When I returned in the New Year the Institute of Public Policy Research Report titled “We must fix it” was sitting on my desk. The report was issued in December 2010 and has a sub title of 'Delivering reform of the building sector to meet the UK’s housing and economic challenges’.
I can really recommend this as an important read for anyone who has any interest in not only the building sector but the UK economy. The housing sector is an important part of the stimulus of the economy and this report gives an excellent and frank view of what the issues are and what needs to be done.
First and foremost it is very clear that there is a significant problem in the UK housing sector. Presently the industry is underperforming and is building no where near as many homes are needed. If the issues of the planning and finance were resolved would the major house builders in Britain respond to the needs of the country. The suggestion within this report is that they would not and that a new system altogether is required.
The report is hugely critical of the current system and its underperformance and outputs. It acknowledges that the situation has been made even worse since the financial crash.
Many of the issues revolve around land and the fact that its value has risen faster than any other commodity in recent decades. The suggestion is made that the industry has become more of a land trading industry rather than a home building industry.
The consolidation of the industry with major house builders merging or buying up competitors along with the land banking of major swathes of development areas has put these businesses in a very precarious financial position. This has meant that the cash flow and balance sheets of these organisations are in crisis meaning new homes have not been built.
Housing completions last year sank to the lowest levels since the First World War. The banks however who are also overexposed have kept these organisations alive.
There have been several references to “The Lost Decade” in UK construction in recent weeks and it looks like 2010 – 2020 is heading this way. The report suggests that the Government’s new housing strategy does not go far enough and does not demand reform rather it offers major house builders public land, money and guarantees without getting something in return.
The implication is that we are heading towards subsidised stagnation.
The report suggests the answer is to bring new players into the marketplace and that the link between land and homebuilding should be severed. It goes on to suggest that any public land release should be linked to a rapid build out and lower profit margins for the developer.
There is also suggestion that partnerships be established where value created is shared between the public and private sector. The report also suggests that financially and viable builders should be allowed to go bankrupt and should not be supported any longer.
The detail within the report is considerable and there are fascinating statistics showing how the market has evolved and changed over a number of years. It also shows where Britain sits within the rest of Europe with some disturbing results.
There is little within this report which I disagree with however how these ideas can be put in practice is the real challenge. We need to provide quality new homes for families whilst also providing economic stimulus for the country. Any change will obviously be slow and in the meantime the large house builders will continue to have a monopoly on development.
The answer is for entrepreneurs to work hard to prove there is another way to deliver quality homes at affordable prices.
The development completed by Kevin McCloud is an excellent start and his profile can assist in moving the debate forward. His generally approaches the challenge from a design perspective but there is also the potential to have a conversation with the Government and start to resolve some of the issues in relation to land values. As ever, changing an industry is not easy. Those who are passionate about doing the right thing must maintain their energy levels. Over the next decade we will be able to make a shift in how we deliver homes whilst also making a considerable difference to the quality of communities and the environments within them.
I can really recommend this as an important read for anyone who has any interest in not only the building sector but the UK economy. The housing sector is an important part of the stimulus of the economy and this report gives an excellent and frank view of what the issues are and what needs to be done.
First and foremost it is very clear that there is a significant problem in the UK housing sector. Presently the industry is underperforming and is building no where near as many homes are needed. If the issues of the planning and finance were resolved would the major house builders in Britain respond to the needs of the country. The suggestion within this report is that they would not and that a new system altogether is required.
The report is hugely critical of the current system and its underperformance and outputs. It acknowledges that the situation has been made even worse since the financial crash.
Many of the issues revolve around land and the fact that its value has risen faster than any other commodity in recent decades. The suggestion is made that the industry has become more of a land trading industry rather than a home building industry.
The consolidation of the industry with major house builders merging or buying up competitors along with the land banking of major swathes of development areas has put these businesses in a very precarious financial position. This has meant that the cash flow and balance sheets of these organisations are in crisis meaning new homes have not been built.
Housing completions last year sank to the lowest levels since the First World War. The banks however who are also overexposed have kept these organisations alive.
There have been several references to “The Lost Decade” in UK construction in recent weeks and it looks like 2010 – 2020 is heading this way. The report suggests that the Government’s new housing strategy does not go far enough and does not demand reform rather it offers major house builders public land, money and guarantees without getting something in return.
The implication is that we are heading towards subsidised stagnation.
The report suggests the answer is to bring new players into the marketplace and that the link between land and homebuilding should be severed. It goes on to suggest that any public land release should be linked to a rapid build out and lower profit margins for the developer.
There is also suggestion that partnerships be established where value created is shared between the public and private sector. The report also suggests that financially and viable builders should be allowed to go bankrupt and should not be supported any longer.
The detail within the report is considerable and there are fascinating statistics showing how the market has evolved and changed over a number of years. It also shows where Britain sits within the rest of Europe with some disturbing results.
There is little within this report which I disagree with however how these ideas can be put in practice is the real challenge. We need to provide quality new homes for families whilst also providing economic stimulus for the country. Any change will obviously be slow and in the meantime the large house builders will continue to have a monopoly on development.
The answer is for entrepreneurs to work hard to prove there is another way to deliver quality homes at affordable prices.
The development completed by Kevin McCloud is an excellent start and his profile can assist in moving the debate forward. His generally approaches the challenge from a design perspective but there is also the potential to have a conversation with the Government and start to resolve some of the issues in relation to land values. As ever, changing an industry is not easy. Those who are passionate about doing the right thing must maintain their energy levels. Over the next decade we will be able to make a shift in how we deliver homes whilst also making a considerable difference to the quality of communities and the environments within them.
No comments:
Post a Comment