With the general election now just days away, politicians from all parties are falling over themselves to promise the earth when it comes to building new homes.
The coalition saw six housing and planning ministers launch more than 25 initiatives during its tenure. However, with surveys suggesting that three times as many voters now regard housing as a key issue compared to 2010, it is tempting to wonder just how much of a difference the coalition has made.
Economist Kate Barker estimates that we need 240,000 homes a year, yet the average number of private completions annually under David Cameron’s government was, according to Savills, just 109,000. That compares poorly with Tony Blair’s premiership, when on average 170,000 homes were completed each year.
But of course, context is everything. As a result of the global financial crisis, the coalition inherited a dire situation in terms of housebuilding, with private housebuilders struggling to survive and government debt ballooning.
Indeed, under Gordon Brown’s government, the average number of homes being built had already dropped to 143,000. What’s more, given the time lag involved in housebuilding, the impact of the crash was bound to spill over into the coalition’s tenure.
“We’ve undergone a lot of fiscal consolidation and the government has had to deal with a very large deficit,” says Lee Jackson, partner at Eversheds. “The economy is still weak after the deepest recession in living memory.”
In such a context, the industry was grateful for whatever the coalition could do to help. A raft of new measures followed, including a radical rewriting of national planning policy and the Help to Buy scheme aimed at stimulating housebuilding.
“The introduction of National Planning Policy Framework (NPPF) and Help to Buy very much helped the recovery in housing delivery,” says Philip Barnes, land and planning director at Barratt Developments, who describes the coalition’s performance as “broadly positive”.
FTSE-listed housebuilders saw share prices surge thanks in part to cheap debt and an increase in transactions. The Bank of England has since tightened up the mortgage market, but borrowing remains cheap and the government is maintaining its support by extending Help to Buy.
In assessing Help to Buy, it is important to distinguish between two elements of the policy: the equity loan and mortgage guarantee. “The equity loan has helped with housing supply, with housebuilders crediting one-third of their sales to its introduction,” says Matthew Pointon, property economist at Capital Economics.
“But it’s difficult to say what would have happened without it, and the surge in share prices indicates that some of the subsidy has fed profit margins. The mortgage guarantee scheme has had no direct impact on supply and simply pushing up demand risks further house price increases.”
Another defining feature of the coalition was the shift towards localism. Scrapping regional spatial strategies infuriated some but played well to many voters. It enabled councils to reduce housing targets, with the steepest reductions occurring in southern areas - places that had the most serious shortages, according to Policy Exchange.
Many believe ministers should have considered things more holistically. “Scrapping regional housing targets was a mistake,” says Craig Casci, a director at Grid Architects. “Housing follows jobs and infrastructure - not the other way round.”
Extending permitted development rights for office-to-residential conversions was another signature coalition policy. Introduced to boost supply, it has proved unpopular with many London councils.
Opponents argued vital office capacity was being taken out of the market at the wrong time. On the other hand, notable residential schemes outside of prime areas, by the likes of Westrock and Essential Living, will turn redundant offices into rented flats.
“If homes can make a better return than offices then from an economic point of view it makes sense to carry out the conversion,” Pointon says.
“The coalition saw too many transient housing ministers. I would like to see housing ministers with actual experience and more long-term thinking.” - Craig Casci, Grid Architects
The NPPF is one area most people agree has worked at least moderately well, although there is still a feeling the government could have gone further.
“More still could have been done to speed-up planning,” Barratt’s Barnes says. “It still takes 70 weeks from first meeting a local authority to discharging the last pre-commencement condition.”
More should also have been done to boost the supply of affordable housing. “There are two problems which have got worse during the last five years,” says Kate Davies, chief executive of Notting Hill Housing. “Firstly, there isn’t enough social housing and what we are building has rents that are too high. Secondly, options for home-ownership are fewer than they were.”
With private renters outnumbering those in social housing, there have been moves to build more rental accommodation. The £1bn Build to Rent fund, set up in 2013, has yet to produce many units, but it has helped attract anxious investors into the sector.
“Coalition moves to support build to rent have been welcome,” says Essential Living’s Bellinger. “But Labour’s Emma Reynolds has also been highly supportive
of a professionally managed, long-term rental sector.” Quite apart from individual initiatives and changes to planning policy, it is clear that the timeframes within which politicians and housebuilders work are difficult to align.
“The coalition saw too many transient housing ministers,” says Casci. “I would like to see housing ministers with actual experience and more long-term thinking.”
Even without the constant reshuffles, five-year parliaments reduce the likelihood of policies being nurtured to blossom seven, 10 or 15 years later when a governing party may be out of office.
Structural issues are also apparent to local government. Councillors understandably focus on pleasing their constituents, who are often more likely to return them to power if they refuse development.
Whatever the general election throws up, everyone agrees that policy now needs to turn towards delivery. The next government will need to lead with a strong hand and an arm outstretched to local authorities, which all too often make or break the supply of new homes.
Perhaps then we will be able to build 100 homes for every page of government consultation.
- Visit the RESI website for more information