth, I think like many of you, particularly those of you who are in the room right now, there is nothing like collaboration, the creativity, the sense of connection, the mentoring, support, the friendship, the collegiality that comes with being back in the office and back at events, like RESI, where you can meet each other share ideas and discuss the future of a sector that is so important to the life of this country as the one that you are all involved in. So, I really looked at this year’s conference as a great success. And this is the first of conferences going forward where people are back, physically meeting and discussing things.
Our attention within government remains in part on the pandemic and ensuring that we can weather the remains of that storm, protect people, support the NHS, help it to rebuild – and of course of this week the Prime Minister has made a very significant announcement about how we can reduce the backlogs in the NHS as quickly as possible, and how we can prepare for the world beyond Covid, particularly ensuring the viability and sustainability of our social care sector.
For me in my responsibilities to the housing sector, I’m really looking now to the future and how we can move forwards, how we can build the homes and the infrastructure that the country needs, how we can fulfil the ambitions that we have when we first came to office in 2019 to level up the country and ensure that wherever you live, or wherever you were born, you can have access to good quality housing, that you do have the ability to get on the housing ladder.
As Mark said in his introduction, that we can ensure the homes that we build and the places and communities that we invest in, are not just houses but these are places that we can feel proud of that we want to live in ourselves, we want to hang on to our children and graduate, and that we play our role in ensuring that we leave the environment in the best place in the way that we found it and that those homes do not need to be retrofitted and that we can ensure that these places are genuinely beautiful, well-designed locally popular communities.
That’s the task and the vision that I have with my ministers here in the department, from the outset of this government back in the summer of 2019. The Prime Minister and I were determined to support the housing market and ensure that we build more homes, that we create more sustainable jobs that depend upon it, and that we do help to tackle this huge generational challenge. And today, I’m going to lay out some of the things that we will be doing in the months ahead, and then hopefully there’s an opportunity to answer some questions.
Casting the mind back, though, to a year and a half ago and at the start of the pandemic, we were determined to ensure that the market ecosystem in its total – construction, estate agents, removal companies, solicitors and conveyancers and everyone else that makes the housing market – could be kept open as safe, as much as we possibly could do. And almost above any other industry and sector in the country, we worked hard with you to make sure that that happened. And the fruits of that really are seen today in the robust health of the market, which has confounded the expectations of many people.
In the room that I’d come to you from today, I met experts and analysts a year and a half ago, many predicted that, unfortunately, we were on the eve of an economic downturn and a downturn in the housing market akin to the one we saw in 2008-2009, which cast a very long shadow over the sector and our ambitions to build more homes, and for which we only really emerged just a few years ago.
Fortunately, today we don’t find ourselves in that position but we’re in no sense complacent. We know that the market can always be fragile and confidence can see the way through. It depends on many other factors, which we’re keeping under close review with the chancellor. But today, we find ourselves in one of the best employment years we’ve had since the financial crash in 2008.
Property sales in the year to July were 45% higher than last year and at the highest point since 2007, according to our own HMRC figures. The cuts in stamp duty that the Chancellor announced have clearly been a factor, encouraging people to bring forward their house moves while safeguarding the hundreds of thousands of jobs that depend on the property market. And this is the primary reason that we did it.
The chancellor and I were very concerned to protect the industry from those scarring effects that we saw in 2008 and 2009, which we’ve seen in previous recessions as well. We knew that that had not only cast a long shadow over the big volume housebuilders in the market more broadly but, in particular, it had caused very significant damage to small and medium sized builders and to smaller businesses more broadly and we wanted to ensure that didn’t happen again. Thus far fortunately, it hasn’t.
We also knew that in every economic recovery in our lifetimes, the housing market and the construction sector played an absolutely pivotal role when we wanted this recovery to be led by housing construction, and thus far again, that seems to be happening. And that’s usually welcome.
Despite the dip in sales that we’ve seen more recently in July, with the tapering of the stamp duty reduction, I think there remains encouraging evidence that in the long term, the market is robust and there are signs of a recovery in supply starting to respond to that higher demand.
Data from my department shows that in the year to June, over a quarter of a million EPCs (Energy Performance Certificates), a good proxy of new supply, were logged for new owners, a 16% increase on the previous year and a sharp bounce back on pre-covid levels. It also indicates a buoyancy, a degree of consumer confidence, that too spurred further investment into growth. We’re seeing that in a number of parts of the industry, particularly for example, in the rent to build [build-to-rent] sector, one that we’re very keen to encourage further investments in.
