We are encouraged that all the main parties have outlined plans in their manifestos to get Britain building more homes, including more affordable housing. Britain needs to build 250,000 homes a year to keep up with demand, a target which will require a significant increase in both public and private development.
Accordingly, we welcome proposals to increase the capacity of Housing Associations, as well as efforts to ensure that homes being built are of high-quality and fit the needs of the local community. The focus by some councils, with whom we have been working, on place-making and strengthening communities through new development offers an example of best practice which others can learn from.
However, there are still a number of areas where we have concerns and would like to see the next government address.
Firstly, the issue of land-banking must be approached in a way which does not undermine Britain’s strengths as a leading destination for international investment. Proposals put forward against land banking and to simplify the CPO process would diminish private landowners’ rights, which may dent confidence in the security of title. This is a cornerstone of the UK’s attractiveness as an investment jurisdiction and the fundamental principles on which land values derive their worth.
The next government must also fully exploit the potential of non-bank sources of finance to address Britain’s housing needs. Non-bank lenders, challenger banks, peer to peer platforms and institutional capital have become increasingly important to financing residential development in recent years, and help to encourage a more diverse pool of developers into the industry.
The current administration’s various funding initiatives via the HCA are pragmatic and on point in terms of providing capital to unlock particular issues on particular sites. But, in the absence of serious reform, the energies of developers, particularly smaller developers and builders, will continue to be stymied by an ongoing funding gap in the next Parliament.
Likewise, initiatives such as the Small Sites Small Builders project being developed in London, which is helping to match smaller developers with appropriate sites, are beginning to address this, but a step change is required if the full potential of this part of the industry is going to be realised.
A diverse pool of developers should also encourage much needed innovation in the industry. New construction methods such as modular housing will require new financial products to fund them before they can become mainstream delivery methods.
We therefore call on the next government to take further steps, working with local planning authorities, to rethink their approach to land-banking reform and ensure that the potential of non-bank finance is fully exploited in the next Parliament. If these measures are properly considered, this will help create a more innovative and resilient housing market that is able to build the homes which Britain desperately needs.
Randeesh Sandhu is chief executive of Urban Exposure