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Worst case no-deal Brexit could see 43,000 fewer UK construction jobs, report says

A no-deal Brexit could see up to 43,000 fewer construction jobs in the UK, according to an economic forecast commissioned by the mayor of London.

The research undertaken by analysts Cambridge Econmetrics has produced a damning report on the adverse effects a hard Brexit could have on the UK economy and various sectors. Sadiq Khan claims the study shows that a no-deal outcome could cost the country half a million jobs and £50bn in lost investment by 2030.

The findings also looked at London alone where increased housing numbers are desperately needed. Experts believe there could be 5,000 fewer jobs and a drop in output of up to £1.2bn by 2030 in the construction sector should the UK decide to walk away from a deal and leave both the EU customs union and single market.

Mayor of London, Sadiq Khan, said: “If the government continue to mishandle the negotiations we could be heading for a lost decade of lower growth and lower employment. The analysis concludes that the harder the Brexit we end up with, the bigger the potential impact on jobs, growth and living standards.”

The analysis looks at the potential impact five different Brexit scenarios could have on nine key sectors of the economy. It shows that every Brexit outcome analysed would be bad for the British economy, but that the harder the Brexit, the more severe the consequences. The worst of the five scenarios postulates a departure in March 2019 with no deal or transition arrangements and researches have estimated this would lead to 482,000 fewer jobs across the entire UK and a loss of £46.8bn in investment by 2030.

“If the government continue to mishandle the negotiations we could be heading for a lost decade of lower growth and lower employment.”
Sadiq Khan, mayor of London.

James Murray, deputy mayor for housing and residential development, said: “This report lays bare the huge risks we would face as a result of Government’s failure to secure a Brexit deal that works for London and the rest of the UK. The fact the Mayor has had do the prime minister’s job in publishing the full impact of Brexit is truly damning. It shows the scale of the blow that a no-deal hard Brexit could have on our homebuilding efforts. London needs 13,000 additional construction workers to build the homes the capital needs – we simply cannot afford to lose skilled European labour.”

The research was commissioned after the Brexit secretary David Davis told MPs in December the government had failed to produce any economic forecasts on the likely impacts Brexit could have. Answering questions from the Brexit select committee, Davis also said no economic impact study had been undertaken before the cabinet decision to leave the customs union.

The Labour mayor was also a strong supporter of the remain campaign and has since argued for the UK to stay in the EU’s single market and customs union. Davis’s admissions in December have said to ignite a drive to produce some research-based evidence of future impacts. While the report’s authors have stressed the figures are reliant on a range of factors, it is the first time analysis like this had been undertaken to delve into the wider impacts of a no-deal Brexit.

Analysis by Melanie Leech, chief executive of the British Property Federation

Not knowing if we’ll have enough skilled workers to resource the construction industry over the coming years is deeply concerning.

We urge government to provide clarity on the status of EU workers as soon as possible – we are already seeing this uncertainty undermine regeneration up and down the country.

Government must get migration policy right if we wish to build much-needed homes and the physical environments capable of driving innovation, which underpin a successful post-Brexit UK.

Source: Infrastructure Intelligence

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Nationwide and UK Finance welcome government leasehold reforms

Nationwide and UK Finance both welcomed the Government’s announcement on how it intends to address onerous ground rents and leaseholds.

The government plans to legislate to prevent the sale of new-build leasehold houses except where necessary such as shared ownership. And they plan to ensure ground rents on new long leases, for both houses and flats, are set at zero.

Chris Rhodes, Nationwide’s director for products and propositions, said: “We welcome the government’s positive measures in addressing onerous leasehold terms and escalating ground rents.

“We hope this encourages providers to review their lending criteria in this area and also guide homebuilders on future developments.

“This is the very reason why we made the decision back in May to become the first major lender to not lend on properties affected by unreasonable multiplying leaseholds that double every five, 10 or 15 years.

“The maximum acceptable starting ground rent on all new build leasehold properties is limited to 0.1% of the property’s value, while our minimum acceptable lease term on new build transactions are now 125 years for flats and 250 years for houses.”

Paul Smee, director of mortgages at UK Finance, said: “We support the DCLG’s efforts to address the onerous and potentially unfair issues surrounding the leasehold system.

“Lenders will continue to work with government and other interested parties to address the complexities associated with leasehold properties, particularly where valuation is concerned.”

Other legislation includes working with the Law Commission to support existing leaseholders and make the process of extending a lease or purchasing a freehold much easier, faster and cheaper.

The government also plans to provide leaseholders with clear support on the various routes to redress available to them.

They plan to ensure freeholders have equivalent rights to leaseholders to challenge unfair service charges.

There will be a wider internal review of the advice and support to leaseholders to make sure it is fit for purpose with this new legislation.

Source: Mortgage Introducer

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28,000 homes plan could benefit Shropshire’s rural landowners, says expert

Paul Middleton said that although the housing figure would be quite a challenge to fulfil, it could prove to be a positive move for rural landowners.

The development forms part of Shropshire Council’s local plan review.

The council’s cabinet approved a consultation document last week, which will seek the views on the preferred scale and distribution of future developments across Shropshire.