According to the Office for National Statistics, job vacancies are at their highest level since records began 20 years ago. I think this is a vindication of the plan for jobs that the Chancellor sent out earlier in the Covid-19 pandemic. It’s an indication of the hard work that was put into the great furlough scheme, but of course, we need to be careful and to keep managing the economy responsibly, and to work with you as a sector to listen and understand what you’re seeing on the ground to remain able to respond to.
Ensuring that the economy recovers and we do create jobs will of course mean ensuring that housing ownership is at the forefront of our thoughts as a government. After the upheavals in the last 17 months, many people are rethinking what they’ve learned from their homes and their local communities. There’s no question that this period has been much harder for people stuck in cramped, substandard homes without gardens, ready access to parks and playgrounds, green spaces or good quality local amenities.
The need to respond with more and better homes is therefore more urgent than ever. Homes that are affordable, that meet people’s needs, and that are within reach of those who want to get onto the housing ladder. The property-owning democracy is one of the foundations of our country but it has meant that it stays just that, a dream for too many people, despite polls consistently showing that the vast majority of people aspire to own their own home. By the age of 30, those that were born between 1981 and 2000 are half as likely to be homeowners as those born between 1946 and 1965. We shouldn’t just accept this.
Homeownership should not simply be reserved for the lucky few born into privilege or born in a previous generation. Yet there are incredibly those who still question the need for more homebuilding, or that there’s a shortage of decent quality housing.
Surely, we’ve seen over the past year the strength of demand, the pressure on supply, that the case remains unanswered.
On the demand side, we’ve made a number of very significant and successful interventions since 2010. Help to Buy continues to break records to 55,000 households benefitted from the scheme in the last year. In total, over 734,000 families have been helped onto the housing ladder with government support from Help to Buy and Right to Buy schemes.
Our First Homes scheme, offering discounted homes for local people and key workers, NHS, teachers, police officers or Armed Forces personnel is now a reality with the first payment on the market in Newton Aycliffe, in Bolsover and Cannock, and thousands more due to hit the market this year and tens of thousands due over the rest of this Parliament.
We’re also determined to deliver higher standards for buyers as they become owners. For too many, the dream of homeownership has been soured by leases imposing ground rents, additional fees and onerous conditions which the individual didn’t expect and shouldn’t have to experience.
At the moment, Parliament is halfway through considering the leasehold reform. This is the first of two landmark pieces of legislation that I intend to pilot through Parliament that will fundamentally change leasehold forever. And I hope to pave the way to the widespread introduction of commonhold as its most likely successor.
The current bill, the first of two, ensures that ground rents are ended for new leasehold properties. Our reforms will make it cheaper and easier for homeowners to extend their leases or buy their freehold with lease extensions of 990 years becoming standard, saving leaseholders thousands, if not tens of thousands of pounds in the process. The commonhold council, which was launched in May, takes this move further. It gives homeowners greater control of the property and we’re now preparing for the widespread introduction of commonhold in the years ahead.
Homeowners also stand to benefit from our strengthening of the powers for address when things do go wrong, including through a new commonhold ombudsman legislated for in the building safety bill, which is also going to Parliament right now. I hope that that will raise quality and ensure that people making the biggest investment in their lives get the same standards of care that we would expect when we purchase a kettle, a watch, any much smaller and simpler investment.
The bill also gives buyers over double the time, from six to 15 years, to seek compensation from builders and developers for poor quality work under our changes to the defective premises act. I hope that in the years ahead, those builders and developers will respond to that significant change in law by increasing the length of time the warranties are active, so that we can reach a vote where not only does the law for 15 years is to take action against a builder or developer but you don’t necessarily have to take the matter to court, because you’re buying a new home in the knowledge that you have a warranty to protect you as well. And we’re working with the developers or with warranty companies to make that happen.
All of this adds up to homeowners being able to have greater confidence that the homes they’ve worked so hard to secure, is truly theirs and built to the highest standards.
As substantial and impactful as these demand side interventions are, we have to accept they’re not going to be enough. Sometimes they are actively counterproductive because they can be inflationary so we also have to be ambitious about supply. And no one can talk about a housing crisis, or concern for the young, or for families struggling to get good quality accommodation, without also accepting the inevitable logic that we need to build more homes.
With that in mind, as you heard in the introduction, I’ve just announced that we’re allocating £8.6bn to 90 major affordable homes projects throughout the country with a much greater weight outside London, which reflects our commitment to level up.
The funding forms the first part of the £11.5bn affordable homes program, the biggest investment in affordable housing for well over a decade which, should economic conditions allow, create 180,000 new homes across all tenures.
Modern methods of construction (MMC)
Interestingly, the sector has responded to the request myself and the chief secretary to the Treasury asked to take a serious look at modern methods of construction when building those first homes and this surpasses our request for 25% of those properties to be built using modern methods of construction, with 40% of proposals saying that they will use in all parts the most modern methods.
