New build boom: will the National Home Building Fund solve the housing crisis?

21 June 2021 | Investment

New build boom: will the National Home Building Fund solve the housing crisis?

Whether you’d describe it as a housing shortage or crisis, it is clear that the UK’s unprecedented demand for new-build homes isn’t going anywhere anytime soon. To paint a numbers-based picture, research on behalf of the National Housing Federation (NHF) noted that England has a backlog of 3.91 million homes. In other words, 340,000 new ones need to be built every year until 2031 just to keep up with current demand.

It isn’t all doom and gloom, though. Despite the large demand, homebuilding figures over the past few years have been encouraging. As noted by Stewart Baseley, executive chairman of the Home Builders Federation: “The numbers show the continued progress being made by the industry to deliver more homes. Homebuilders have delivered more homes seven years in a row, increasing the number of homes built by 42% in five years.”

It’s progress, albeit slow, but much more is needed as the country tentatively emerges from the pandemic-induced lockdown. That desperate need for more housing is clear in government policy, reflected in the home-building call of ‘build, build, build’, stated by Boris Johnson, which speaks to urgency over nuance.

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This need has now been backed by funding as well as words, with the Ministry of Housing, Communities and Local Government set to receive £10 billion in funding this financial year. The bulk of it has been earmarked to develop more new-build homes through the National Home Building Fund.

This boon to new building development is, of course, welcome news given our current housing shortfall, but funding alone isn’t enough to solve such a complex issue. Therefore, this investment should be distributed to the sectors of the industry where it’s most needed, to help solve the problem of lack of stock and overwhelming housing demand.

So where should the investment and the change start? At the beginning, with transformative reforms to our outdated and cumbersome planning process.

Perfect planning

The government must streamline the planning process and make it more action-orientated to respond to the rapid demand for new build properties. This would help counter developers being left waiting for multiple steps or different approaches from each local authority.

We need to recognise that the type of housing in demand changes with time, as homeowner priorities shift – for example, needing more space due to increases in working from home. It would be negligent to think that one type, location, or size fits all and this is precisely why a more joined-up approach to planning is needed to respond to any change in demand.

In our rush to build, we mustn’t neglect picking the perfect spots to develop properties. It may seem like an extra burden at the beginning but will pay off in the end. For example, homeowners today are on the hunt for more suburban, green spaces. A smart move, as public parks and gardens on a neighbourhood doorstop will placate the (often expensive) need for a garden on a home’s actual doorstep. However, this demand requires homes to be built out of traditional new build areas in big cities.

Secondly, a disused site is a disappointing sight considering the current housing shortage, and yet these are peppered around the country. Current complicated planning guidelines prolong the empty occupancy of these brownfield sites and their allocation for residential construction needs to be sped up.

The greener the better

Finally, funding must go to encouraging greener homes. This is a major factor in the new home market and today buyers expect greener credentials from properties. A lot of our buyers are already seeking a greener home through better energy, heating, and insulation in an effort to be more ecologically and economically conscientious.

We’re already seeing that if two homes are a similar price on the market, the greener home will likely sell first. This major factor should encourage funding towards greener homes and push developers to meet this demand for energy-efficient properties in the future. 

Smart funding

We welcome the investment the government is putting into the housing industry, particularly after the beating the economy has taken from the pandemic last year. But with great funding comes the responsibility to change the development sector’s structure and funding for the better.

Only then will the investment prove to be the lift needed to raise housebuilding levels and make it easier for everyone to find a home.

*Tim Foreman is Managing Director of Land & New Homes at LRG

This post has originally been featured in Property Investor Today.