Budget response: Grant Thornton reaction to Budget 2017 housing measures
Kersten Muller, Partner, Construction & Real Estate, Grant Thornton UK LLP
“We are encouraged by the Chancellor’s announcement to undertake a review of the reasons for the gap between planning permissions being granted and the start of construction.
“Our analysis in London (undertaken in conjunction with LondonFirst and the 50,000 Homes campaign) shows the rate of attrition – homes given planning permission but not built/under construction within three years – remains high. In 2016 over one in three homes with planning permission was not started within three years of planning consent being granted.
“The house-builders we have spoken to say that it makes no commercial sense for them to hold on to land that has been granted planning consent, and any land they do hold is usually awaiting permission which, particularly for larger sites, can take years to attain.
“To get to the root cause of the high attrition rates we are currently investigating the reasons why land with planning consent does not get developed. We expect to have initial findings in early 2018, followed by more detailed research. We look forward to contributing to the government’s review in to this issue and welcome the possibility of direct government intervention where commercial constraints may prevent the release of land for home-building.
“We welcome the Chancellor’s announcement on planning reforms in particular the need for high-density housing in cities and around transport hubs.
“Using our data analysis tools Grant Thornton has been exploring the links between infrastructure and housing development. Early analysis in London shows that the investment in infrastructure has directly benefitted delivery of new homes. Attrition rates for larger developments of 300+ homes were also markedly improved, showing that the housing supply was significantly boosted by investment in to transport infrastructure.
“We agree with the Chancellor’s sentiment that there is no silver bullet to resolve the housing supply shortage. The ambitious targets set for housing will require significant investment and we are encouraged by the measures announced today, which are a decent start to addressing the housing supply issues in the UK.
“The additional funding packages combined with the Stamp Duty Land Tax relief for first time buyers, disincentives for keeping homes empty, planning reforms and encouraging landlords to provide longer term tenancies will hopefully start to address supply and affordability.
“However, in a post-Brexit environment, where a weakened pound increases the cost of importing raw materials and discourages migrant workers, it is vital that Britain’s construction industry has access to the materials as well as the skills and labour necessary to achieve the rapid growth in housing supply that the nation requires.
“We are pleased to see policies from the Chancellor that aim to future-proof the construction labour market, providing support for training skills to upskill the workforce. We would however like to see more measures to encourage young people in to the construction industry across a range of skills.”