A healthy housing market is critical to the UK economy. But with demand for homes outstripping supply and recessionary forces at play, there has been a dramatic reduction in the number of new homes being built. Several recent government reviews and initiatives may kick start the housing sector.
At an event, hosted by Clyde & Co in London on 25 September 2012, a panel of leading experts faced an audience of over 50 developers, contractors, investors, and local authorities to discuss government and private schemes to stimulate the UK housing industry.
The panel included: Ben Denton, Strategic Director of Housing, Regeneration & Worklessness, Westminster City Council; Richard Hill, Executive Director - Programmes and Chief Executive of Homes and Communities Agency (HCA); Jim Saunders, Managing Director, Pinnacle Capital; Trevor Burns, East Thames Assistant Director for Development; and Clyde & Co head of planning, partner Ian Ginbey.
"It has been a really difficult housing market and there is no single magic bullet," said the HCA's Richard Hill, "But the Government's recent proposals send strong messages about the expectations for delivery for this year and the next." The Government's plans for a market-based recovery through shared equity products, additional take out from the private rented sector and more affordable housing are a positive package of measures.
Westminster City Council's Ben Denton discussed the role of local authorities in speeding up housing supply and the "intricate process" of estate regeneration. The challenge of generating both housing growth and financial growth for the local authority is key.
Trevor Burns, of the East Thames Housing Authority, said that "relying on a market-based recovery and larger housing builders was not sufficient". Institutional investment, equity creation, and greater competition are essential to get the sector moving.
Access to funding was a recurrent theme. Lack of liquidity in the finance market and limited availability of central government funding and mortgages are major hurdles to viability. However, non-traditional lending could inject much needed capital into the industry. REITS, specialist debt funds, and bond finance are vehicles which may gain currency.
Questions arose as to the impact of the new National Planning Policy Framework (the "Framework") on the delivery of housing. Whilst most would agree that reform was needed, the lack of detailed guidance in respect of the new rules has created some inconsistencies in applications and assessments. Clyde & Co partner Ian Ginbey added that the first few planning decisions for major housing development following the introduction of the Framework sent a mixed message to the industry but forthcoming decisions will hopefully provide greater clarity, given the recent statement by the Secretary of State.
The audience raised concerns in respect of the community infrastructure levy (CIL) which some felt might ultimately undermine efforts to provide new local infrastructure and affordable homes. The complexity and cost of calculating CIL as well Section 106 renegotiations were a source of frustration.
Clyde & Co partner Liz Jenkins, who chaired the discussion, said: "The housing crisis is one of the greatest challenges we face in the UK and there are no easy solutions. Clearly, no one initiative can stimulate the house building industry alone. What is clear is that local authorities, housing associations, private investors, and developers play a vital role in coordinating efforts to deliver and speed up housing supply. The impact of regulation should not be underestimated and policy certainty is necessary for a stable housing sector."