Councils must take more risks to build homes
Published by Max Salsbury for 24dash.com in Housing and also in Development, Local Government
Councils are being urged by developers to take more risks with their land to build more new homes.
Though an increasing number of councils are forming partnerships with private developers, more radical steps will need to be taken say property chiefs, who are calling on local authorities to put land into joint venture agreements in order to reduce up front financial outlay for constructors.
Anthony Lee, director of development and residential consulting, at BNP Paribas Real Estate, said: “The credit crunch continues to stifle activity outside of London, meaning finance for schemes is difficult to secure as banks look to rebuild balance sheets. But it is possible to work around that if councils are willing to take on more risk and give up short term gain for longer term benefit.”
Nick Jopling, executive director at developer Grainger, added: “Our own deal with the Royal Borough of Kensington and Chelsea means they will be able to deliver new homes in their local area as well as receive a secure rental income stream for 125 years through high quality rented homes, which Grainger will develop and manage on their behalf.
"With growing demand for rental accommodation in many places throughout the UK, this is a model that many councils could replicate. At a time when government subsidies are at an all-time low, leveraging property to support other council services makes perfect sense.”
According to government figures, 115,000 new homes were built in England and Wales last year.
However, it is widely estimated that the UK needs roughly 300,000 homes to be built each year for the next decade to address the 230,000 new households created annually and an existing two million short-fall.
Estate agent Savills estimates that even with Help to Buy potentially boosting new home sales by 30%, housebuilding will struggle to exceed 155,000 units a year.
And BNP estimates housing targets have fallen to 170,000 homes per year – around 7% below regional spatial strategy targets, which equated to around 185,000 per year.
Lucian Cook, head of UK residential research at Savills said: “Central and local government have the ability to facilitate much greater levels of housebuilding through a more flexible approach to planning, the supply of surplus land and policies that support the development of build to rent model.
"Help to Buy may be grabbing the headlines but this can only be one part of a more holistic approach to meeting the country’s housing shortfall.”