The UK housing sector is no different; you will recall it came to a complete standstill in the early part of 2020 as the UK shut down due to Covid. However, since that brief setback, it has bounced back, and some would argue has never been more buoyant. Throughout the UK in villages, towns and cities, in what were previously empty parcels of land, are suddenly become building sites — a hive of activity full of people in High Vis and hard hats. The question is, why? The simple answer is, we have a housing shortage — a big one.
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As demand continues to outstrip supply, developers, large and small, are working round the clock to help plug this gap and keep up with buyer demand.
There are many causes for this shortage: a sheer lack of new homes being built since the 1980’s is the most obvious. Planning restrictions and challenges in areas where there are parcels of land deemed to be suitable development locations but never gain approval; and banking by investors who sit on good quality land, waiting for land values to peak before cashing in, are others. Post Brexit, the UK has seen a sharp fall in high quality labour and a shortage of building materials that has slowed down the progress of many developments. We are all living longer and contributing to an ageing population in the UK, meaning less housing stock becomes available. The ultimate knock-on effect of all these factors sees residential property prices continuing to rise as demand remains higher than the available homes on the market.
So, how does the UK plug the gap and start to see house prices stabilise? We need to see more sites gain planning approval which will increase stock levels, giving people more choice and availability of good quality housing.
Developers need to ensure that they factor in their ESG commitments as part of their planning applications too, especially in a post-COP26 world, with significant changes in policy, regulation and finance just around the corner. By bringing ESG considerations to the fore in project plans now, there will be fewer hurdles down the line. Perhaps it’s time for a tax review relating to the build and purchase of residential property; could government make it less of a deterrent for developers and buyers due to the often high stamp duty tax costs? It could possibly provide developers with extra assistance from local authorities with the clean-up of brownfield sites for repurposing as land suitable for residential development and review planning laws to offer more opportunity for housing to be built on land deemed suitable for homes.