That I think would be extremely important to the future of housing because it ensures that those homes are built to high standards, that invariably they’re to higher environmental standards and that they can be built quickly using those factory methods that I’ve seen myself with recent visits to modern methods of construction factories across the country.
I would urge any housing association or council that is participating or considering participating in the affordable homes program to take a look at how you build all or some of your homes using those new modern methods and help us in doing so to kick start this important new industry for housing sector, which helps us to diversify and tackle some of those other big questions like net zero, and quality.
Help to Build homes
We’ve also recently announced over £150m pounds in funding for the new Help to Build equity scheme, which brings help to buy to the many hundreds of thousands of people in this country who aspire to build their own home, or to buy a custom-built perhaps from one of those MMC manufacturers. We’ve all watched and loved those programs like Grand Designs. Now, we want to ensure that that isn’t just a grand vision and dream on the television screen, but something that is much more accessible to ordinary households across the country. And as my colleague and partner Richard Bacon’s recent review into self-custom-build, self-build offers another path to boosting supply with the potential to generate 30 to 40,000 extra new homes a year if we were able to replicate what we see in many other European countries.
Invariably, those homes will be built by smaller builders, helping SMEs and local entrepreneurs to prosper. I’d like to see self and customer build become the norm as it is in other countries, to see local authorities bringing forward service plots in every part of the country using the funding that we’re now providing to do so. And developers of larger schemes, parcelling out some of that property itself.
But clearly, one of the biggest levers available to government – beyond simply investing many billions of pounds more ourselves in affordable housing as there’s always going to be a limit to what government can invest particularly in a period when public finances are constrained as they are clearly today after the covid 19 pandemic – one of the things at our disposal is how we can modernize and improve the current planning system.
I think we can all agree that there’s a clear and compelling case for a better system, a system which is often too slow and bureaucratic, produces poor outcomes and commands low public trust. That’s what our planning reforms aim to do. Creating a simpler, a faster and digital and a more predictable system to benefit members of the public, local councils and smaller groups and entrepreneurs. At the heart of these reforms are five key ideas.
The first one is a brownfield first approach, which seeks to protect the greenbelt and the environment by prioritizing development on brownfield land, backed by over £10bn of regeneration funding in this parliament.
The second point is an infrastructure first approach that makes it easier and quicker to build the roads, the cycle lands, the train stations, the schools and the GP practices, which should go hand in hand with new development. And when they don’t, leaves, understandably, existing residents feeling frustrated. This is an approach that provides greater transparency and certainty for local communities, giving them more say over how development from development contributions and it shows the areas where land values are high, it can capture more of the land value advantage as a network of basic things and put that disposal with local communities and the public good.
Thirdly, an environment first approach, mandating treelined streets for new development, making sure biodiversity net gains are provided and used to ensure the access to nature are demonstrably improved alongside every development and ensuring that no new home built under our improved planning system that ever needs to be retrofitted. And also ensuring that local areas have plans. Today, only just over 50% of local authorities have an up-to-date local plan. You can’t meet the housing needs of your community if you don’t have a plan to do so. But also, you can’t be serious about net zero unless you have a plan.
So, our reforms will make it simpler and faster for the community to create a local plan and they will ensure that all parts of the country finally get a plan, a plan to build homes and a plan to meet our net zero commitments.
Fourth, we want to ensure that homes are more locally popular, higher-quality and more beautiful and the ugliness is consigned to the past, with local people and communities dictating what they want to see in their own areas.
We want to enhance local democracy, giving people more control over what is built where. We’ve strengthened to make plans simpler assessments, and all this at your disposal from your smartphone with good 21st century digital technology. So, we’ll replace the lengthy and jargon filled documents running to 1000s of pages – a feast for lawyers and consultants – with user friendly, simple documents and assessments and effective design developed by residents and backed by our new office for place, led by the great Nicolas Boys Smith, who’s done so much in recent years to lead the charge of beauty, design and humane communities.
Fifthly and lastly, a levelling of the playing field for smaller builders, who currently struggle to navigate a highly complex system that favours existing players and larger developments. A simpler approach to how builders contribute to local infrastructure, to reduce barriers to entry, to create a more diverse and competitive industry and the new bespoke route through the planning system for smaller builders.
We’ll be setting out what this means in much more detail when we publish our response to the ‘Planning for the Future’ white paper consultation shortly. My thanks to the thousands of people who have contributed to this. We’ve listened extremely carefully to the views of members of the public, members of parliament, local councillors, housing associations, builders and developers large and small, and everyone who cares about the planning system. I appreciate how important it is in so many respects. I want to modernize and improve it and we’ll be setting out how very soon.
