A leading property consultant has released a report which finds that, at current house building targets, the UK’s housing shortage will take four decades to fix.
Bidwells released its one hundred and eight page report entitled “The Productivity Engine”, and in it examines what it describes as “Britain’s flatlining productivity”, with the housing crisis named as one of this country’s key barriers to success.
Other factors cited as contributing to our productivity troubles are: the lack of resources for R&D-intensive industries and the scarcity of purpose-built labs; the sporadic and inadequate upgrades to transport, grid and utility infrastructure, the piecemeal approach to renewables and the environment; the inefficient, non-strategic and short-term utilisation of landed assets.
The paper argues that productivity has been overlooked as a factor influencing the housing sector; where it states inflation, interest rates and GDP growth tend to be the focus. But, the point is made that economic performance is both influenced by, and influences, real estate.
In analysing these influences, the report breaks down four types of space, housing, cities, innovation and power and infrastructure, which Bidwells believes are the ‘primary drivers of productivity’.
Productivity failure
The report by Bidwell’s puts forward a productivity framework which describes what its authors conclude are the reasons for productivity failure in the UK:
- Cities: Are not future-proofed and so centres for productivity are being ‘hollowed out’.
- Power and infrastructure: The best and most optimal use of land in the long-term is being overlooked and so is stunting the acceleration of productivity.
- Housing: Positive social outcomes and productivity are being restricted by the lack of housing tenures needed
- Innovation: With limitations on the space for innovation, high value jobs are suppressed and talent is going overseas.
The housing shortage
Within the report, homelessness is spotlighted as the issue of greatest concern arising from the country’s lack of housing, giving the following statistics for autumn 2023:
- 3,900 people were sleeping rough
- 109,000 people were in B&B/hostels/private rentals, arranged by local authorities
- An estimated 150,000 people were sofa-surfing, living in cars, sheds or other unsuitable buildings
All down to the fact that property is unaffordable for individuals and, the report states, for the government too.
The paper says that financial deregulation – buy to let mortgages – are partly to blame, but points to the growing void between house prices and earnings as driving the average age of first time buyers from 26 years old in 1980 to 34 years old in 2022.
The report also highlights that the gap in housing affordability is costing the government significantly increasing sums of money in housing benefits, which have grown by 50% in the last five years.
Will housing targets pledged by politicians fix this problem?
This all prompts the question as to whether the house building targets, put forward by the politicians in their various manifestos, will actually fix the housing shortage.
Far from it, according to Bidwells, who – having modelled population growth and data from the Office of National Statistics – says that 550,000 new homes need to be built annually, until the year 2031, to both clear the backlog in requirement and account for the increase in the population.
The Conservative party has pledged 320,000 per year for the next five years, the Labour party pledged 300,000 per year, the Green party pledged 150,000 social homes and the Liberal Democrats pledged to build 380,000 new homes of which 150,000 would be for the social sector.
The report suggests that its much higher house building target of just over half a million homes per year needs to comprise a range of property types, including ‘housing for the elderly (sheltered accommodation, care homes), private rented flats for young graduates and more social housing for families on low incomes.’
Planning reform essential
Bidwells also argues that major planning reform is needed. The report states that giving planning powers to local authorities has watered down growth, as whilst most people do not object to more housing and employment, they do not actively vote for it.
Furthermore, those who oppose will turn up to vote against it, and so there is less energy propelling growth forward and more holding it back.
The report proposes that housing and economic targets should be set nationally, larger authorities should be set up to stop cities dictating development and ‘, local authority allocations, infrastructure funding, affordable housing and S106 contributions must be reformed so there is a clearer and more express link between new development and local communities.’
Implications for landlords
Given that the various manifesto pledges being given are all well below the 550,000 per year figure that this report proposes is required, then taken at face value our housing industry is set to remain crippled by a lack of housing stock.
And, with decades of house building targets being missed arguably a huge change is required to achieve proposed targets consistently, let alone exceed them to the extent being discussed in the report.
With that backdrop, the private rental sector will remain a vital option for those people unable to buy property, or who prefer the flexibility of rental accommodation.
However, landlords are still having to carry the mantle of scape goat, in the eyes of the public, for a great deal of this countries housing woes.