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House building has become an expensive game of chance with less players willing to take the risk

With continuing recession it seems that construction is the culprit with a down turn of 3% in the last quarter. Yet the BBC’s Stephanie Flanders recently highlighted how house building is the very industry that could take us out of recession. House building is a powerful economic accelerator. It is said that for each £1 spent on house building £2.50 is added to GDP. In the USA that is beginning to take place with just a small improvement in house building making its mark. So why not let’s get on with building more homes. The UK population has risen. No one could seriously argue that we don’t need more homes?

 

Sadly, we have a trifecta of constraint that conspires against any possibility of a substantial increase in House building.

 

Insidious red tape and regulation is throttling the house building industry. Building codes   add costs and delay. Planning applications requiring endless environmental reports. Obsessive   development control and restrictive development plans. Affordable housing that is unaffordable in terms of development viability. Construction training levy and community infrastructure levy. From the minor costs of acquiring information from statutory bodies and service providers, to the costs of Planning Obligations. House building has become an expensive game of chance with less players willing to take the risk.

 

Next is the absence in Southern England of any willingness to make development land available despite the exhortations of central government. We don’t need vast areas of countryside set aside for housing. What we need is changes at local level to allow new homes in response to demand. Change in land use from business to residential. Mixed use development. Intensification of development by town centers. Specialist land allocations for affordable rented homes. Small scale development but lots of it.

 

Finally is the absence of finance. The thirties housing boom was fuelled by the availability of mortgages through the Building Societies. Again in the 1970s mortgage funding was made available. Today state owned banks are constrained by the edict to build cash reserves to meet gambling debts. Little appetite for mortgages, nor to fund Housing Associations to provide subsidised rented housing.

 

The effects of these constraints to house building cause polarisation between rich and poor. House prices are not rising due to the funding constraint, but there is the increased cost of rented housing caused by housing shortage. Worse, this polarisation distinguishes young and old, with young working couples struggling to get onto the housing ladder. Unlawful residential use of outbuildings in gardens has become an unwelcome feature of our cities in response to a failure of development control. Public funds have to support temporary accommodation that disrupts and segregates families denied decent homes. Regional disparities in housing and labour markets are exacerbated.

 

We need to unravel red tape, plan for our future, invest in housing and build more houses.

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