From a housing perspective at least, this week’s Tory conference was as encouraging as any I can remember. Finally the party seems focused on tackling the root cause of the crisis: the woeful lack of supply in the market.
In recent times the government has appeared preoccupied with home ownership. Ministers always denied this, but that was certainly the perception. This week, however, from the prime minister to the chancellor of the exchequer, the communities secretary Sajid Javid to housing minister Gavin Barwell, there was a consensus: the only way out of the situation is to get building.
“Building more homes is critical,” said Javid. Yes, he was stating the bleeding obvious, but it was refreshing to hear it put so starkly by a member of the Cabinet.
He promised to support SME builders, accelerate construction on public sector land and promote new methods of construction.
Did he hint we would go so far as to advocate building on the green belt? Some read it that way. “Local leaders must be prepared to make difficult calls, even if they are unpopular,” he said. “Everyone agrees we need to build more homes. But too many of us object to them being built next to us. We have got to change that attitude.”
That debate will rage.
Did he suggest he would intervene to force developers to build out planning permissions or release the land? Quite possibly. “The big developers must release their stranglehold on supply,” he said. “It’s time to stop sitting on landbanks, delaying build-out: the homebuyers must come first.”
A white paper – expected around the time of next month’s Autumn Statement – might reveal more about that.
And will he free up the public sector to borrow and build? After all, the disappearance of the public sector from homebuilding has contributed hugely to current undersupply. Javid said little that hinted at that, but he should.
Speaking to Estates Gazette later, Barwell added context: “The key message is I want to see more of everything. I want to see more homes built for the open market, I want to see more homes in the PRS, more shared ownership, more sub-market-rent homes as well. Because the need that exists in this country is across all tenures.”
The reaction from residential developers and advisers in Birmingham was positive. Indeed, many were surprised at how far the government appeared to have shifted.
Investors liked it too: Grainger’s share price, for instance, climbed by almost 10% on the speeches.
But there is a long way to go before the government can be confident it can deliver on its ambition for a million new homes by 2020, notwithstanding the announcement of a £3bn homebuilding fund this week.
All in all, however, it was a conference that laid solid foundations on which to build.
Does Guy Hands have designs on property? One of the best-known names in private equity appears to.
The chairman of Terra Firma is slated to speak at MIPIM UK later this month, where he will “explore what Brexit really means for UK property” and, more tantalisingly, “the opportunities for private equity in the UK post-EU referendum”.
One thing’s for sure: Hands won’t be bland.
Will he be entirely forthcoming about further investment ambitions in this sector – Terra Firma acquired Annington Homes, which owns the Ministry of Defence’s married quarters estate, in 2012? Let’s hope so.
“Residential housing is an industry that will provide investment opportunities despite the economic cycle or broader macro-economic issues,” he has said.
That may have been in 2013, but those words are as true today as they were then – especially after events in Birmingham this week.
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