The review includes building 28,750 homes across the county, while the consultation document also looks at employment growth.

The consultation period began last week and closes on December 22.

Mr Middleton, of rural surveyors and estate agents Roger Parry and Partners, said: “A housing figure of 28,750 across the county is quite a challenge to fulfil, that equates to a delivery rate of around 1,430 dwellings a year.

“It therefore follows there will need to be development in the rural areas to assist in meeting these targets, and this places great emphasis on the emerging Hierarchy of Settlements policy.”

The Hierarchy of Settlements document puts forward rural settlements that have gone through a screening process for size, population, service provision, internet links, transport links and employment opportunities.

Mr Middleton added: “If adopted, the Hierarchy of Settlements could provide opportunities for development that presently are not achievable, which is very positive indeed for rural landowners.

“We will of course be liaising closely with the council during the course of the consultation to ensure that our planning team are best placed to advise clients on the development opportunities, that will undoubtedly come to fruition in the future.”

The extra 10,347 houses are mostly planned for the towns in Shropshire, with 30 per cent planned for Shrewsbury, 24.5 per cent planned for the bigger towns such as Market Drayton, and Whitchurch, 18 per cent for smaller towns such as Much Wenlock and Bishop’s Castle, and 27.5 per cent for rural areas.

Ian Kilby, planning services manager, said: “In the recession there were about 800 houses built per year, and last year we had 1,910 delivered.

“It’s only a few years ago that next to no houses were being built.

“There was significantly more development last year than there was.”

But the council admitted that, as of this year, there were more than 11,000 cases where planning permission had been granted for homes where construction was yet to start.

Source: Shropshire Star

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Finding solutions to the UK’s housing crisis

Larry Elliott suggests five steps to fix the housing market (Britain’s broken housing market – and how to fix it, 9 October) which include Kate Barker’s idea of “acquiring” large sites abutting urban areas at a modest premium to their existing use. That would effectively part-nationalise development value and might help supply, although the Tories wouldn’t do it because they reversed Labour’s two attempts at taxing development value, the Land Commission Act 1967 and the Community Land Act 1975/Development Land Tax 1976. Increased housing supply doesn’t automatically lead to lower prices of course (unless builders were to build at a rate that forced them to drop their own prices, which they wouldn’t) because, as Elliott says, the housing “market” isn’t a market at all in the traditional supply-and-demand sense.

Before more of this crowded country’s open space is concreted over and its amenity value taken from those abutting urban areas, other expedients could be deployed, like penal taxation of empty property and progressive taxation of inherited property wealth, the latter of which continues to snowball for the haves and push prices further beyond the have-nots. Those two measures would do more to bring prices back closer to a manageable multiplier of local earnings and improve the rising generation’s chances of ownership. Whether the banks’ loan books could stand the strain of falling prices – and how hard the Treasury would fight to avoid them – is another question.
John Worrall
Cromer, Norfolk

• Larry Elliott’s incisive analysis of the housing market missed a trick or two. We urgently need to move jobs where the people are, not the opposite. That just inflates southern house prices. And please stop blaming planners. America realised 20 years ago that sprawl is not the answer to housing problems; it doesn’t lower prices, it just increases greenhouse gas emissions. The US smart growth movement’s growing influence demonstrates that compact urban development produces better housing and vibrant communities. Of course the big measure that would reduce house prices would be extending right to buy to the private rented sector – politically impossible, of course.
Jon Reeds
Smart Growth UK

• Analysis of possible solutions for fixing the housing market seem to overlook a key point: an understanding of what housing should be about – ie community. A home for our families, a roof over our heads and a secure base for the rest of our lives from birth to old age. We need less reliance on large builds by multimillion pound faceless corporations making huge profits, and more local planning in favour of self-builds to serve inter-generational families and communities. In France there seems to be a lot of one-unit building on the edge of villages and towns, often they appear to be small bungalows for the elderly. In the UK this is frowned upon. Second, we need to examine the way house prices soared when two full incomes became more the norm. This was a gift to those who benefitted from inflated housing values. It proved a disaster for households at the stage of raising children when (out of necessity) couples’ earnings go down to one and a half incomes or less, due to the need to meet important care responsibilities at home. It’s time to put families first and recognise that housing is a basic need. Let’s invest in construction of decent social “community” housing for young and old. Stop encouraging people to overstretch themselves. Only then will equilibrium be restored.

