At Labour’s annual conference in 2013 Ed Miliband announced his plans for a Labour government to increase the supply of new homes in England above 200,000 a year by the end of the next parliament.
He promptly asked Sir Michael Lyons to look into how it could be achieved.
It was akin to a magazine editor writing a headline first and then asking the ace reporter to go out and find a story that fits. But Lyons set about assembling an impressive array of respected industry figures for his review and his conclusions have just been published.
With housing high on the political agenda, the publication of The Lyons Housing Review means that the starting pistol has been well and truly fired on the pre-election debate.
Until now, there has been precious little substance in Labour’s housing policy. The party’s so-called One Nation Housing initiative, also unveiled at last year’s conference, was based on a 50-point plan and offered some commendable principles by which people could rent or own property, but it was short on detail.
The Lyons review fills in some of the gaps and drops many of the more radical points. The 200,000 target still stands – and in case of any doubt, that is for England alone, where we last built over 200,000 homes a year in the late 1980s boom, and even then only briefly.
The latest figures show that following the introduction of Help to Buy in 2013, house building starts have risen by about 20% to 138,000, which is good progress but clearly well short of Miliband’s target. It is not even close to meeting housing demand, which is widely accepted to be at 240,000 a year – a figure forecast as long ago as 2004 by economist Kate Barker in her housing review.
It is also worth noting that, while starts are a good indicator of housing output, completions need to be factored in too. Starts and completions don’t correlate over the same time frame. And while it might be stating the obvious, you can’t live in a housing start.
Sharing the burden
Part of the problem with supply is that the onus for delivery falls largely on private house builders. It seems unlikely that they could reach 200,000 in Labour’s timescale on their own. Local authorities and housing associations must share more of this burden.
Lyons believes the process of land assembly is flawed and lies at the heart of the housing crisis. This could be a potential flashpoint for the housing sector, given that one of Labour’s housing principles involves a “use it or lose it” ultimatum to developers allegedly sitting on land.
But there is certainly scope to improve the release of local land.
One of the conclusions that the review draws is that councils should have stronger planning duties in assessing housing need. Few could argue with building the right homes to meet local demand. But talk of permitted development remains absent from the report. There is a need for more decisiveness on the part of councils and greater accountability in assessing whether existing buildings and sites are fit for purpose as they stand, or that they should be redeveloped as housing.
Under Lyons’ recommendations, local councils will be given powers to give priority to local first-time buyers to buy new homes and restrict the number of new properties being sold as buy to lets or to anyone other than owner-occupiers.
Locking investors out would be disruptive for the development market. Investors play an integral role in forward-funding new schemes – literally providing the building blocks of many new developments – and they play a vital part in adding supply to the private rented sector. Restricting both supply and choice for tenants will likely lead to higher rents as well as disadvantage renters over buyers.
Measures to underwrite loans to help small builders get building should be welcomed, but encouraging “unconventional developers” such as supermarket chains and churches to enter the house building market could in reality slow down delivery and potentially result in substandard housing.
Surely it is better to leave it to the professionals and focus on providing skills for a much-needed workforce
to deliver new supply.
Nick Vaughan is head of residential development and investment at Hamptons
