What's Happening?
Property consultancy Colliers has raised concerns about the viability challenges facing the UK housing market, which could hinder the government's ability to meet its housebuilding targets. Andrew White,
head of UK residential at Colliers, emphasized that while planning reform may gain momentum under the new government led by Prime Minister Andy Burnham and Housing Secretary Angela Rayner, the economic conditions for residential development have significantly changed. White pointed out that the issue is not just about identifying land or setting targets but restoring economic conditions that allow for sufficient home building. Factors such as rising build costs, expensive development finance, planning delays, and regulatory requirements are putting pressure on new housing schemes. Additionally, slower sales rates for new-build homes reflect commercial realities rather than a reluctance to build.
Why It's Important?
The viability challenges highlighted by Colliers are crucial as they impact the ability to meet housing demands in the UK. The cumulative effect of policies like affordable housing requirements and building safety legislation, while serving legitimate objectives, adds significant cost and complexity to residential development. This situation is compounded by ongoing housing affordability concerns, affecting market demand. If these challenges are not addressed, the government's ambitious housing targets may remain unachievable, affecting the housing market and broader economic stability. The need for a balanced approach that maintains environmental and quality standards while ensuring development viability is essential for sustained housing supply increases.
What's Next?
For the UK government to achieve its housing targets, it must address the economic viability of residential development. This includes increasing affordability, providing policy certainty, supporting infrastructure investment, and understanding development viability. Planning reform remains essential, but it must be accompanied by better-resourced local planning authorities to improve market confidence. If the government can restore confidence in the commercial viability of development and create a faster, more consistent planning system, housing delivery is likely to increase. Failure to address these issues may result in continued challenges in meeting housing targets.
