We stand on the cusp of perhaps the biggest housing crisis in a generation.
The Government's own statistics (via the Ministry of Housing, Communities and Local Government's Live Tables 244) tell the story of the devastating impact of market cycles on new-build housing delivery. In 1979 the balance of delivery of 209,460 homes was 57% private enterprise and 35% local authority, with 8% by housing associations. By 1989 we relied on the private sector for 86% of the 179,360 homes that marked peak output pre-1990 recession. By 2007 local authorities were delivering just 0.0014% of new homes. The fragility of this arrangement was highlighted by the ‘great recession' of 2008/2009, which swept away a third of SME housebuilders. With further consolidation since, just 10 housebuilders were responsible for 47% of new homes built in the country last year.
With 178,800 new homes built in 2019, it is clear we lack the capacity and models to deliver the 300,000 annual output we need, even before we factor in the economic impact of COVID-19, with some commentators predicting at least a 30% reduction in homes delivered next year.
In times past, national crisis required great public sector intervention and fortunately, since 2012, resurgent local authorities are already building once again. The University College London research paper Local Authority Direct Delivery in 2019 drew on responses from 142 different councils (40% of England's 353 authorities) of which 69% were directly engaged in housing delivery, with 8,992 homes built by 83 councils.
As well as being facilitated by Housing Revenue Account reform and new financial freedoms, this housing drive has been motivated by authorities' interest in delivering genuinely affordable homes for local people, and the political mantra that ‘housing is the right thing for councils to do'.
We are seeing an exciting era of municipal housing delivery and the timing could not be better.
Meanwhile the pandemic, and of course Brexit, will impact heavily upon delivery, with construction capacity that continues to drop, as predicted by Mark Farmer in his Modernise or die report four years ago. He rightly pointed to a need to move to a greater amount of construction in factories, and away from building sites, as the way forward.
During the lockdown I wrote a paper with Mark Farmer, the Government's Modern Methods of Construction (MMC) Champion, looking at how we might link modular delivery to an industrial strategy that lifts jobs while delivering homes. There have been some fantastic signs that we're not the only ones that see this link. Throughout the UK, combined authorities, unitary councils, local authorities, LEPs and partner organisations, including housing associations and developers, are embracing to the need to do things in a different way.
The attraction of delivering low carbon housing solutions at speed and scale, while also creating jobs for local people, is not lost on a country facing a massive unemployment crisis as furlough drops away.
But manufacturers need a long-term and stable pipeline of orders to confidently invest in scaling up their operations. The ‘stop-start' nature of traditional development is counter to this.
The route to truly embracing this opportunity, we believe, is through aggregation and collaboration; multiple authorities coming together to pool resources, sites and standards across a multitude of smaller development parcels, to create a programme based on common approaches to procurement and standards, with early manufacturer engagement.
With government support, Homes England stewardship and local authority leadership we envisage an additional 75,000 homes can be delivered annually by 2030, with potentially 50,000 jobs adding 0.75% to the GDP.
There are many barriers in the way. Human nature somehow favours the belief that each site and location is so unique that even a kitchen, bathroom or stair layout must be bespoke. There are also the various hurdles of procurement, planning, insurance and warranties to overcome, as well as the need to adjust standards as we get to grips with failures of the past so terribly illustrated by the Grenfell tragedy.
Our experience over the past decade tells us that the quality that can be achieved in offsite built housing often far exceeds that of traditional construction, with benefits in terms of speed, productivity and performance predictability. Importantly these homes are delivered with up to 40% less carbon, fewer defects, and less disruption to neighbourhoods where sites are located. Once completed the fact they are made in a factory is not obvious to the passer by or occupant, it is just great housing, beautifully built, with low running costs.
The recently published Housing, Communities and Local Government Select Committee inquiry into long-term delivery of social and affordable rented housing [July 2020] concluded that we need an additional 90,000 new social homes every year. It is encouraging that the government has responded, if with a smaller ambition, but with a strong link with offsite delivery. If we can bring this together with an incentivisation for aggregation and collaboration, we can supercharge how we provide housing in the UK, and finally tackle an issue that has hampered our growth for 40 years, while aiding recovery over the next decade.
Mike De'Ath is a partner at HTA Design
Build Homes, Build Jobs, Build Innovation: A blueprint for a housing led industrial strategy is available at www.hta.co.uk
