Can the Construction Industry Cope with the Government’s Plans for New Build Homes?
Earlier this year, the government announced plans to build more homes across England, hoping to fix the broken housing market in the process.
In their statement, the government suggested that current and future housing pressures needed to be addressed by a standardised calculation. Therefore, every local area would need to put a realistic plan in place, reviewing this every 5 years, at least. With 40% of local planning authorities not having this type of plan in place, it’s necessary for them to ensure that new homes are being built in prime areas, e.g. places where people are keen to live and work.
50,000 Affordable Homes to be Built in London
Following this, London mayor, Sadiq Khan, announced a £1.7 billion deal in July for 50,000 affordable homes to be built in 33 London local authorities over the next four years.
By 2020/21, Mr. Khan has pledged to have 90,000 affordable new homes built, with his latest announcement putting him on course to reach this target. 44 housing providers including housing associations, private developers and nine London councils will deliver these new homes. Out of these, 32,000 will be available for the Mayor’s living rent or shared ownership, with the remaining 17,500 being up for rent.
In his statement, Mr. Khan admitted that solving the housing crisis wasn’t something that could happen overnight, but he welcomed the commitment of councils and housing associations in achieving his goals. However, he was clear that they had a lot to do to secure the land required, and that they needed to make sure the construction industry could cope with the demand.
Will Brexit Affect the Construction Industry’s Ability to Cope with this Increased Demand?
One huge concern many have is whether or not the construction industry is going to be able to meet these large demands, particularly as the future beyond Brexit remains so unclear.
RICS figures revealed in March suggested that the UK construction industry could be hampered post-Brexit due to the loss of nearly 200,000 EU workers as reported by the Royal Institution of Chartered Surveyors. With 8% of the workforce within the UK construction industry being from the EU, there could be huge shortages, particularly as the industry already faces a shortage of skills. This could place £500 billion worth of projects in jeopardy, including those in London.
Therefore, the demand and potential complications faced by Brexit and other economic uncertainties need addressing.
Speeding Up the Process and Diversifying the Market
To bridge this potential gap, the government are trying to make building projects run with greater speed while also adding diversity to the market.
In their original statement, they suggested they would provide tools to local authorities to make sure homes were built in time. They also bid to help more small independent builders enter the market through their Home Building Fund which is worth £3 billion. With just 10 companies building 60% of all new homes in England, the fund should help by offering loans to assist essential infrastructure, offsite construction, custom builders and SME builders. They predict that this will help build 225,000 over a longer period of time, with 25,000 being built this Parliament.
This may also involve working with property consultancy and house auctions specialists, like Allsop, to ensure construction companies and potential buyers are locating the best opportunities in the right area.
Even though the news of more affordable housing is welcomed by many, it’s clear the right processes and allowances need putting in place from the offset to make sure everyone involved can meet these demands. Creating new roles for small builders, protecting EU workers and speeding up the processes for construction companies are the first steps in making sure the housing crisis doesn’t become a construction crisis.