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The Five Biggest Barriers to Building Today

 370 230 Aston Mead Land and Planning | Land with development potential across Surrey

Adam HesseConstruction is in a crisis.

Some of my colleagues in the sector have described this as the most difficult environment for developers in a generation. And I have to say, I agree.

To any impartial analyst, this would seem to be an odd state of affairs: house building is an established cornerstone of the UK economy. Few other sectors provide more injection into government coffers than the property market – not only from the income it derives from developers, estate agents and surveyors, but also the support it provides for associated industries (such as kitchen-fitters, electricians, plumbers, painters, decorators, tilers, roofers, carpet-layers, interior designers etc).

However, the problems we are encountering now will pale into insignificance with the chaos in housing that will result in 10 or 15 years’ time, if we do not get a grip on the situation straight away.

So, to outline what needs to be done, I’ve identified the five biggest barriers to building that are currently standing in our way:

1: Government inconsistency

First, there were local housing targets (which added up to 300,000 a year nationally); then they appeared to have been scrapped.

Not so long ago, councils had to submit housing plans; then that was deemed unnecessary.

Plus there’s been the revolving door of housing ministers – an unbelievable 14 of them over the last decade; six since 2020. (The current incumbent in the role is MP Rachel Maclean).

Even with a single political party in power for the past 12 years, the guidance and advice at national level has chopped and changed, ebbed and flowed, leaving councils in a state of limbo about what they should do next.

Late last year, Secretary of State for Levelling Up, Housing and Communities Michael Gove watered down existing building targets, saying they will now be a “starting point” and “advisory”, rather than mandatory.

But if this is the case, the likely result is that councils won’t bother. In effect, local authorities have been provided with the green light to give up on local plans and take a ‘wait-and-see’ attitude instead.

The truth is – if you haven’t got targets at a local level, it’s inevitable that you’re not going to hit targets at a national level. And that is exactly what’s now happening.

2: Council negativity and inaction

If the government are serious about the 300,000-a-year target, the attitude to development should be ‘in principle, yes – unless there’s a very good reason why not’. But for years it’s been ‘in principle, no’.

What’s more, applications are so complicated and expensive that many small and medium-sized developers can’t afford them. A simple application with all the required reports is so expensive (in the region of £50,000) and often takes 6-12 months to go through the system – timescales which can break a business.

As we’ve said before, each local authority’s back yard would be a good place to start. Recent research has identified almost 320,000 unused small plots of land owned by local councils that could accommodate 1.6m new homes if developed. These plots are all listed with the land registry as having no use and no existing buildings, and equate to nearly 100,000 acres of land going “unnoticed and unutilised” under the noses of local authorities – many of which would be perfect for the smaller developer.

3: Planning authority delays

It seems unbelievable now that planning decisions used to take place in around 12 weeks. I can’t remember the last time that happened. The usual duration is now closer to a year. Even the time for appeal has gone from an already lengthy 6 months to 9 months or even longer.

The simple fact is that planning authorities are massively understaffed and underfunded. There are too few people with too little money in their budgets to make the speedy decisions that are needed. Morale is low, apathy is high, and in-trays are over-flowing.

This sort of thing may be a frustrating hindrance to the big developer. But for small and medium-sized businesses, the delays can drive them under.

As an example of what I mean, the second series of the TV hit ‘Clarkson’s Farm’ landed on Amazon Prime Video this month. It shows Jeremy Clarkson’s attempt to expand his farming business, only to be met by bureaucracy, resistance and refusal at every turn. The national press has responded to the programme by calling it “the most convincing argument you’ll see for overhauling our 70-year-old planning system”.

4: A misconception about ‘Brownfield development’

Without doubt, ‘brownfield land’ is the single most frequently repeated answer to the question ‘where should new houses be built?’.

But the ease at which this response is given betrays the level of misunderstanding out there about how building on brownfield sites actually works.

A lot of the smaller brownfield sites rely on SME developers stepping in, because the plot size is too tiny to interest the bigger construction companies.

However, the smaller developers’ hands are tied by the relentless and turgid procedures and processes which take so long, and which adopt a ‘computer says no’ stance from the very start (see above).

