Government targets construction to drive recovery

The Prime Minister has put the construction industry at the heart of the Government’s plans to revitalise the stalled UK economy. A raft of measures have been announced; to temporarily relax planning controls on minor developments, underwrite the provision of new private rented accommodation, ease the burden of planning gain on new private sector developments, tackle perceived inefficiencies in the planning system and to provide additional funding for new affordable housing and for the Firstbuy scheme. Using Glenigan data the Government identified 75,000 potential new homes currently stalled due to sites being commercially unviable.

The measures to encourage developers to bring forward sites for development will be welcomed by the industry. As reported by the Financial Times on 9th September, the latest data compiled by Glenigan for the Home Builders Federation (HBF) reveals a disappointing 4% decline in the number of private and social sector homes securing detailed planning approval (on sites of 10 or more units) during the second quarter of 2012.

Furthermore a separate report researched by Glenigan for the Local Government Association identified some 400,000 dwellings with planning approval that were on projects that were either under construction or had yet to start on site. The planned renegotiation of section 106 agreements and the additional Government funding should help unlock stalled schemes and accelerate the delivery of projects currently on site.

The Government’s proposals to temporarily relax the planning controls on home extensions and other small scale developments is intended to provide a direct boost to construction activity and the wider economy in the run-up to the General Election.

Glenigan figures quoted by the Telegraph on 4th September highlight the potential impact that an increase in such work could provide to industry workload. Home extensions typically account for seven out of ten of all residential planning approvals.

At 85,500 the number of all residential approvals during the past five months was 13% up on the preceding five months. This coincided with the decline in larger new build projects (10 or more units) during the second quarter of the year analysed in Glenigan’s report for the HBF. The overall rise points to renewed interest among existing homeowners to invest in their homes. The planned relaxation in planning controls could potentially accelerate this trend.

The measures announced by the Prime Minster include:

• Removing restrictions on house builders to help unlock 75,000 homes currently stalled due to sites being commercially unviable. Developers who can prove that council's costly affordable housing requirements make the project unviable will see them removed.
• New legislation for Government guarantees of up to £40 billion worth of major infrastructure projects and up to £10 billion of new homes. The Infrastructure (Financial Assistance) Bill will include guaranteeing the debt of Housing Associations and private sector developers.
• Up to 15,000 affordable homes and will bring 5,000 empty homes back into use using new capital funding of £300m and the infrastructure guarantee.
• An additional 5,000 homes built for rent at market rates in line with proposals outlined in Sir Adrian Montague's report to Government on boosting the private rented sector.
• Thousands of big commercial and residential applications to be directed to a major infrastructure fast track and where councils are poor at processing decisions developers can opt to have their decision taken by the Planning Inspectorate. More applications also will go into a fast track appeal process.
• 16,500 first-time buyers helped with a £280m extension of the successful 'FirstBuy' scheme, which offers aspiring homeowners a much-needed deposit and a crucial first step on the housing ladder.
• For a time limited period, slashing planning red tape, including sweeping away the rules and bureaucracy that prevent families and businesses from making improvements to their properties, helping tens of thousands of home owners and companies.