We need new homes, but how many?
By Ritchie Clapson CEng MIStructE, co-founder of propertyCEO
300,000 new homes annually is the government’s aspirational target, but the origins of this figure remain shrouded in political ambiguity. It raises questions about whether it was strategically inflated or understated for ease of attainment. Either way, this arbitrary target is a critical factor, influencing the direction of housing development policies in the UK.
According to the government’s English Housing Survey of 2018/9, Over 540,000 households reported having someone living with them who would otherwise be homeless, and 1.6m households reported having a concealed household (i.e. an adult who wants to buy or rent on their own but who can’t afford to do so). The planning consultancy Lichfields made some further projections to determine how many new homes would need to be built each year to house both concealed households and new organically formed households, and they arrived at 389,000, significantly higher than the government’s target of 300,000. The housing charity Crisis conducted a similar study and estimated that we needed to build 340,000 new homes yearly to make good a 4 million home shortfall within 15 years.
Even if we just accept 300,000 as being accurate (or as good a place as any to start), we don’t necessarily have a clear idea of what that means. To give you a way to imagine how big an ask building that many homes each year is, Wales has around 1.3 million households, so over four years, we would be adding another Wales every time a World Cup comes round. The city of Leeds has about 350,000 households, so we would be building (pretty much) a new Leeds every year. No small feat.
How many houses have we been building?
Over the last twenty years, we’ve averaged less than 190,000 new homes per year, and the largest number we managed was 243,000 in 2019/20. So even a step up to 300,000 would mean building over 20% more than in our best recent year’s production. Interestingly, Lichfields decided to tot up the number of new homes included in every council’s Local Plan across the country, which turned out to be 216,000. Shockingly, we would need to up production by 40% to get from the number of new homes that local councils think should be built to where the government wants us to be – a telling gap.
Countryside charity CPRE’s State of Brownfield 2022 report suggests that brownfield land for up to 1.2m new homes is currently lying dormant in England. They also cited research that suggests that housing developments on brownfield sites are completed six months more quickly than those on greenfield land.
The significant advantage of these projects is that they will be connected to existing infrastructure. And from a political perspective, brownfield development isn’t a vote loser like greenfield is. As the economy has evolved, so have our requirements for retail and business premises. We no longer need much of our current commercial space, and the number of unused brownfield sites increased by 30% between 2018 and 2022. And recycling empty buildings is usually a vote-winner – after all, who wants a derelict factory on their doorstep, or a dead high street filled with empty shops?
But if you thought brownfield redevelopment was a slam dunk that automatically gets us four years of new housing, think again. Because most brownfield land is in the form of relatively small buildings and plots that don’t appeal to the larger home builders. The likes of Persimmon and co build lots of new houses on large empty fields using existing designs. A one-off, smaller conversion project simply isn’t in their repertoire. Instead, it falls to the smaller SME developers to take on these projects, and luckily, small-scale property development is currently enjoying something of a resurgence, with many first-time developers entering the market. Many are existing landlords who have woken up to the fact that the buy-to-let market is a shadow of its former self and that even doing something as simple as putting flats above a shop can unlock six-figure profits. The government has helped by creating increased permitted development rights that make it easier than ever to convert these buildings. But SME developers still only account for just 12% of the country’s housebuilding, down from 30% in their heyday.
Taking into consideration various projections and challenges, the government’s target of 300,000 new homes per year looks to be on the light side. The complexity of the issue calls for a nuanced approach that involves not only meeting targets but also addressing public sentiment and leveraging alternative solutions, such as brownfield redevelopment. Local and national government need to do even more to ensure that first-time property developers can take advantage of the opportunities that brownfield represents.
ABOUT THE AUTHOR
Ritchie Clapson CEng MIStructE is a veteran property developer of 40+ years, an author, industry commentator, and co-founder of the leading property development training company propertyCEO. Ritchie is passionate about tackling the lack of housing in the UK and helping ordinary people to be part of the solution. To discover how you can get into property development, visit www.propertyceo.co.uk