Construction levels for new housing starts are up 16% over the past year. The recent Budget has made the Government’s position very clear on the support they intend to offer those in the property development industry. Policies coming out of the Budget include a consultation on a so-called Right to Build scheme, which would give custom builders the right to a plot from councils, as well as the planned creation of a £150 million repayable loan to provide up to 10,000 serviced plots, and a £500 million Builders Finance Fund to provide loans to developers.
However, while big policy and scheme announcements are enthusiastically supported by those in the industry, a great deal of good could be achieved with a more subtle revamp of planning restrictions: the incentives have been made clear to those willing to invest in greater levels of development, but if momentum is significantly cut by excessive red tape it throws into question whether the variety of strategies to boost house building are living up to their full potential. Proper encouragement for development on brownfield sites, for example, could provide the necessary impetus for an upsurge in new housing available. While there are certainly good reasons for green belt land to be protected, it does not necessarily follow that all of it should, and a review around the justifications for preservation in certain areas could free up land that could lead to a more enjoyable urban environment, with a more even spread of housing as opposed to high-occupancy tower blocks.
What emerges is a fairly positive picture for the future of property development and SMEs in the UK. The Home Builders Federation reports that Help to Buy 1 has 1,200 builders signed up to the scheme – 94 per cent of which are small and medium-sized businesses – so the appetite for expansion is definitely there.
A clear and comprehensive government agenda supporting developers would provide a solid framework for construction projects that could last several years. A lack of planning or overly aggressive expansion could serve only to push up land prices and possibly exacerbate the problem. With an increasingly positive economic outlook, strong demand and rising confidence, now is the perfect time for policymakers to seize the opportunity to make good on Chancellor George Osborne’s pledge to “get Britain building”.
By Rob Lankey, Managing Director, Commercial Mortgages, Aldermore Bank
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