As Ed Miliband promised this week at his Labour Party Conference, Labour ‘will build 200,000 homes a year by 2020’. Well, as many critics have pondered this week, is this really possible?
Mr Miliband proposes to increase building by 20 per cent, a figure scoffed at by developers as being over double the realistic rate of growth. Of course any increase in building is great news, and 10% whilst not ideal, would still be an increase.
Many of the country’s largest housebuilders met with Government officials last month in an attempt to calm Osborne’s rather optimistic claims. However, Ed’s latest speech suggests these calls were in vain with his overall vision brandished as ‘wild’ by house builders. Much of Labour’s forecasts are based upon the improving market as a result of their ‘Help to Buy’ scheme. Though, according to a leading industry executive, he believes that elements of the scheme could be cancelled and used as leverage if builders do not increase their production levels. It has also been proposed by many industry experts that Labour will spout off unrealistic figures of growth and then shift the blame onto the industry when these figures are inevitably not met.
In a further attempt to shake up the housing industry, Mr Miliband’s now infamous ‘use it or lose it’ sound bite rings loud in many a developer’s ear. Miliband proposes that housebuilders who buy land and sit on it for a number of years will face tougher sanctions such as fines in a new push to sanction greater power to local councils. Further to this Mr Miliband says he is considering allowing councils to seize undeveloped sites through compulsory purchase orders. Labour has also promised a new housing review to examine ways to create more new Towns.
However, despite our gripes with Ed’s latest promises; the Home Builders’ Federation has reported positive figures in UK housebuilding, even going as far as to predict a surge. The latest data shows planning approvals for new homes increased 49% per cent between April and June compared with the same period of 2012. The findings also saw a 26% increase in permissions granted over the first 6 months of this year with 77,686 being granted. Although it is important to remember, as we discussed in an earlier blog that just because approval has been granted this doesn’t mean the build will go ahead – there are still many stipulations and conditions delaying development to sites.
Ultimately, there are positive figures out there regarding housing and the industry will grow…just perhaps not as fast as Mr Miliband expects.