How The Housing Shortage Affects Developers

November 29, 2017

Did you know that only 5% of the UK is actually built upon?

 

Even when you consider the farms, mountains, lakes, rivers, national parks, motorways and other areas that you can't build on, this leaves a huge amount of space that's seriously underused.

 

Despite the government putting in about  £25 million into the construction industry under new rules to provide some new housing, there is still a chronic shortage.

 

Now I'm no expert on economics by any means, but as any schoolboy knows, demand plus scarcity equals rising prices. Thinking about it, banks, building societies, and other financial institutions including pension funds invest heavily in property to create profits.

 

If there are more housing developments then surely this will affect this financial mechanism. So does it really benefit the government to build new houses?

 

Maybe I'm being cynical on this point;  but apart from this paradox,  I do think that the real problem with housing supply in this country is the very strict and overly restrictive planning rules and regulations which actively prohibit residential development anywhere other than in the already overcrowded settlements of villages and towns. It seems to me that you need to remove one medium-sized dwelling to cram on 3 smaller ones in its place.

 

Trying to find a building plot in a village or a town and getting the financials to work for the developer is actually quite difficult, despite the government creating legislation that allows the building on previously developed land otherwise known as brownfield sites. They have also introduced permitted development rights to allow the changes of use of offices and retail and warehousing to residential. So in this way, they are in fact utilising existing property to create more housing to help with the shortfall, but building in the countryside remains tricky.

 

However, some councils cannot demonstrate a housing supply of at least 5 years as required by the government. When this happens their planning rules can be overruled and as long as the proposed houses are ‘sustainable’ (and that’s a huge subject on its own) then building in the countryside is allowed. But despite the housing demand, councils still resist these plans and using the ‘5-year housing supply’ route is not by any means guaranteed.

 

So, residential development on the 95% of unused land which is outside of towns and villages is far from easy.

 

The developer must learn how to get around the planning restrictions by using other means. Permitted Development is one way that can be used to their advantage so they can build in ‘the countryside’ and contribute positively to the housing shortage.

 

I will explain how in my next post.

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CJS Planning Services, Norwich
01362 690 779
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