Elliott’s solution number five – the need to boost wages will, I fear, just mean forcing mothers and fathers to both work longer hours with no time to care for children or older relatives. This in turn means a house is no longer a home, just a place to sleep.
AM Lewis
Salisbury, Wiltshire

• Anna Minton’s concern about developers’ “artwash” is just the tip of an urban mountain of bling: “iconic”, “placemaking”, “cultural quarter”, the urban realm as theme park (Developers are using culture as a Trojan horse in their planning battles, 11 October). Meanwhile, city dwellers suffer chronic housing shortages, appalling air quality, gridlocked transport, increasing inequality and marginalisation. Why? Planners morphed into seeing cities as service centres, reflecting the shift since Margaret Thatcher to a service economy. Then Tony Blair brought the bling to the great neoliberal game, along with the expectation of remuneration. A whole generation of local politicians, responsible for taking bread-and-butter planning decisions, have grown up expecting to spread jam. They are too easily seduced by developers’ art-bling, even believing it ethical to join the revolving door of persuasively dazzling development consultancies. Perhaps the most egregious live example is at land secured for social housing at Coin St on London’s South Bank: Bjorn Ulvaeus’ application for an Abba nightclub is currently enjoying fair wind, following the collapse of the infamous garden bridge proposal on an adjacent site. The lessons from that debacle have yet to be learned.
Michael Ball
Waterloo Community Development Group

• Your supplement Rebuilding social housing (20 September) described some of the efforts being made to fill the housing gap. All of these are to increase supply. With more than 300,000 immigrants per annum, a smaller number leaving, and with natural increase, there is no chance without addressing demand. We need more than to limit the number coming in to the country. The ideal would be a population policy with a cabinet minister responsible for population.
David Hurry
Hurstpierpoint, West Sussex

• Regarding “insulting” levels of “affordable” housing at a development in Ilford (Report, 16 October), the really insulting thing is how no one really nails the government and developers on the massive lie inherent in every definition of “affordable” they use. Rather than fig-leaf approaches based on already unaffordable levels of rent, affordability can only be properly based on average incomes and standard mortgage lending criteria. Given average nationwide incomes and typical four-x income multiples, the actual number of truly “affordable” new homes built in the UK today – and for many years – is probably zero.
Norman Miller
Brighton

Source: The Guardian

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More land needs to be released for new homes in the UK to meet demand

A rapid expansion of the house building industry has the UK on track to deliver the Government’s target of one million new homes by 2020, but more are needed, according to a new analysis.

Indeed, an additional 100,000 homes are needed each year if the new supply is to have any effect on housing affordability and to boost volumes and improve affordability more land needs to be released in the areas of greatest need, including green belt swaps, says the report from international real estate adviser Savills.

It explains that new homes volumes are up almost 50% on three years ago, meaning that new housing supply is almost meeting demand across most of the UK. However, London and South East regions are bearing the brunt of the shortfall, accounting for 104,000 of the 2015/2016 total, which puts great pressure on affordability. Only a fifth of households can afford to buy the average new home in these regions.

‘Policymakers must take this shortfall in the south east of England seriously if we are to finish the job of solving the housing crisis. Many more new homes are needed at price points that are affordable to the many, and across a range of tenures, if affordability pressures are to be eased,’ said Chris Buckle, director of Savills residential research.

New homes need to be priced as a mass market product to ensure high sales rates, the report says. Increased land release in areas of high housing demand would reduce competition for development sites, leading to lower land values and enabling new homes to be sold at lower price points.

If there were more land on the market, land owners may need to realign expectations on the value of land, Savills argues, though that value will still need to be high enough to persuade them to sell. For the policymaker, it means recognising that lower new homes values may result in less land value to be captured through CIL and section 106.

A commitment to solving the housing crisis is evident in the housing white paper, but to address the crisis where it is most acute will require a regional market led strategy for land release, including a programme of green belt swaps, the firm says.

The report also points out that Government aid, particularly in the form of Help to Buy, has helped boost the number of homes being built and will support around 20% of the 190,000 new homes expected to be built in 2016/2017, compared with 34,000 in 2015/2016 and 28,000 in 2014/2015.

Far the biggest increase has been in the number of homes being built without public funding, both market sale and built to rent units, up from only 62,000 in 2015 to an expected 111,000 this year, an increase of 79%.

The Savills report details evidence of high delivery sites in high demand areas across the South East. These include sites in Andover, Aylesbury and Bedfordshire where homes are priced at a discount of up to 15% compared to the local market on an average price per square foot basis. Each of these sites completed more than 600 new homes for sale in the past three years, a build-out rate significantly above average.

Even in high demand areas, such as Cambridge and Horsham, there are large numbers of homes being sold at a discount to market averages on a per square foot basis, the firm’s researchers found.

‘To build on this momentum, policy needs to go further, and our report contains some uncomfortable truths. Help to Buy may have helped boost housing delivery and given aspiring home owners a welcome leg up onto the market, but something more fundamental needs to be done to ensure we deliver more homes quickly, and at prices that more people can afford, whether to buy or to rent,’ said Buckle.

‘Policymakers need to recognise that high volume delivery of lower priced housing will limit the capacity of developers to fund infrastructure and affordable housing in the way they currently do, via section 106 and CIL payments, so other sources of funding for infrastructure and affordable housing will be essential,’ he added.

Developers will need to change their approach, Savills says, adding that the Government clearly wants to hold developers to account for new home delivery, through better, more transparent data and sharper tools to ensure housing with planning permission is built.

‘Although it is unclear what form these tools will take, this pressure, combined with the new housing delivery test for local authorities, means that it will not be enough for the development industry simply to maintain current modes of delivery,’ Buckle concluded.

Source: Property Wire