LCCI event highlights issues facing the Housing development industry

Patrick Duffy - Technical Director

The Mayor said recently at MIPIM that he is "looking to (the developers here) to help deliver 42,000 new homes a year. But I always want a higher quotient of affordable housing".

He said he wanted Londoners to be able to live near where they work and to raise their families in London. He then sought a pledge from house builders to commit to market new homes first or first equal to Londoners. So; a laudable objective from the Mayor to seek to address the chronic housing shortage, particularly affordable housing in London. 

Recently I attended a London Chamber of Commerce discussion on house building that raised many interesting underlying issues that were thought to need to be addressed by the Mayor and others if he is to meet his objective of 42,000 homes per year (49,000 if we are to address the pent up demand generated by under-supply in the past and 60,000 per year if the anticipated demand and this backlog is to be addressed in 10 years!). The pressing issues highlighted for the Development industry included the following:

• 42% of residential planning permissions are held by non house builders which has implications for speed of delivery and price; 
• The recession has seen a large reduction in the number of house builders in the market, with the market now being comprised on a number of large volume builders and a focus on large strategic sites. To deliver more across to the city there is a need for more smaller builders to come into the market as a lot of permissions are for smaller number of homes. In this respect it was thought that banks could do more to facilitate new builders as their current terms for loans do not encourage builders into the market.
• Viability remains a key issue and type and amount of affordable housing needs to be addressed. A blended approach was suggested not only to address viability but also in the interest of balanced and mixed communities.

So what is the solution? It was clear from those at the discussion that there is no one magic solution to the homes delivery issue, rather we require a raft of measures to enable delivery through a number of routes. These include:

• Facilitate the delivery of unimplemented permissions;
• Recognize the role of increased density at hub locations;
• Apply a blend of affordable homes to address viability and mixed communities
• More flexible approach to high streets to recognize they may become smaller and more dense;
• Ensure a mix of a lot more sites not just large strategic sites but smaller site able to be delivered quickly;
• Make use of the changes to the Use Classes Order.

Several of these are being recognised through proposed changes to the London Plan. But can the Mayor can go further by having his Party colleagues in central government do more to bring planning permissions to the market and instill in the Banks a greater desire to increase lending to smaller builders? Perhaps that's the key to increasing home building in London.