July is the month when schools, universities and the UK parliament break up for summer recess. It is not therefore generally a time when you expect a string of significant government announcements. But this year over a four-day period, the Conservative government published its first Budget plus a 90-page productivity plan, Fixing the foundations. Both contained a host of measures aimed at delivering more homes, and taken together, the documents have redefined the housebuilding landscape along so-called ‘one-nation Tory’ lines.
Rent cuts for social homes: Rents in social homes will be cut by 1% every year from 2016 for four years, so instead of raising rents in line with the Consumer Price Index plus 1%, they will move to minus 1%. This may be good news for social renters, who are having benefits cut, but ultimately it could exacerbate the shortage of affordable housing. The Office for Budget Responsibility forecasts the policy could mean 14,000 fewer affordable homes will not be built, but the National Housing Federation has put the potential loss at 27,000 units. Coming on top of the introduction of right to buy for social housing tenants, the rent cut is a blow to housing associations who clearly have no friends in the Treasury. The squeeze on housing associations could have implications for London where housing pressures are most acute, Greater London Authority executive director of housing and land David Lunts told the audience at last week’s Housing Forum annual conference. “In London housing associations build 40% of all new housing starts. If they are challenged in the ways we might see, then that raises important questions for supply,” he said.
Planning-free brownfield housing: This isn’t a free for all; government wants to free ‘suitable’ brownfield sites in government-allocated housing zones from planning controls. This is one of a package of measures including a pledge to intervene to release land where local authorities have failed to draw up their local plans and the right for major infrastructure projects including housing to be fast tracked through the Nationally Significant Infrastructure Regime. The determination to tackle the housing shortage has been welcomed but concerns have been voiced that the absence of planning control in housing zones could lead to poor quality homes and communities being developed in locations that already have low land values, perpetuating mediocrity. RIBA has urged the government to look at coupling planning freedom with design codes as a safeguard.
No zero carbon new homes: The zero carbon target and allowable solutions for new homes are dropped under the productivity plan. Government had already discarded the Code for Sustainable Homes, but the news still came as a surprise to industry as it has not been subject to consultation. The move was slated by environmental groups but welcomed by some in housebuilding, who saw building greener homes as a cost and a difficult sell to the consumer. It is expected that the government will not implement the zero carbon requirement for non-domestic buildings. Instead of focusing on making buildings more efficient, the government’s policy document concentrates on energy infrastructure, pledging it will develop the shale industry and look to expand the nuclear sector. The shift leaves green building businesses and innovators in the UK re-appraising their markets.
Devolution: The Northern Powerhouse initiative got a further push with additional powers and responsibilities for the mayors of London and Manchester. The government is also working towards devolution deals with Sheffield, Liverpool and Leeds, while Cornwall could have the first county-wide devolution deal. The new land commission earmarked for Manchester to control public sector land offers potential benefits in placemaking and in accelerating the release of land for homebuilding.
Overall, there are wins and losses for UK housing in the new policies, with cities and house builders looking to be the winners and affordable housing players and sustainability being the key losers. In the present economic climate where buying any home is becoming an increasingly distant goal, cheaper energy bills and water economy are assuming less importance for both government and consumers for now. Building more homes has been given priority by the government, but with the supply-demand relationship dictating that housebuilders can only build what they can sell, actual delivery may yet again confound politicians’ plans.