Diversify and innovate to fix the housing market
UK government places diversification of tenancies and offsite construction at the heart of its housing policy as Mark Farmer, author of the Farmer Review, cites skills as the ‘burning platform for change’
Report from – Damien Carr
The government’s highly-anticipated housing White Paper ‘Fixing our broken housing market’ published on 7 February 2017 has set out wide-ranging proposals for increasing the supply of housing.
According to the White Paper the country needs 225,000 to 275,000 homes per year to keep up with population growth and demand, which has led to soaring house prices and a fall in home ownership.
In research released in August 2016 by the Resolution Foundation, for example, home ownership in England was at its lowest level in 30 years. And it is not just in the overheated London and South-East property bubble that people have been struggling to afford to buy their own homes; double-digit falls in home ownership are also being experienced in the West Midlands and in Manchester and other ‘Northern Powerhouse’ cities.
The White Paper, therefore sets out a series of proposals to tackle the under-supply of housing, identifying the planning system, an over-reliance on the major housebuilders, and a lack of skills, as major barriers to delivering new homes.
Perhaps the most significant area of the White Paper, however, is a move away from the traditional emphasis on homeownership, which has defined national housing policy in recent decades, in favour of a shift towards a more diversified market of mixed tenancies.
Diversifying the market
For example, the White Paper urges increased involvement from pension funds and other institutional investors for to enter the build-to-rent market in order to create a private rented sector able to deliver more quality rental accommodation with greater security of tenure. A key proposal in this area is a change to the National Planning Policy Framework to encourage build-to-rent schemes.
The White Paper also calls for a greater role for housing associations, which already build a third of new homes and also encourages local authorities to build more. Significant proposals include a commitment to set out rent policy for housing associations beyond 2020 that allows them to borrow against future income and “bespoke” housing deals with local authorities that demonstrate a commitment to housebuilding.
Writing in a blog, BRE’s Gwyn Roberts who leads the Home Quality Mark, welcomed this shift towards a more mixed-tenure housing market.
“As [Communities Secretary] Sajid Javid says, there is no silver bullet but a combination of diverse homes, with different tenures, built in efficient ways that are in locations that people want, to high standards of quality and sustainability is the only way to achieve the housing targets that have been set,” he said.
Modern Methods of Construction
Indeed, the government places modern methods of construction, including offsite manufacturing, at the centre of its proposals both as a solution to tackling the skills shortage, driving up efficiencies and quality and as an enabler for a more diversified market. For example, offsite construction will underpin both an increase in custom build homes and the government’s £1.7bn Accelerated Construction programme for local authorities that use small and medium builders to construct homes on surplus public land.
One of the issues that has adversely effected the offsite construction sector has been the lack of pipeline in the market and scale of production for factories to improve efficiencies further and drive down cost. Proposals in the White Paper, therefore include a stimulation of the sector through the Accelerated Construction programme and Home Builder’s Fund and examine how the planning system is working for offsite.
David Brown, co-founder of modular housing specialist Pulse Modular, welcomed this emphasis. “What is encouraging is that the innovation drive of the whitepaper is already being recognised by councils and housing associations. One of our housing schemes, which is in partnership with North Lincolnshire Council above a Scunthorpe town centre carpark, is a perfect example of how this can work.”
Skills – the burning platform for change
The Housing White Paper has tackled many of the issues identified in ‘The Farmer Review of the UK Construction Labour Model – Modernise or Die’ published at the end of last year. Indeed, its author Mark Farmer, founder of property consultancy Cast, broadly welcomed the Paper in his keynote address to the Offsite Outlooks event held at BRE on 15 February.
In a wide-ranging talk he described the shrinking workforce through retirement as being the “burning platform for change”. Not only would labour shortages exacerbated by Brexit contribute to increasing construction costs, which have risen to 40% since 2001, but also a reduction in skills and quality.
“We’re faced with a deterioration in quality…for me there is a genuine dilution of competence levels across not just trade but professionals as well, this is a construction-wide issue, and for a whole host of different reasons I see this as being not just an issue of head count but of competence that people can do what we ask them to do,” he said.
Farmer highlighted the importance of pre-manufactured homes as a solution to these fundamental problems in the industry. He said one of the failures in the industry was the lack of standardisation.
“We bespoke every design that we do and re-invent the wheel every time, and very little standardisation opportunities are harnessed. That doesn’t mean we have to cookie cut everything,” he said.