Quality not quantity for UK housebuilders

By July 1, 2019 October 1st, 2019 Opinion

Maybe it is because like me, he used to be a lawyer, but I am rather impressed by James Brokenshire, the Secretary of State for Housing, Communities and Local Government. In a relatively short period of time, just over a year, and in a febrile political environment paralysed by BREXIT, he is trying to get to grips with the significant issues facing the Housing Market.

There have been a number of positive steps, including: lifting the council borrowing cap which enables councils to be able to borrow billions of pounds more for housebuilding, changes to the National Planning Policy Framework and the £1bn Housing Delivery Fund to finance small and medium-sized developers to deliver new homes across the country.

He has also pledged to speed up the planning process, which is a quagmire for SME developers who can get tied up for months or even years attempting to get planning. I am not holding my breadth but he wants councils to be able to approve planning applications more quickly under radical new measures to remove bureaucracy from the system. He said that a new accelerated planning green paper, to be published later this year, will dramatically improve the planning process. Let’s wait and see and the reality is that it comes down to ensuring planning authorities have the resources they need to act quickly.

However, it his focus on calling to account the large housebuilders that has really grabbed my attention, especially on cracking down on poor quality housebuilding and the leasehold scandal.

Last week, he announced that all new-build homes are to be sold as freehold and to reduce ground rents on future leases to zero, in a move to tackle unfair leasehold practices, which has been a shameful exploitation of consumers, with the consequence that their homes will be incredibly difficult to sell in the future.

In terms of housebuilding, the large housebuilders are able to build large numbers of units at a cost that smaller housebuilders simply can’t build at, given their economies of scale and the significant preliminary costs involved before construction even starts.

However, it is often eye opening to see the lack of quality in these cookie cutter style housing developments, who often leave new build buyers with a nightmare of faults to fix as opposed to their dream house. The supposed remedy of a 10 year warranty, in reality does very little to rectify snagging and can leave buyers badly exposed.

Mr Brokenshire has been a vocal proponent of building better homes and is considering forcing housebuilders to sign up to a code of conduct if they want to benefit from the Help to Buy scheme, and is pushing ahead with plans for a New Homes Ombudsman to give buyers of new-build properties greater protection.

In my time in the specialist finance industry running development finance companies, we have literally funded SME developers and builders to construct hundreds of houses. I am struck by the care and attention that SME developers take in their building. It is often the exact opposite of the big housebuilders, where our clients see the houses they build as a labour of love rather than just churning out another unit. This tends to lead to the right houses being built in the right areas and happy purchasers. Don’t just take my word for it – an award winning surveyor who has overseen many developments by both SME developers and big housebuilders said that pretty much every time the quality of houses being built by the client’s of Magnet Capital is superior to the big housebuilders.

There has to be an emphasis in the country on not just numbers of properties being built but the right type and quality of houses in the right place. So, you might not have heard much about James Brokenshire but I think he is doing a good job so far.

 

Sam Howard