The Economics of the UK Housing Market – House of Lords consultation

CoVoP draft Submission to House of Lords Inquiry Dec 2015

Well done to CoVoP on this draft submission and I must say I am delighted with this document and find it supporting the views and written output of WARD over the last 5 years, especially in respect of 5 year land supply being used not to stimulate building but to impede it and generate softer planning on more desirable sites.

Having read it through I do feel that some wider issues may be being missed but I’ll concede that they may not be at the core of arguments about the economics of the UK housing market.

There is an issue over supply of raw materials, especially bricks. I believe that brick output is also mainly in the control of the big 6 builders because: –

  • they own the brick manufacturing companies (or are shareholders)
  • they have pre-ordered substantial brick quantities that are successfully cutting out the SME builder
  • the result of this is a shortage that is pushing up prices significantly to those wanting to buy smaller quantities e.g. SME builders.

My view on this is that government should be encouraging the development of more “ready built” housing that can be mainly constructed off site and quickly erected on site. These use less of these brick resources by enabling the use of alternative materials. There is also much more likelihood of these types of construction generating lower cost housing because building costs are lower. There is also considerable advantage in productivity as housing building goes on in whatever weather.

Finally, as a solution to all this I am strongly of the view that governments are there to fix “broken markets” and I’d say the housing one is seriously broken (it’s not delivering built houses!). I go further and state that I believe the developers are revelling in it being broken, benefitting from that, and do not want it to be repaired.

The government stepped in and poured billions into a broken banking system. They need to step in and get these brownfield sites built through financial incentive, and this should be a reward for actual housing delivery and nothing else – payment on result and driven through the corporation tax system. We have seen that the big six developers cry foul on any development not generating 20% profit. I am in favour of government financial support through the company taxation system to support brownfield development margins – but I’d like to see that offered not to the big six (who have taken advantage of the situation and have not built) but to local SME building companies, who will also be employing local people.

Martin Hughes