As for the larger sites, many of them have contamination issues that are so costly to put right, they have become unviable anyway. If brownfield sites really were that attractive, developers would be snapping them up. As it stands, most of the lower-hanging fruit has already been picked.

5: Public resistance

When questioned, most people seem to accept that this country desperately needs to build more homes. The problem is – many of those individuals don’t think that the construction should happen near them. This trait of NIMBYISM (Not In My Back Yard) has always been with us, but if anything, it’s got worse in recent times.

Strangely, much of the resistance seems to come from people aged in their 50s who have children who are leaving university, starting in their first jobs, and hoping to set up home in the next few years.

These parents need to understand that the laws of supply and demand mean fewer homes equals higher property prices. So, if those same people want to perpetuate the conditions which currently keep their sons and daughters off the property ladder – forcing them into a lifetime of exorbitant rents – they’re going the right way about it.

Adam Hesse

Recruitment crisis in construction means we need a return to the YTS, say Aston Mead

 370 230 Aston Mead Land and Planning | Land with development potential across Surrey

Leading land agents Aston Mead say that the current recruitment crisis in the UK construction industry means more government spending on employment training is now essential.

Land & Planning Director Adam Hesse thinks too many school leavers are automatically opting for a university education, regardless of whether it’s the right choice for them, while ignoring the possibilities that a job in construction offers.

He said: “The latest figures from the British Chambers of Commerce indicate that over three quarters (76%) of British companies are struggling to hire new staff and the construction industry has been hardest hit.

“At the same time, the number of British 18-year olds aiming to go to university directly from school continues to increase at a record pace and now stands at unprecedented levels. This may be a boon for the world of academia, but in the real world, we need to make sure that some students might not be better off considering training for employment instead.

“Many of these youngsters still don’t know what profession they want to follow even after they’ve completed their degree, and have delayed getting a qualification as specialist plumbers, electricians or bricklayers, which could help secure them a six-figure salary, every likelihood never to be out of work, and no student debt!

“The problem is that without a radical boost in employee numbers in the building trade, we will never hit the 300,000 new homes needed across the country each year. It’s all very well the government setting a national target – but without enough people in the profession to carry it out, that figure is never going to be reached.”

Adam Hesse says that for the past few years the world of construction has suffered an identity crisis, with potential employees unaware of the vast range of professions it covers.

He explained: “We need to make jobs in construction sexy again. Its image is too male, stale and pale – whereas in reality there’s a huge number of roles that come under its umbrella, with careers in digital technology being an increasingly popular choice for many young people.

“The trouble is, we’re now fishing for workers in a shrinking pool of talent. This inevitably leads to wage inflation – but we can’t keep increasing people’s pay and fighting each other for the right candidates. So, the profession also needs to up its game as far as offering a decent work/life balance is concerned.

“Above all, we need a return to something like the days of the Youth Training Scheme (YTS), helping young people train for a career, with up to two years of paid employment and a full grounding in their chosen profession. Training places would be guaranteed by the government, with a standardised form of certification at the end. Trainees could be recruited by employers, or via a training organisation, using employers as training placements.

“Make no mistake – the labour shortage is unquestionably the biggest fear for the industry in 2022. To prevent university being seen as the ‘default’ option for so many, we need to better sell the very real advantages of a career in construction. And without a serious input of government money into training, this will be a problem that will continue to haunt us for decades to come.”

Adam Hesse

Aston Mead herald ‘worst planning environment in a generation’, as local authority plans are delayed yet again

 370 230 Aston Mead Land and Planning | Land with development potential across Surrey

Leading land agents Aston Mead say the current planning environment is the worst they have had to work in since their business was founded over 20 years ago.

Aston Mead Land & Planning Director Adam Hesse explained: “Without doubt, this is the worst planning environment we’ve had to face in a generation. The system was already unfit for purpose before Covid struck. But since then, three key factors have emerged to make a bad situation even worse.