Taken together, these five reforms represented some of the most profound changes to what, where and how we build for over 70 years, responding to the dramatic shift in the way we live that was well on the way before covid hit but has been accelerated. It’s too soon to say how these changes will ultimately evolve. Some will be understated as we see people returning to the offices and town centres right now. But others will be permanent and lasting.
One thing that we know is true is the need for good quality housing and the human desire of homeownership. That will remain central to creating a stronger, a fairer, a more united country that we all want to see after the pandemic. That’s why we’re asking you as one of the country’s most important sectors to be ambitious through investment, through our planning and leasehold reforms, through you’re raising your expectations and aspirations about the quality of the homes and the places you manage, you steward for your buildings. So that together, we can build those homes. But we can also build a better, more beautiful, greener and safer places and communities that we can all be proud of together.
Q&A with Mark Easton
Mark Easton: Thank you secretary of state for that and thank you also for agreeing to answer a few questions. In respect to what you’re saying, one of the things I did notice is that you seem to be admitting that the some of the demand side measures you’ve introduced recently were, in your words, counterproductive in terms of the affordability problem. You’ll know that the ONS has said that the stamp duty holiday was a big factor in pushing house prices in the UK up 13%, making it much less affordable for people on lower incomes. Do you accept that the demand-side measures have been a mistake?
Robert Jenrick: No, I don’t. I think that they need to be coupled with supply side reforms as well. My view has always been that you need a balanced approach. There is a need quite clearly to help young people onto the housing ladder. That’s why previous secretary of states and chancellors brought forward Help to Buy. That’s why the current chancellor and myself brought forward the 95% mortgage guarantee and the First Homes scheme. We’ll always consider other ways in which we can innovate and help people and families to get onto the housing ladder to tackle some of the challenges like the difficulty in saving for a deposit. But I never believed that that was enough, that it was the answer in and of itself. They have to be coupled with supply side reforms as well, because fundamentally, at the heart of issue is the lack of supply. Now we have to do that in a sensitive way because we all want to live in a country that has a beautiful natural environment. We want to protect places that people care about the most. But we do need to build more homes and so the approach I’ve taken is to take forward both demand side measures you kindly described, but also to think more so than I think any of my recent predecessors have about how we use the planning system sensibly to ensure that more supply in the long term comes into the system.
ME: Lawrence Bowles asks are you still committed to building 300,000 homes per year in England. I assume you’ll have to scrap that target.
RJ: No, we haven’t scrapped that target. It’s been a long-standing goal of the government and its predecessor. It was established by Teresa May when she was Prime Minister and I think it’s a sensible target but it’s an extremely ambitious one.
The good news is we’re doing well as a country. Last year, we built over 240,000 new homes, which is more homes than any other year since I was in primary school, and I would like us to go further than that.
Of course, Covid has presented some challenges and so we should expect that the immediate numbers coming out of the pandemic will be less positive. But I think we can see that we bounce back from that very sharply, in part because of the work that we did together between government and the sector to keep the market going, in part because the public responded to being at home, changing the preferences, desiring gardens and green spaces and rethinking whether they want to be living in their existing home, and that’s helped to spur the market. So, I think things are currently looking positive. But there’s a great deal of work to be done to increase those numbers in the years ahead if we’re going to get to that target of 300,000 a year. That government doesn’t build the homes, that’s for the sector. What I can do, in addition to the investment that we’ve made in record levels is to try to ensure that government does its role is ensuring the planning system is as simple and easily understandable, navigable as possible, while still providing the outcomes that the public would expect in terms of quality protection of public spaces and environmental considerations as well. And that’s exactly what we’re trying to do.
ME: Andrew Stanford has asked a question on government’s view on build-to-rent. Does it, for example, recognize its ability to accelerate housing supply and regeneration, while also increasing choice for renting customers? Build-to-rent is often a subject that’s been absent from ministerial speeches of this and other conferences. Is there an acceptance in government now that BTR is an important part of the equation?
RJ: Yes, very much so. I think it’s going to be an extremely important component in both meeting the need to build more homes, and also ensuring that, within the private rental sector, there is high quality well managed accommodation available. It’s very important to me. I’ve been heartened by the fact that some investments I see in the market this year suggests that there is heightened interest. There are new players coming into it, including some of our big lenders, like Lloyds. We’ve also seen new businesses like John Lewis entering the market. I think there’s a lot of creativity out there as institutional investors and those who sit on large property holdings, which is subject to change, like department stores for example, are considering whether this is something that they can go into as an alternative. If there’s anything I can do as housing secretary, I will do. I think it’s going to be an extremely important component of our strategy in the future.