As we eagerly anticipate the results of the upcoming General Election, could July’s outcome represent a significant change in tack for the housing industry? I believe it should.
The vote will determine the Government for the next five years, but the housing market requires long-term planning that stretches beyond a single electoral term.
The industry has faced systemic issues for many years now, including affordability, supply challenges and planning difficulties, all of which have only been exacerbated by Covid-19 and the mini-Budget.
Whoever forms the next Government must be brave and implement a lasting strategy to ensure the housing industry’s health and sustainability for the coming decades, not just the next few years.
Time to get out of the short-term mindset
Recent Governments have struggled or simply haven’t committed to applying more long-term thinking to housing policy. This has been clearly demonstrated by the high turnover of housing ministers, with 16 different individuals holding the position since 2010.
This must change – a commitment to having a housing minister in post for at least two years would be a welcome start.
However, although the election provides an opportunity to hit the reset button on policy too, the main political parties’ manifestos continue to demonstrate a short-term focus for housing policy. Politicians are placing a large emphasis on support for first-time buyers, for example.
Pledges such as reintroducing the Help to Buy scheme, removing stamp duty for first-time buyers, or extending the mortgage guarantee scheme are taking centre stage. These are policies which have a role to play, but they are fundamentally measures designed to attract votes rather than addressing the critical problems plaguing the housing market. We must move away from this short-term mindset, so what long-term steps should the next government commit to?
Supply issues must be tackled
One of the most pressing issues facing the market is the chronic lack of housing stock. This has been a leading cause of rapidly rising house prices, making home ownership unaffordable for many.
The main political parties have set clear targets on how many homes they intend to build. There’s certainly nothing wrong with putting these objectives in place, but we have seen such targets time and time again. What we really need is a clear plan for achieving these numbers. The focus now needs to be on delivery.
Meeting these targets will ultimately mean addressing our flawed planning system. A survey conducted by the Home Builders Federation in March 2023 has revealed that 93% of SME developers view securing and processing planning permission as a significant barrier to their growth, showing how significantly planning is impacting supply. Other data corroborates these concerns, with only 222,000 new homes gaining full planning consent in the twelve months leading up to Q1 2024, according to Savills. This marks the first time since the 2008 – 2009 financial crisis that the number of new homes gaining consent has fallen below the current level of completions.
Fortunately, we have seen some recognition from the main political parties about the need to reform planning. However, we would encourage the next government to work together with the housing sector to create a lasting solution that considers different paths to homeownership, if we are to really deliver on the homes people need.
This should include encouraging alternative paths to owning a home, such as custom and self-build projects which could contribute significantly to meeting housebuilding targets. These methods offer more flexibility in terms of the location and design of a build and can be more affordable than buying an existing property – depending on the materials being used.
The National Custom and Self Build Association released a report at the start of this year laying out the policies it would like to see to enable more self- and custom-build. One key change recommended included redesigning the Right to Build registers, which it argued do not accurately reflect the demand for self- and custom-build homes and that local authorities cannot deliver their obligations under the legislation as a result. Engaging with alternative policy ideas such as these will be an effective way for the next government to address the housing industry’s supply problem.
The Government cannot ignore environmental factors
When looking long-term, it is equally important that we focus on making our housing stock green. Research from the Institute for Government has previously shown that Britain’s homes are some of the worst in Europe when it comes to energy efficiency.
This needs to change, especially given that ONS figures show that 26% of greenhouse gas emissions in the UK come from our homes. Not only will increasing the environmental friendliness of our homes contribute towards the UK’s energy efficiency goals, but it will also help households save money. In fact, Rightmove research shows that average energy bills for a two-bed flat are £1,352 for a property with an EPC rating C, compared to only £552 for a property with EPC rating A.
Additionally, homeowners who have improved their EPC rating from F up to a C could see an average house price increase of almost £56,000. Encouraging more self- and custom-build properties can support greener housing stock, with increasingly environmentally conscious consumers often choosing to build greener and better quality homes. Any long-term strategy for the housing market must take this into account.
The housing market is an ecosystem
While solving supply issues must be a priority, there also needs to be recognition that a healthy housing market operates as an ecosystem, where various components — homeownership, the private rental sector, and social housing supported by community infrastructure — all need to thrive. It is not enough to focus solely on increasing homeownership rates; the rental sector and social housing also need attention and support.
Any approach by the next Government must ensure that all elements of the housing market function effectively, providing a range of options to meet diverse needs and creating a market that is resilient to future challenges.
A long-term strategy is essential to creating a stable and sustainable housing market that benefits everyone. At Saffron, we urge the incoming government to prioritise solutions that tackle deeper-rooted, more fundamental problems facing our housing sector.
Phil Lawford is national account manager at Saffron for Intermediaries