“Firstly, and most recently, the biggest blow has come from the Government itself, with reports that it has scrapped plans for a standalone planning bill, which would have delivered many of the proposals in the white paper. This, on top of the Prime Minister’s comments at last year’s Conservative Party Conference about not building on greenfield sites has meant several local authorities have put a halt to their Local Plans, saying that they now need more direction from the top.

“One of our clients has recently received notice of withdrawal of the publication version of their regional authority’s Local Plan, which had been submitted to the Secretary of State back in 2019. He’s been told that the lack of new guidance from the government has made the council reluctant to go any further.

“Secondly, there are difficulties at the Local Authority level, who are finding every reason to kick the issue into the long grass. This means that the planning process has almost ground to a halt. Ideally, planning applications should be heard in eight to twelve weeks – but most cases we are dealing with are taking at least three months to get validated, and then at least six months to get a result. In fact, we are still waiting for decisions on a number of our sites after more than a year and there are even some that have been stuck in the system for three years now!

“Even if the assigned planning officer supports an application, councillors will often refuse it for political reasons. We have never seen so many sites go to appeal – a process which used to take six months but is now taking up to a year.

“Finally, there are all the usual problems like underfunding, lack of staff, and demoralisation. Added to which, we are still witnessing a public sector reluctance to get back to the office, which slams the brakes on even further.

“Overall, this toxic combination of factors has created a perfect storm, where we now risk local plans having to be rewritten or more research carried out because the current evidence is out of date.

“This could add years to the whole process. But in the meantime, if there aren’t enough brownfield sites available, more greenbelt land will have to be released, in order to catch up. So, the net result will mean more building on greenfield sites, not less!”

 

Adam Hesse

Councils struggling to find brownfield sites should look in their own backyard first, says Aston Mead

 370 230 Aston Mead Land and Planning | Land with development potential across Surrey

Leading land agent Aston Mead says that councils now suspending their local plans to avoid building on greenfield land should consider releasing brownfield sites they already own.

Some councils are reported to be putting their local plans on hold after Boris Johnson suggested developers should build homes ‘not on green fields’ at the Conservative Party conference last month. His comment led some local authorities – including Welwyn Hatfield Borough Council in Hertfordshire – to put meetings to discuss its local plan on indefinite hold, using the Prime Minister’s words to justify doing so.

Aston Mead Land & Planning Director Adam Hesse commented: “Putting their plans on hold will prevent councils from having to make a decision about releasing greenbelt land and select brownfield sites instead. But to be frank, the government needs to look in its own backyard before beating developers with the brownfield stick. As some of the largest landowners in the country, local authorities have a wealth of untapped brownfield sites on their doorstep, if only they were prepared to let them go.”

But Adam Hesse says that some greenfield land will inevitably have to be built upon if the government is to hit its target of constructing 300,000 new homes every year.

He explains: “The truth is, even with this week’s news of £624m of government loan funding, brownfield sites are only half the story. After all, if building on brownfield land was so simple, every developer would already be doing it because planning permission in such cases is almost a given.

“However, town centre brownfield land is often either contaminated and too expensive to reclaim, or already occupied by light industry who would have to be moved elsewhere. It’s no good saying we need more building on brownfield sites when they’re not readily available.

“Instead, councils would have to have a policy of building new light industrial units on land they own outside town centres, in order to relocate the companies concerned. This would certainly make much more sense than risking millions of pounds of taxpayers’ money buying shopping complexes hundreds of miles away outside their patch, which were often massively overpriced even before the Covid pandemic.

“In fact, if they had spent some of that commercial money on developing the land they own, they would have created a stack of affordable homes which they could have rented directly, rather than paying landlords to put up tenants and families who need accommodation.

“Such a policy would have the added advantage of moving existing businesses to new, modern buildings with greener credentials, and cut down on heavy lorries polluting town centres. However, there’s no getting away from it – this would mean building on greenbelt.

“But as we’ve said for years now, there is plenty of what we call ‘grubby greenbelt’ – land around railway lines and road junctions of no scenic value whatsoever, which might actually be improved by building on it.”

