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New Homes: Can the supply meet the demand?


Lack of affordable new housing is the subject of constant debate. The Government recently set a target for 200,000 new homes to be built each year but is this figure achievable in reality?

There is debate over the type of data that should be used to base the progress of building new houses on. Whether this should take into account buildings that are demolished and rebuilt, offices converted into living spaces or solely be based on new houses that are built, it is clear that the amount of new houses made available each year is significantly below demand.

Projections prepared by the Department for Communities and Local Government indicate that household growth alone requires 220,000 houses to be built each year across the UK for the next 10 years. This figure does not account for the significant undersupply that has been ongoing for many years.

Is it really possible to build this many houses? The large house builders have pledged to build over one million homes by 2020. However the estimated figures for new homes expected to be completed in 2015/2016 show significant lacking – just 172,000 for the year.

Although the large house builders have made this pledge, they will also need to rely on the Small and Medium Sized (SME) house builders to help them. Demand for large plots of land is ever increasing whilst the available plots are obviously decreasing. Greater Manchester councils have resorted to assessing the viability of building on green belt land in order to accommodate the need for new houses in the area.

SME’s are needed to bump up the housing figures. The idea is that more land is available for smaller housing developments. However, a recent survey conducted by the Federation of Master Builders (FMB) has shown that lack of viable land was cited as the most common barrier to development for SME’s.

The lack of land is not the only thing inhibiting SME’s though. The FMB report further advises that the second most common barrier is the lack of financing available to the SME’s and the protracted and burdensome planning system that is in place.

With all this said, the large house builders have reported that they are building 60% more houses than they were in 2010. Hopefully SME’s will follow suit in the near future.

There is no dispute that more houses need to be built and builders are willing to make this happen. All that remains is for the barriers, such as financing and planning delays, preventing the house builder’s pledge from becoming a reality, are removed as a matter of urgency.

For further information, please contact Ellie Leatherday.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.


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