Why small developers hold the key to the failing housing target?

In 2004, the UK was set a target of building 270,000 new homes each year. Nearly 15 years later, this is a figure developers are still failing to hit.

The actual total has averaged less than 150,000 new build homes since 2007 – leaving the UK’s housing deficit standing at a whopping 1.2 million.

In another blow to the sector, in June of this year, it was revealed that a third of local authorities in England are forecast to miss two or more government housing targets. The targets include:

• Adopting a local plan
• Identifying a five-year land supply for housing
• Passing the newly created housing delivery test

According to Savills’ planning performance index which has looked into projected housing delivery by 2019, 110 of a total of 326 councils will fail on two or more of these counts. These local authorities account for 37% of the national housing need and if Savills’ predictions do transpire, they risk losing control of where housing development will take place.

Why the industry needs more small house developers

As the UK continues to struggle to hit its housing target, questions are being asked about why this is. Although there is of course plenty of dispute regarding the topic, the industry is largely in agreement that the over-dominance of big house builders is creating a huge problem.

Last year, MPs even called for an end to the big eight house builders’ dominance in a bid to fix the housing market.

Committee chair from the Commons Communities and Local Government Committee, Clive Betts warned:

“The housing market is broken; we are simply not building enough homes. The sector is over-reliant on an alarmingly small number of high-volume developers who are driven by commercial self-interest and have little incentive to build any quicker. If we are to build the homes that the country so desperately needs, for sale and for rent, then this dominance must end.”

A target of 270,000 new homes each year is a huge milestone to reach. Unless there is a huge increase in public sector building (which is unlikely), it’s the private sector that will have to deliver and it hasn’t consistently built this many homes in a year since the 1930s when interestingly, the market was dominated by small building developers.

There are plenty more reasons why the industry needs more small house developers including:

• They ensure the market stays competitive.
• The business model of big house builders results in homes that are often badly located and poorly designed.
• The big builders bank land and sit on their supply for as long as possible so that prices stay as high as possible.
• Unsurprisingly, the houses they build are intended to turn a profit rather than meet social needs or high environmental and design standards.
• Standards do of course vary among house builders, whatever their size. There are some great schemes run by the big firms and some bad houses built by SMEs. Evidence does however suggest that smaller firms tend to build better homes with more energy efficiency and designs that take the local vernacular into account.
• Towns across the UK are experiencing an influx of almost identical houses to that of their neighbours. While this is understandable as economies of scale helps developers to offer customers more affordable homes, many communities are frustrated that they’re losing character. Small housing developers on the other hand tend to be more passionate, entrepreneurial, creative and flexible when it comes to providing new, bespoke homes.
• They employ local tradesmen – as well as providing more jobs locally, it means that they can keep to their timescales without compromising on the quality of work

Keay Roofing is delighted to announce that we are just about to start a project with a small to medium-sized housing developer. You can follow us on Twitter to stay up-to-date with the project or alternatively, feel free to get in touch to find out more.

Published: September, 2018

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