The British Property Federation (BPF), a group of the UK's biggest construction companies, has urged the next government to invest an extra £14 billion into affordable homes.
They believe this could ensure 145,000 are built every year. The BPF also wants the next government to make sure around 30,000 build-to-rent properties are constructed across the country. Melanie Leech, the group's chief executive, said "this year's election comes at a critical time. The next government must not only set out a compelling vision for the future but will need to persuade the electorate that it can deliver." The BPF believes that if the government works with the industry, it could unlock billions of pounds of investment from property companies.
They suggest that £10 billion of new private capital could be unlocked if the government increased subsidies for affordable housing by £9-£14 billion. This could help deliver 145,000 new affordable homes every year. As a country, we need to stimulate economic growth and become more productive.
We need to invest billions of pounds in our infrastructure, our housing is of insufficient quantity and quality, and town centres across the UK need reinvention. Looming over these issues is the existential challenge facing all of us the need to decarbonise our society."
The country might have an election this year or in January 2025 if the Prime Minister waits until the last possible moment. The BPF has called on the government to take action in several areas, such as making town centres stronger and helping developers build greener buildings. They want more support for local planning officers and a central system that helps with big projects.
They also want changes to the business rates system, which is like council tax for businesses. A spokesperson from the Department for Levelling Up, Housing & Communities said "we need to build more affordable homes and that is why we continue to invest in our £11.5 billion Affordable Homes Programme, delivering tens of thousands of homes to buy and rent across the country. The Secretary of State recently set out new measures to speed up the planning system and we remain on track to deliver one million homes over this Parliament. Our long-term plan for housing will allow us to go even further, backed by £10 billion investment to boost supply and build the homes that local communities want and need."
Housebuilders back Labour to get Britain building
Housebuilders have indicated that they would prefer a Labour government is formed after the next General Election. The latest Land Index and Housebuilder Survey from Knight Frank has found that 70% of housebuilders said they would prefer that Labour wins the election as they believe this is the party most capable of enhancing the country’s land and development market.
Labour has pledged to release low quality green belt land, dubbed ‘grey belt’ for development, and give local authorities increased powers to help meet their area’s housing need.
Only 30% of respondents said the Conservatives would be mostly likely to enhance the land and development market, while none of the respondents believed the Liberal Democrats would have a positive impact on the land and development market.
Of the 70% of respondents who said they thought Labour would be most capable of enhancing the country’s land and development market, 70% were large volume housebuilders and/or big London developers.
Of the remaining 30% of respondents who said they thought the Conservatives would be most capable of enhancing the country’s land and development market, 64% were smaller/regional/SME housebuilders who deliver up to 50 units a year.
Commenting on the findings, Charlie Hart, head of development land at Knight Frank, said “there is clearly mounting frustration amongst housebuilders, and growing demand for practical solutions over political promises. Housebuilders are facing planning and political constraints right now and, unfortunately, there’s a lack of trust in the current system due to the absence of coherent long-term strategy and insufficient land supply. Ahead of this year’s election, housebuilders will be looking for the party that can offer strong leadership and support increased housing delivery through planning reform, industry engagement and addressing nimbyism.”
As the Help-to-Buy chapter closed without a sequel, many housebuilders are feeling the effects – namely a decrease in housing demand. Labour's promise of ‘first dibs’ for first-time buyers and a streamlined planning process has clearly struck a chord. While the Conservatives have promised a tightening of green belt restrictions, Labour’s pledge to unlock “grey belt” will be eye-catching, offering hope to frustrated developers. Ahead of the March Budget, housebuilders will be waiting to see if the Government's policy dial will shift. Indeed, this announcement will be an important test of whether the Conservatives can assuage housebuilders' concerns. For now, however, Labour's ambitious housing plans seem to be wooing housebuilders and appealing to their immediate interests.
Anna Ward, associate in the residential research team at Knight Frank, added “news that Rishi Sunak has likely delayed calling a general election until the second half of the year should provide some stability for the land and new homes market. Once the election is called, our survey shows that the majority of housebuilders would welcome a Labour government from a land and development perspective. As election fever gains momentum, it will be interesting to see what incentives, if any, the government includes for first time buyers in the Spring Budget.”
Time to adopt modular construction to bring costs down
Construction firms have been urged to start using modular construction in order to make the process more cost-effective. This comes as construction costs are predicted to rise by between 3-3.8% this year, following a rise of 4.1% in 2023.
Currie & Brown, provider of cost management, project management and advisory services, made the recommendation in its report, ‘How to navigate 2024: Balancing challenge with opportunity’.
It said adopting modular construction will help reduce the impact of local skills and materials shortages, giving greater certainty on construction costs. Close collaboration between developers, consultants and contractors will also lead to greater clarity on schedules so that skilled labour can be secured early.
Nick Gray, chief operating officer, UK and Europe, Currie & Brown, said “cost escalation is a significant challenge for the construction industry, but it is also nothing new. The UK is not alone in experiencing spiralling construction costs. Currie & Brown predicts cost increases across every one of its operating regions in the year ahead.”
Prices are rising due Geopolitical turmoil in Ukraine and the Middle East. This is disrupting Red Sea trade routes, which is increasing insurance costs and extending journey times.
Inflation is the dominant driver of cost increases, while the industry is also looking to adapt to new sustainability rules, as well as deal with skills and material shortages.