Can we ever catch up?
PUBLISHED: 11:33 03 November 2017 | UPDATED: 11:52 03 November 2017
Are we being left behind by the Usain Bolt of new build targets? Joe Pattinson, of Newbury New Homes, discusses.
Imagine that you are in a race with the great Usain Bolt and he keeps getting further and further away from you. Then they give him a bike!
Worse still, imagine you are the housing minister and have a target for housing which was set 14 years ago that you are getting nowhere near. Then remember that the population of the UK in 2004 was 60 million, today it is 66 million and the ONS, the office of national statistics, tells us that it will be 70 million in 2027. That means we need an extra 189,000 new homes every year to go with Kate Barker’s figure of 245,000.The annual rate of new home starts had reached 175,000 before the financial crash of 2007. Not surprisingly, demand dropped significantly leading to some builders going bust whilst many others got very close to it, including a couple of national house builders. So they had to draw their horns in. I was working for a large builder whose plan was to develop and expand the business further into East Anglia. They, very sensibly, showed me, and the team of land buyers, the door, as there was no point in paying us to find sites that they had no money to buy.
So the land supply chain was severely restricted for three or four years. Finding sites, acquiring them and sorting out planning takes a long time and only once recovery looked likely to be sustained did house builders start hiring again enabling the land supply to get back to normal.
Assume that there is a site near Norwich that has planning for say 1,000 houses. It would cost more than 150 million to buy and build out. Builders will build as fast as they can sell. Experience tells us that it will take several years to sell out this scheme with interest racking up at more than £12 million a year. The interest would not matter because they would have gone bust long before that kicks in though in reality they could never get the funding or find the labour force.
There are no reliable figures for how many plots with planning there are in the UK but assume it to be around 500,000. That is less than a three year supply at current rates and without wishing to bore anyone any more than I already have by touching on the intricacies of reserved matters consents, section 106 agreements, etc that is not a very long time especially if you get held up (which you always do) by your electricity, drainage or highways provider.
Development is not for the faint hearted and Usain Bolt is disappearing into the distance.
You can contact Joe Pattinson at Newbury New Homes, sponsors of this column, on 01603 520000 or www.newburynewhomes.co.uk or email email@example.com