The housebuilding industry has warned that the number of new properties completed each year in England could fall to its lowest level since the Second World War due to a “perfect storm” of government policies and high mortgage rates.
The Home Builders Federation estimates that annual supply of 233,000 new properties in 2021-22 could fall to just 111,000 this decade as a result of changes to England’s planning framework by ministers and the impact of government environmental regulations.
This would be the lowest level in more than 80 years. Stewart Beasley, executive chairman of the Federation of Home Builders, said “not in my back yard lobby” for “government capitulation”, and mishandling of environmental policies, home building could decline and hundreds of thousands of jobs at risk Could
Beasley said “short-term political decisions” to appease backbench Conservative MPs worried about the development were putting confidence in the housing market at risk, as Britain headed for a possible recession with tighter mortgage availability.
Higher interest rates have pushed up the cost of mortgages, and lenders further increased the price of their products last year after then-prime minister Liz Truss’ disastrous “mini” budget.
Since then, the cost of some fixed-term mortgages has fallen, but they are still more expensive than they were before the Bank of England started raising interest rates to curb inflation.
Housing Secretary Michael Gove last year slashed the government’s target of building 300,000 homes a year in England in the face of a rebellion by Tory MPs concerned about building in their constituencies.
In December Gove wrote to MPs saying the target, despite being in the Conservative Party’s 2019 general election manifesto, would only be a “suggestion” rather than a firm target.
At the same time the Government also launched a review of the National Planning Policy Framework for England.
Gove announced that councils would no longer have to plan a “buffer” of 20 per cent more new homes than they needed, and said they could reduce the amount of land needed for house building.
Local authorities were previously ordered by ministers to draw up a “local plan” with specific housebuilding targets.
But research by the Federation of Home Builders and the Federation of Land Promoters and Developers has found that 47 councils have postponed that process amid recent policy uncertainty.
The council in the Gov’s Surrey Heath constituency is the latest local authority to delay its new housing construction scheme.
Surrey Heath Borough Council was aiming to draft its plan by February, but said on its website that it was reconsidering the announcement as a result of changes to the national planning policy framework.
In research for the Home Builders Federation, planning consultancy Litchfields predicted that changes to the framework could reduce the supply of 77,000 properties per year in the near term.
The research also concluded government environmental regulations to protect against pollution of rivers and waterways could lead to a further cut in supply to 41,000 homes per year.
Guidance on so-called nutrient neutrality from Natural England, a government agency, requires Scottish councils to restrict house building to limit the pollution caused by residential development.
Construction on new housing in “recreational influence areas” near national parks may also be constrained by Natural England boundaries.
The Department for Leveling Up, Housing and Communities said it “did not accept” the Home Builders Federation’s analysis, adding that it was committed to delivering 300,000 new homes each year.
“The proposed changes to the planning system are designed to support areas to achieve more local plans and therefore provide more housing,” it said.