New build starts up 6% as completions drop by 3% – MHCLG

Richard Pike, sales and marketing director at Phoebus Software: 

“An increase in new build starts is welcome news for a housebuilding sector that has endured a prolonged period of weak activity. 

“It suggests some developers are beginning to regain confidence and commit to new projects, despite the wider economic uncertainty and continued affordability pressures facing buyers.

“However, one quarter does not make a recovery. Housebuilders are still contending with high construction costs, expensive finance and subdued demand, while higher mortgage rates continue to limit what many buyers can afford.

“The challenge now is turning this improvement into sustained growth in supply.

“With the government under pressure to increase housebuilding, the priority should be creating the certainty developers need to invest. 

“Planning reform, a clearer long-term housing strategy and measures that support demand would all help give the industry greater confidence to keep projects moving.”

Neil Leitch, managing director of development finance at Hampshire Trust Bank: 

“This fall in planning approvals should surprise nobody when the system responsible for processing applications is operating under this much pressure.

“Recent HBF research found that nine in ten local authority planning departments are understaffed, operating on average at just 80% of the capacity they say they need, while only one in five major applications is being determined within the statutory 13-week period. 

“We are asking an under-resourced planning system to deal with an increasingly complicated development environment. 

“Developers face substantial upfront costs before they have any certainty of securing consent, while planning teams themselves are having to navigate an expanding range of regulatory and policy requirements. 

“You cannot continually add complexity at both ends of the process and expect homes to be delivered faster.

“SME developers feel that particularly acutely. Delays tie up capital, increase pre-development costs and reduce the flexibility available elsewhere in a scheme. 

“What is harder still is uncertainty around timing and outcome because that is much more difficult to price. 

“With development appraisals already having to absorb higher costs and additional requirements, that can be the difference between a site progressing and an otherwise deliverable scheme falling out of the pipeline.

“The Government’s investment in additional planning capacity is a start, but it needs to match the scale of the challenge. 

“More planners are welcome, but reform only works if the system has the people and expertise to implement it. 

“If we want to deliver 1.5 million homes, we need properly resourced local planning authorities, simpler processes and greater certainty around getting decisions made. Planning approvals are only the beginning. 

“The real measure of success is whether those permissions can be converted into homes.

“Nobody should be surprised that completions have fallen again. Completions are a lagging indicator, reflecting decisions taken months and often years earlier. 

“Many of the homes reaching the finish line now were appraised and funded in a very different environment. The bigger concern is whether the schemes developers are looking at today still stack up.

“Development has become more complicated and expensive, while the planning system remains unpredictable and inconsistent. 

“If we are serious about building more homes, the Government cannot focus only on the finish line. 

“It needs to create the conditions that give developers the confidence to invest in the schemes that will become tomorrow’s completions. 

“That means a simpler, more predictable and more stable route from planning to construction.”