May unveils plan to get England building again

In an effort to combat increasing house prices in the UK, Theresa May has proposed changing planning rules to encourage house building and boost UK housing supplies.

Brick laying
Prime Minister Theresa May announced plans to kick start England’s moribund house-building market by rewriting planning laws to make it easier for developments to be built.She also threatened action against developers who were “hoarding” land by getting planning permission and then not building houses and, instead, hanging on to the land until its value increased.

Moving house building forward

Mrs May said the cost of housing in parts of the UK, both for ownership and rent, was reinforcing economic divisions and leading to growing social immobility, with workers – particularly in the public sector – unable to take jobs in certain parts of the country.The prime minister said in a speech National Planning Conference that the government would establish a nationwide standard setting out how many homes councils needed to plan for in their area, with provisions to prioritise affordable homes “key workers”.Mrs May said young people were “right to be angry” at not being able to buy a home and that ownership of property was largely unaffordable to those without the support of “the bank of mum and dad”. This disparity was entrenching social inequality and “exacerbating divisions between generations”, she said.

First-time buyers in the UK

Her comments came as figures from the Council of Mortgage Lenders showed the average deposit for first-time buyers in the UK stands at £25,896, though with huge regional variations. First-time buyers in London are looking at an average deposit of about £98,000, while the figure is Wales – which, like Scotland, has devolved housing powers – the figure is about £15,000.Mrs May, whose government wants to see 300,000-plus homes built a year – almost twice the current rate – said the continuing shortage of housing in England was partly the blame of developers, who she said had a “perverse” financial incentive to hoard land once it had been approved for development rather than actually build on it.“In a market where lower supply equals higher prices, that creates a perverse incentive, one that does not encourage them to build the homes we need,” she said.She pointed out that the number of planning proposals being approved in England had risen since 2010, but that this had not been matched by a corresponding rise in the number of houses being built.
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Local councils to encourage growth

Mrs May said councils should be allowed to take developers’ records on actually building homes to be taken into consideration when deciding whether to approve future projects and said planning rules would be rewritten to make it easier to bring forward land for development and to fast-track approvals.“I want to see planning permissions going to people who are actually going to build houses, not just sit on land and watch its value rise,” she said. “I expect developers to do their duty to Britain and build the homes our country needs.”Ministers have also made it clear that it is considering action against ‘nimby’ councils that are failing to build the houses – particularly affordable ones – that their areas need, consequently forcing people to relocate to other areas.The government is now poised to implement up to 80 proposals set out in last year’s housing white paper, including requiring councils to adopt a new nationwide standard that shows how many homes they need to plan for in their area to “make the system fairer and more effective by streamlining the process, cutting red tape and ending barriers to building”, Downing Street said.However, the Local Government Association said it was wrong to blame councils as they were approving nine out of ten proposed developments and yet more than 420,000 homes with permission were still waiting to be built.“No-one can live in a planning permission,” said its chair Lord Porter. “Developers need to get on with building affordable homes with the needed infrastructure and councils need greater powers to act where house-building has stalled.“Why not let councils build so many houses they don’t have to ration them just for the poorest in our society? Then key workers can have affordable housing where ever they live, until they can afford to buy.”

Constructions sector continues bleak outlook

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said, “The near-term outlook for the construction sector remains bleak. Hopes that a Brexit transition deal could be agreed by the end of this month now look forlorn, so businesses will remain reluctant to commit to long-term capital expenditure.“Rising mortgage rates will subdue demand for new houses. Meanwhile, public sector investment is set to fall by 4.5 per cent in 2018/19, provided the Chancellor does not revise the November Budget plans in this month’s Spring Statement.” 
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