For the second year in a row the government has got off to a rapid start in its plans for the housing market with two initiatives issued ahead of Twelfth Night and before some Hogmanay revellers had even managed to make it home.
Where last year began with prime minister David Cameron (remember him?) revealing plans to directly commission 13,000 affordable new homes, this time it was prime minister May and her team giving the go ahead to build a swathe of new garden villages and updating us on progress on Starter Homes.
Both these announcements were made in the first week back to work ensuring there was no easing back into the routine for those charged with debating and analysing the market. The timing helped both initiatives get decent air time in an otherwise relatively quiet news week and there was much discussion and debate about the effectiveness of these new plans in tackling the housing crisis.National media
It is often the case that announcements such as these are not well covered by the national media which can be a cause for some frustration for the industry. The press releases are sometimes treated as gospel along with overblown claims of how much success they might have in increasing housing supply. A complex debate is by necessity condensed into a three minute news slot resulting in a lack of depth to the discussions.
While this was again true this January, there was a small change in the media’s approach. Whether it was part of the new trend to question anything “experts” have to say, or whether it was just a result of the government making too many announcements too quickly, but questions started being asked about whether all these initiatives were actually any good and would make any difference at all.
It is a very good question. For all the announcements of new funds and new initiatives, what is it actually like at the coal face – are there increased opportunities to build more new homes? Clearly some ideas have been successful and popular – Help to Buy equity loan for instance. Others may not have worked so well.
But what of the initiatives designed to make life easier for small to medium sized housebuilders? Anecdotal evidence suggests that these are not going so well. I can think of at least three bosses of smaller firms who have spoken to me about the ongoing frustration of tapping into the funds and initiatives that have been announced by the government. “When it comes to it – when you apply, the money is just not forthcoming,” said one. Another pointed out that the banks have “effectively stopped lending post-Brexit” and that the “Homes and Communities Agency model is difficult to work”.
There are many different areas of the housing industry that need to be tackled and improved to boost housing supply – but helping SMEs succeed and grow is naturally a key area. Regulation, the planning system, the funding challenges of recent years and the way housing targets work locally are all combining to make it difficult – if not nigh impossible – for a small firm to flourish.
In a report issued last month the Home Builders Federation – through interviews with its smaller members – revealed the challenges facing SMEs, numbers of which have collapsed in the past 20 years or so. In a telling foreword to the report, Redrow boss Steve Morgan said that in the current climate the likes of himself, Lawrie Barratt and Tony Pidgley would not be able to repeat the feat of growing small firms into Top Ten industry plcs. HBF’s report included a series of recommendations to try to help SMEs grow.
But it would seem on the face of it that they are pushing at an open door. At a Housing Delivery Summit in London last month, HCA chairman Sir Edward Lister made it clear that helping SMEs was a priority. “We need smaller builders,” he said. “Because they become big builders and they build on smaller sites. But there are blocks to their progress – including availability of sites, a planning system that works totally in favour of the big boys and obtaining development finance.”
Sir Edward said the HCA will help with land and with funding SMEs through the planning process and become risk takers along with the smaller firms. It all sounded very good – but I sensed that if my three small builder bosses had been listening they would have been harrumphing in frustration and disbelief.
So we move from the era of nothing being done for the industry to an era of regular announcements and launches – but with the concern that nothing is yet changing. To keep abreast of this in 2017, we will be checking in with the government agencies, the small housebuilders and the big boys to keep asking the question – is anything actually changing at the coalface?
We need these announcements to become actions, not just words to titillate the news agenda in the quiet weeks of January.