UKPF partners and sponsors have welcomed the Competition and Markets Authority (CMA) report on the housebuilding market – but now want to see action.
The CMA report, published on February 26, found the planning system to be ‘complex and unpredictable’ and, along with the limitations of speculative private development, to be responsible for the persistent under delivery of new homes.
Jonathan Headland, urban design director for WWA, said: “The CMA report into housebuilding has reinforced what, those of us who operate in this sector have been painfully aware of for some time, namely:
- The lack of investment in and unpredictability of the planning system in England is a huge brake on delivery of housing. This has the effect of producing unpredictable results and often takes a protracted amount of time for builders to navigate before construction can start.
- The consideration of ‘land banking’ is a symptom of the constipation and uncertainty of the planning system rather than a separate issue.
- The over reliance on private sector speculative development for delivery of housing, further compounds meaningful delivery of housing, with SME providers particularly badly affected by these delays, levels of uncertainty and costs.
- There is a long emerging trend of increasing private estate management, a further symptom, in my view, of massive under investment in local government services over the last 15 years.
- There is no real incentive for speculative development providers to compete on quality.
“In short, the strong lack of competition in this sector, from pure larger scale speculative development providers, is exacerbated by the current issues within our planning system.
“If left unchecked this could further erode numbers of new entrants and therefore non market-led delivery. The CMA review also found that the main drivers for low housing delivery in England are policy-based, or the result of choices made by Government, rather than deliberate action by the housebuilding industry.
“It makes for depressingly predictable reading. Given the fundamentals of housing delivery seem to, for now, at least, be well understood; when will Government pick up the mantle and start the work of fixing this planning-based, housing crisis?
“I am hopeful the momentum created by the CMA review will lead into the upcoming General Election and would love to see strategies which help address:
- Delays and unpredictability in the planning system
- A lack of local authority resourcing
- The huge over reliance we have in housing delivery being left to the private sector, which has commercial constraints around build out and absorption rates to take into account.”
John Dingle, partner in commercial property at Blandy & Blandy, said: “It is of little surprise that the report recently issued by the Competition and Markets Authority (CMA) on the housebuilding market highlighted ‘fundamental concerns’ and the need for more good quality new homes that deliver homeowner value for money. Achieving that is another thing entirely.
“The CMA rightly targets delays and unpredictability in the planning system, which – the report states – is underpinned by insufficiently resourced planning authorities, often without Local Plans, clear targets or strong incentives to deliver, and in the face of challenging statutory consultative procedures.
“Not to mention all of the other headwinds. The CMA, however, stops short of outlining specific recommendations as to how to improve on the status quo, and instead proposes several options for consideration, such as streamlining planning systems (whilst not watering down environmental and other protections) and increasing planning authority capacity.
“Looking at housing quality, the CMA’s report does contain specific recommendations to help improve quality, such as establishing a New Homes Ombudsman, and also proposes other recommendations to tackle the ongoing and often uncertain costs that homeowners may face when buying a new-build property, such as the recommendation that local authorities adopt new-build amenities (which would include amenities such as estate roads and services, and which will clearly require additional government funding).
“However, when it comes to the impact of market forces on the deliverability of housing, the CMA provides further options for the Government to consider (such as the introduction of incentives for developers to diversify new home supply) but does not, again, cater for specific recommendations.
“It remains to be seen whether the impact of the CMA’s report – which stops short of putting forwards specific recommendations on two key issues – will result in real change in the context of an increasingly complex planning system and the continuing impact of market forces on the private housebuilding sector, all set against the backdrop of likely political change.
“Any positive change is welcome but, as the report states, the evidence is that market supply may still not keep pace with market demand even if its recommendations and options are taken into account.”
Brian Dowling, partner at Boyes Turner, said: “Hopefully, developers feel vindicated by the CMA report. It seems to dispel a number of persistent myths and misunderstandings about how land is turned into housing. And it acknowledges that the current market is not working for consumers and that much of the fault for this lies with the planning system.
“This includes a confirmation that land banking is not a major contributor to the current mess. Building and selling to meet appropriate absorption rates is not seen as a practice that needs to be targeted.
“Land agents and promoters will be pleased to hear that they are, statistically speaking, not dragging out the planning and sale process to maximise profits. Lawyers weren’t referred to in that part of the report.
“And there was an acknowledgment that the cost, uncertainty, and duration of the planning process is disproportionately harming SME builders.
“Estate management arrangements came in for criticism. There is an understanding that common areas are no longer adopted by local authorities, and that it can be difficult for residents to take control of the areas which they have to pay to maintain. That should be looked at, and reforms should be introduced to give residents more rights. But that isn’t a matter for the CMA.“
Colin Brown, head of planning & development for Carter Jonas, said: “In my view the CMA has quite correctly pointed out that a central issue in the slow delivery of new housing is the state of the planning system, and particularly its funding and the slow progress made with Local Plans.
“I am also pleased to see that the myth that ‘landbanking’ is being pursued nefariously by housebuilders has been debunked and there is an acceptance that their need to have a secure pipeline of sites necessitates the holding of land.”
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