Trendy flats will not fix our housing shortage

As the Help to Buy scheme is extended to £600,000 homes today, Julian Knight asks how to meet the demands of both young families and retirees

Part two of the Government’s controversial Help to Buy scheme goes live today. Critics say it will create a housing bubble while supporters say it is needed to boost the key housebuilding sector. Just a fortnight ago Ed Miliband pledged that if elected Labour will build 200,000 homes a year, nearly double the current level. It seems housing, so often a Cinderella sector, has moved centre stage and for good reason.

“It is one of the sectors which can really spark economic growth. Every new house built creates three jobs. It also mobilises society, as people are more likely to have families once they own their own home, so it is an economic and social good,” says Steve Turner, communications director at the House Builders Federation.

But are 200,000 homes possible and are we in danger – as happened during the housing boom of the early 2000s – of building the “wrong” type of homes for Britain’s ageing population? Does Communities Minister Eric Pickles have a point when he said recently we need more bungalows?

For much of the past five years housebuilding has been on its knees. The crash, which started in 2008, led to new builds plunging to levels not seen for a century. As an upshot, the industry desperately needs re-skilling if it is to have any hope of reaching the magic 200,000, Mr Turner said: “It can’t be done overnight, we have lost skills in the recession and there are very basic things like opening new brick kilns for instance. And it doesn’t stop at infrastructure, we need to be sure that the mortgage finance is there to allow people to buy and the planning system as it stands has not been delivering enough land to build 200,000 homes a year.”

This is in sharp contrast to the refrain of politicians that developers are sitting on lots of land and should be taxed for the privilege.

“It makes me laugh when I hear politicians say developers are sitting on lots of land so as to see its value rise. There is barely a year’s supply of land out there to develop and they can’t sit on it as they need to keep building to survive and turn a profit. There have been several reports including those by Kate Barker and the Office of Fair Trading which have rubbished the idea of land banking,” the National House-Building Council’s commercial director Richard Tamayo said.

Even if 200,000 was achievable – and most industry experts think it is unlikely for several years – that would not even be enough to meet current demand. The Office for National Statistics estimates up to 220,000 new households are being formed each year due to divorce, bereavement, immigration and the UK population growing faster than at any time since the 1960s.

“The reality is we are only building 0.5 per cent of housing stock, so even if current build rates were to double that means it would take ten years to replace 10 per cent of the country’s stock”, Mr Tamayo added. But of the few houses currently being built there are concerns that they are the wrong type, taking little account of the shift in UK demographics from young to old. Mr Tamayo explains the dilemma facing the building industry: “Land is very expensive in the UK, as a result developers have to maximise returns and this is achieved through building up. No developer is going to build one storey when they have the chance to build two or three on a site.” Hence flats are in vogue once again and could well dominate any drive to 200,000 despite the fact that one of the iconic images of the UK financial crash in 2008 was the huge number of city centre high-rise developments, particularly in the northern cities, which either struggled to find buyers or trapped owners in negative equity.

Mark Hoyland, managing director of Peverel property services, warns: “With an ageing population and more retirees, the UK has an urgent need to build retirement housing. More manageable properties, with communal support and facilities, will help people live more independently. At the same time a better supply of retirement property will help to generate supply for younger buyers, as retirees are able to downsize and stay locally.”

He wants more American-style retirement communities or villages, with access to on-site health care and designed specifically for the mobility needs of ageing residents. The idea of the villages – some of which are being developed by the likes of McCartney & Stone – is that homeowners can remain in their own properties as long as possible because they are sympathetically designed and care is close at hand.

The HBF’s Mr Turner reckons developers would be foolish to ignore this demand, though high-rise will still loom large. He says:“Building smaller units not only provides people with a first rung on the ladder, it also means downsizers can cash in their property and free up stock in the family home sector. The truth is we need houses of all types, but getting the mix right is a major challenge every bit as big as building 200,000 homes a year.”

THEN AND NOW: THE HOUSING FIGURES

1996

Detached 61,700
Bungalows 11,000
Semi-detached houses 34,100
Terraced houses 25,900
Flats/maisonettes 23,600

2012

Detached 24,100
Bungalows 1,700
Semi-detached 21,600
Terraced houses 24,200
Flats/Maisonettes 33,900