Adam Hesse

Developers have been made the whipping boy for alleged land banking when it’s the planning system that’s at fault, says Aston Mead

 370 230 Aston Mead Land and Planning | Land with development potential across Surrey

Leading land agent Aston Mead has questioned new recommendations to penalise developers who fail to build new homes on sites they have acquired, despite having been given planning permission.

The suggestions have been made in a wide-ranging report on the government’s proposed planning changes, published by the Housing, Communities and Local Government (HCLG) Committee.

The report urges the government to ‘set a limit of 18 months following discharge of planning conditions for work to commence on site’, after which permission ‘may be revoked’. Following a further 18 months for development to be completed, the local authority ‘should be able to levy full council tax for each housing unit which has not been completed’.

Aston Mead Land & Planning Director Adam Hesse said: “Firstly, the idea of charging council tax on uncompleted homes is a complete non-starter. Any barrister worth their salt working on behalf of a developer would be able to point out that this would be charging for services – like maintaining roads, collecting bins, and cleaning streets – which were not yet being provided. They would have to create a new levy instead, but it wouldn’t be council tax!

“Secondly, all of this presupposes that developers are deliberately sitting on land they’ve acquired and doing nothing with it – or what has become known as ‘land banking’. But to be honest, we are at a loss to see where these claims are coming from.

“As land agents for the past twenty years, we’ve been working day in, day out, with people who buy and sell land. That’s what we do. And I can honestly say that for every single site that we’ve sold in that time, I don’t know any company which hasn’t built out as quickly as possible.”

An investigation into land banking in the housing industry conducted by Sir Oliver Letwin under Theresa May’s government and published as recently as 2018 concluded that it was not an important factor in slow build rates.

Adam Hesse says the perception that developers are land banking demonstrates a fundamental misunderstanding about how housebuilders run their businesses.

He explains: “Housebuilders’ profits are generated from selling homes, not from an increase in the value of land they own. The idea that they spend their time acting like financial investors, speculating over future land values is a myth.

“If anything, it’s the absorption rate which is slowing delivery; most housebuilders simply build out sites at the pace demanded by local market conditions. Admittedly, they could help themselves by producing a wider variety of homes in each development, differing in size, design and setting, to increase the appeal to a range of markets. That could accelerate built out rates substantially.

“But the truth is that developers have been used as the whipping boy for the slow pace of development, when actually it’s the planning system which is at fault. One minute it’s Nimbys protesting about development, the next it’s MPs saying you’re not building fast enough!

“So rather than beating developers with a stick, time and money would be better spent on making sure planning departments were fully funded, to enable permissions to be given more quickly. That’s the only way we’ll get to building the target figure of 300,000 homes per year the government are demanding.”

Adam Hesse

Aston Mead welcomes move to ban councils from gambling on the property market

 370 230 Aston Mead Land and Planning | Land with development potential across Surrey

Adam HesseLeading land agents Aston Mead have welcomed proposals to ban local authorities from making risky investments in commercial property and say councils should spend the money on affordable housing instead.

The move follows revelations that since 2016 local authorities have borrowed £6.6bn to buy shopping centres and office blocks, to replace revenue lost by government cuts – 14 times more than in the previous three years. Over a third of that spend was made outside their boroughs. Last month it was reported that the Treasury now intends to “severely restrict councils’ ability to borrow for the sorts of out-of-area investments which are for yield rather than for policy reasons”.

Aston Mead Land & Planning Director Adam Hesse said: “We’ve been warning councils about their wild property gambling spree in a series of press releases, articles and interviews for the past two years.

“For instance, we know of one local authority which bought a shopping centre for an eye-watering £40m just weeks before the lockdown came into effect. Not surprisingly, more than 90% of its stores are now shut. And there’s another which paid £6.2m for a hotel that the tenant has said will go bust without a rent cut of up to 80%.

“Let’s face it – the authorities concerned are hardly experts in property speculation. And yet they are risking vast amounts of taxpayer-funded debt on commercial premises, often outside their districts, and about which they know next to nothing. These councils are massively over-exposed and putting public services in jeopardy. I’d be astonished if they got half of their money back or half of their rents paid!”

