House building – latest excuse is lack of skilled workers

For years, the Home Builders Federation, the Federation of Master Builders and others have been warning the government that there are not nearly enough new homes being built to satisfy demand. According to Shelter, the UK needs at least 250,000 new homes per year to come close to reaching that goal. Last year (2014), the actual number built was 118,760.

Various reasons for this have been discussed in recent years, such as planning permission for developments taking too long to go through. Another reason often put forward is that house prices are rising so fast that fewer people can afford to buy, and if they can’t be sold, then they won’t get built – though this is somewhat paradoxical, as not building houses will only push prices further up.

In addition, there has been a perceived lack of available sites and the banks have substantially tightened both their lending criteria and their typical loan-to-value ratio.  Whilst the larger construction firms like Balfour Beatty can access finance elsewhere through financial instruments like ‘commercial paper’, ‘deep discount bonds’ and ‘Multi-option financing facilities’ (MOFFs), to name but a few, these options are not open to the smaller end of the industry which is struggling to contribute a meaningful number of homes.

To each of these obstacles, the government has acted – planning laws were relaxed to allow more construction on brown-field sites and a new ‘fast-track’ Householder Appeals Service has been introduced to expedite the planning appeals process. The regional tier of planning has been removed and more focus put on local planning authorities. Schemes like the ‘Help-to-Buy’ have been introduced to assist first timers with securing their first investment.

Help-to-buy seems to have been quietly successful – according to George Osborne, over 120,000 people have been assisted to buy their own properties since the scheme began in 2013. The vast majority of these were outside of the Greater London area.

In August last year, news from the construction industry was so positive there was a reputed shortage of bricks! This is denied by the Brick Development Association, who said that brick manufacture was keeping up with demand, and that with there being 1,500 different types of brick, there were always supplies of the more expensive bricks in stock.

Now it is said that the current reason for the shortage of homes is the shortage of skilled workers like bricklayers, carpenters, joiners and plumbers. This is regional to a certain extent – Northern Ireland requires more general labourers, while the West Midlands needs more scaffolders. If you’re an out-of-work plasterer, head over to the East of England where the shortage is greatest!

Whatever the reason for the shortfall in housing, it’s going to take many years for the UK to get up to the 200,000 new houses a year promised by the government. Although the likes of Taylor Wimpey, Persimmon and Barratt are busy building, Housing Associations are only building a very small number – in 2013, only 27,040 were built, compared to 108,860 by the private sector. As for the government itself? Just 2,080.

www.PropertySurveying.co.uk

PP
04.09.15

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