The recognition that England is facing a housing crisis has pushed housing to the top of the political agenda. As the general election approaches, all three main parties agree that housebuilding needs to increase in order to meet the needs of a growing population.

However, with the party conferences now over and the election battle lines drawn, political differences on how to achieve higher levels of housebuilding are coming to the fore. So what are the key differences between the housing policies emerging from the main parties and what are the prospects for housebuilding?

"All three main parties agree that housebuilding needs to increase"

Labour

The Labour party has said it aspires to increase housebuilding numbers to at least 200,000 by 2020. This ambition was emphasised in the long-awaited Lyons Housing Review commissioned by Ed Miliband to map out ways of delivering higher housing numbers.

The broad and comprehensive review offers a range of recommendations, from ways to improve the planning system and increase land for housing, to emphasis on the importance of building for different tenure types, including private rent. There were also recommendations for helping SMEs. There was no mention in the review of Ed Miliband’s promise at the Party’s conference to ensure 400,000 first-time buyers get on the property ladder. Details on that proposal remain elusive.

Conservatives

Although the Tories have set no targets for housebuilding, emerging policies have focused on homeownership. Since its launch in April 2013, the Government’s flagship policy Help to Buy has supported 53,000 sales, including 37,600 through the Equity Loan part of the scheme aimed at purchases of new build homes.

As an extension to that, the new Help to Buy: Starter Home, will enable first-time buyers under 40 
to purchase a home at 20% discount 
to the market price.

Under the scheme, which the Conservatives say will deliver 100,000 over five years on new brownfield land, developers would be exempt from paying Community Infrastructure Levy (CIL), off-site S106 contributions, including affordable housing and the homes would not have to meet the full zero-carbon standard.

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Liberal Democrats

The Liberal Democrats are calling for 300,000 new homes and to help deliver these numbers, the party is proposing at least ten new Garden Cities. Plans include the re-opening of the Oxford to Cambridge rail link and expanding three to five of the towns along the route ‘along Garden Cities’ principles. Building on the ‘brain-belt’ would enable 50,000 
new homes to be built, they say.

Housebuilding forecasts

Current projections for household growth suggests that we should be building 240,000 to 245,000 new homes in England a year. Just over 112,000 new homes were completed in the 12 months to March 2014 this year in England. This represents an increase of 4.5% on the previous year but remains well below the 170,000 achieved in 2008.

However, despite the political 
will to support housebuilding, 
the strengthening economy and growing consumer demand, we expect the number of housing completions to increase to 152,000 in 2019, as current conditions stand. This falls well short of Labour’s and Liberal Democrat’s targets and assumes that private housebuilders will continue to deliver the bulk of new homes.

Private housebuilders have responded to strong demand for homes by increasing production. Over 111,000 new homes were started by private builders in the year to March 2014, an increase of 28% on the previous year. We expect the momentum to feed into the completions data next year but constraints such as a shortage of labour and materials will prevent continued growth at this level. The private sector has become increasingly dominated by larger developers (500+ units per annum), which are currently delivering 73% of private homes. Judging from housebuilders’ performance over the last two decades, we believe this part of the sector is close to maximum capacity. In contrast, small builders (up to 100 units per annum) are producing just 14% of all private homes compared with 26% at the height of the market in 2006-07. It 
is difficult to see a full recovery any time soon.

Therefore, we forecast completion rates for private housebuilders will grow by around 4% a year from 2015 onwards. Within this, there is less Section 106 affordable housing than in the past, squeezed by viability, including the lower value of affordable housing without grant. This squeeze will be exacerbated by Community Infrastructure Levy as its implementation is rolled out.

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Public sector and affordable housing

While housing associations and local authorities have the potential to play a significant part in boosting housing numbers, we do not expect the public sector to fill the gap between private developers’ output and housing need in the short-term.

Housing associations have not delivered more than 27,000 new homes a year at any time in the last 15 years and there is little sign of this changing soon, particularly as there seems to be limited appetite for the Government’s 2015-18 Affordable Homes Programme, which was 
48% ‘underbid’ in the most recent round. Local authorities are developing a lot more, but much of this is via joint ventures, so it is likely to be recorded in the housebuilding statistics as activity by either the private sector or housing associations.

So the capacity for new homes development under established models is unlikely to get much above 150-155,000 per annum, with affordable housing delivery falling short of Government targets, unless and until we get radical change in the way that homes for rent and other flexible tenures are delivered.

With the weight of money looking to invest in large scale rented housing and a shortfall in private rented supply, there must be a policy priority to bring forward large sites with substantial elements of build to rent, in addition to established forms of development.

Taken from
Residential Property Focus Q4 2014