London house prices: Housebuilding is falling in the capital – so rip up planning rules and start again
Help to Buy. The Help to Buy Isa. NewBuy. Right to Buy. Shared ownership. As the housing crisis worsened in recent years, there was no shortage of government schemes aimed at helping first-time buyers reach that crucial bottom rung on the housing ladder.
In the capital, it is becoming increasingly obvious gentle encouragement from George Osborne has not worked to boost housing. Figures published by the National House Building Council (NHBC) yesterday showed while housebuilding across the UK increased in 2015, in London the opposite was true. The number of new homes registered in the capital last year fell nine per cent, from more than 28,000 in 2014 to just under 26,000 in in 2015.
Housebuilder share prices leap each time a new government housing scheme is unveiled – so why are developers not leaping at the chance to build thousands of homes in the most sought-after city in the UK?
They’re trying. But ask anyone in the housebuilding industry and they will tell you the single most frustrating part of their job is planning. Not only is it expensive, time consuming and slow, it is also inefficient: about a quarter of planning applications for new homes in England are rejected, leaving vast swathes of land idle as developers go through endless appeals.
The last major housing boom was in the years after the Second World War, when the UK was building more than 300,000 homes a year. Experts have suggested the capital needs 50,000 homes a year to keep up with demand – double the number of new homes registered in the capital last year.
Artificially inflated loan-to-value ratios and small sums of free money for first-time buyers are not going to create the sea-change in attitudes to housebuilding needed to solve the housing crisis. A significant rise in development can only come from ripping up the UK’s bureaucratic planning laws, and starting again.
Incidentally, yesterday’s news came exactly a week after Deloitte – a City firm not known for scrimping on salaries – admitted it was considering building its own homes for its staff, saying when it comes to the spiralling cost of living in the capital, “employers must help”. When even accountants are struggling, something has to give.