The British Property Federation says that only one third of retail rents and two thirds of office rents were paid on time in March of this year. It expects those figures to halve again this month. Meanwhile, Property groups are finding it difficult to sell retail parks even at rock bottom prices, and analysts forecast lower office rents for years to come, as more people chose to work from home.

However, it has since been suggested that the proposed ban may contain a major loophole because whilst the plans will force councils to hire a qualified independent accountant, it appears that they may not have to follow the advice provided.

Adam Hesse said: “This is absurd. For this ban to work, it should be mandatory to follow the guidance given. No exceptions, no exemptions, no excuses.

“In fact, we would propose that councils go even further. Local authorities have been funding their property speculation by borrowing from the Public Works Loan Board at incredibly low rates.

“No one begrudges councils being able to access money cheaply, of course. But we think that this cash should be used to build affordable homes on council-owned land instead.

“Local authorities are some of the largest landowners in the UK. As one of the South East’s most proactive land agents sourcing sites for our developer clients, we are amazed at how much council development land there is in our town and village centres, and yet they’re doing nothing with it!

“We suggest that councils could continue to invest in property by selecting their own sites on which to build, provide the planning permission required, and decide how many properties should be constructed – all in their own local regions – the circumstances and needs of which they intimately know and understand.

“The homes would enhance the value of the land, as well as provide a regular rental income for the council. The level of risk the authority would be exposed to would immediately diminish, and it would mean that we could start to construct the affordable homes that people in this country so desperately require.

“Perhaps the Government should issue Compulsory Development Orders on local authority land where there is an acute shortage of affordable homes to offer those on the waiting lists.

“It’s estimated that this country needs to build 100,000 genuinely affordable homes over the next five years – many of them for key workers. Our proposal would be the perfect way to thank them for their sterling efforts through the Coronavirus crisis.”

Adam Hesse

Stirling Prize award proves good housing design is possible everywhere, says Aston Mead

 526 315 Aston Mead Land and Planning | Land with development potential across Surrey

Leading land agent Aston Mead says the award of the RIBA Stirling Prize for Architecture to a development of council houses in Norfolk is proof that good design is possible for properties in all price brackets.

Goldsmith Street in Norwich became the first social housing project ever to win the prize from the Royal Institute of British Architects. Judges described the development of 105 homes as a ‘modest masterpiece’ and ‘an outstanding contribution to British architecture’.

Aston Mead Land & Planning Director Adam Hesse said: “For too long we’ve put up with the excuse that good design is too costly to be applied to lower value homes. But what happened in Norwich has put the lie to that argument at a stroke. This is quite a modest development of 50 one, two and four bedroom flats, together with a similar number of two-bedroom houses – but now it has been recognised as a pioneering example for other local authorities to follow.”

The properties in Goldsmith Street have been built to eco-friendly ‘Passivhaus’ standards – ultra-low energy buildings which need little fuel for heating or cooling. Over a quarter of the site is communal space – lushly-planted, with a secure alleyway connecting neighbours at the bottom of their garden fences.

Adam Hesse says that a similar approach can be found at the Prince of Wales’s new town of Poundbury on the outskirts of Dorchester, Dorset, which started in 1993 and is expected to be completed by 2025.

He explains: “Poundbury demonstrates that it is possible to build high-quality housing at affordable prices. Around a third of the housing there is being built by housing associations for rental or shared equity ownership by people on the local housing list. But just as in Goldsmith Street, emphasis is placed on the quality of design and materials, landscaping, and attention to detail – even down to street furniture and signage.

“However, crucially at Poundbury, there is no zoning. The social housing is interspersed with – and indistinguishable from – the private housing nearby. This is just the way it should be. When quality runs throughout the development, rather in privileged ‘pockets’, not only do those residents tend to take more care of their properties, but the private homes nearby prefer to have them as neighbours as well.

“Previously, people may have thought that it was only kudos and publicity generated by the Prince of Wales’ connection with Poundbury that allowed such a development to take place. But as the houses at Goldsmith Street in Norwich prove, the truth is that good design should be possible everywhere.

“In fact, with ambition, careful thought, and attention to detail, there is no reason why similar examples of high quality design for properties in all price brackets should not now be created all over the UK.”