The highly accredited and charismatic Dr Noble Francis, Economics Director at the Construction Products Association (CPA), shares his thoughts and reflections on the new Government’s housing targets and planning system.

Noble explained to David Crowson, Editor, that when the Government announced that it was increasing its housing target from 300,000 to 370,000 homes per year and making it mandatory, it caught his attention. Additionally, the Government proposed revisions to the National Planning Policy Framework (NPPF) and broader planning system in England, which are now open for consultation. Following the announcement, much of the Government’s focus has been on this new housing target and how it’s distributed regionally. But there’s more to the story. There are also some positive proposed changes to planning for infrastructure, including public service projects like schools, hospitals, and prisons, as well as private commercial and industrial developments, such as data centres and giga factories. Additionally, there are proposed changes to planning for upward extensions, such as mansards, which could have a significant impact.

A pragmatic view on the Government’s house building targets

Noble said: “I can’t help but point out that there’s little chance of actually building 370,000 homes per year, even within five years. We’re only expecting around 180,371 homes to be built in 2024/25, meaning house building would have to more than double to meet this target. The Government has also reiterated its ambitious goal of 1.5 million new homes over the next five years, but this too seems very unlikely. “The key issues, however, remain: How will the demand for these homes be met if private house builders are expected to provide most of them? And where will the skills and capacity come from, even if the demand is there? “So far, the Government’s proposals have focused primarily on easing planning regulations, which addresses one problem but does not solve most of the house building challenges, especially for major house builders. That said, it’s still early days for this new Government, and we might see demand-side measures introduced in
the Autumn Budget, such as support for the private housing market and increased investment in social housing.”

Large house builders

He continued by saying: “When I have spoken with large house builders, they have indicated they are ready to build more if the demand is there. However, this would require lower mortgage rates and some Government policy stimulus to enable them to build with significant double-digit margins. But even though mortgage rates are expected to fall as interest rates are cut, the impact will likely be limited. Fixed-rate mortgage rates already account for anticipated rate cuts, so we won’t see mortgage rates return to the historic lows of 2021. Back then, house building benefitted from factors like the ‘race for space’, the Stamp Duty holiday, and Help to Buy. Given this, it’s hard to see major builders contributing much more than they did in 2021. They’re also unlikely to invest heavily in New Towns or green belt developments, as the Government’s affordable housing requirements of 40% and 50% respectively make these projects financially unviable.

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