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  • Buy-to-Let

    Councils 6 years behind housebuilding targets



    Councils across the country have fallen more than six years behind their own housebuilding targets, spelling disaster for Britain’s bid to end the housing crisis, according to new research by Project Etopia.

    The modular smart homes provider found that development across the country is moving at such a glacial pace that local authorities are, on average, 6.2 years behind the rate of housebuilding needed to hit targets identified as part of the Government’s ten-year plan, ending in 2026.

    The Ministry for Housing, Communities and Local Government set out annual housebuilding targets with local authorities up to 2026, published in September 2017.

    However, building in 316 local authority areas is set to fall short of housing need by 889,803 homes over the next decade.

    Some of these locations (75) are keeping pace with housing requirements, but, just one year in, 241 areas are already in deficit, leaving them 9.2 years behind housebuilding targets on average.

    If those councils not building fast enough do not speed up, they will miss their targets to the tune of 1,013,312 homes by 2026, Project Etopia reports.

    Of the ten councils that have fallen the furthest behind, it would take until between 2042-60 for all the homes required by 2026 to be built.

    Figures show that Southend-on-Sea is by far the worst town or city outside of London for meeting its housebuilding targets, and is set to be 8,405 homes short of what it needs by the end of 2026. If it does not speed up, it will take 34 more years to build that amount of housing stock.

    York and Luton are the only other towns and cities that are more than 20 years behind, and all ten councils with the greatest deficits are two decades off the pace on average.

    The Project Etopia study found that, even councils with fewer homes to build, such as Gosport, Hampshire, which only needs 238 per year, have been struggling to meet their own housebuilding targets. Gosport is 17 years behind.

    Full/source article

    The lack of social housing was discussed at the Landlord Investment Show panel debate and you can watch a video recording in full at the footer of this thread.

    SEE ALSO  -          9 irrefutable reasons why property is still a viable investment + Landlord Survival

    UP NEXT -              What causes homelessness in the UK?

    DON'T MISS -         Six babies have been born for every new home built in England since 2010

    NOW WATCH:

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    https://www.bbc.co.uk/news/av/business-4...ng-problem


    Well, the above link shows an article about modular home build. Essentially it tells us that one factory can supply up to 1 percent of the needed homes, i.e up to 3000 of the 300,000 homes the gov wants each year. I personally don't think it is likely modular homes will gain that much traction among developers or they already would have. My guess is that the cost of producing in a factory then moving the modules and adding profit on top is probably not significantly cheaper than erecting a house on site.


    I think the bigger problem like the Landlord sector is the legislation that is affecting the sector. For developers there is s106 and/or CIL - Construction Industry Levy. They essentially require a contribution from the developer towards infrastructure, roads, schools, libraries, etc and/or a requirement for so many of the homes being built to be set at an affordable rate/affordable home. Both tend to have the issue in that they don't always apply to all sites and the developer won't know until he has been through planning. Many sites are of course let of one or both of these in order not to put off housing, not being seen as applicable, opposition from the developer, etc and that can mean a lot of money is not collected.


    I personally think both s106 & CIL should be scrapped and many housing review documents think similar, yet in the most recent Budget the Chancellor did not address the issue at all. To my mind both s106 & CIL spread confusion and fear over what they are, the ins & outs of each, whether they apply and to what extent they apply. If planning come along to site say 'X' amount of proposed house builds must be sold as 'affordable homes' there is then the question of what is deemed 'affordable' and how many homes on site this will be. Apparently, this should not be set so as the site becomes an unviable build, but in who's eyes, the developer is not in it to make a few quid, they want a good return for the bother/risk of taking on the project.


    So this either means abolishing the system and not replacing it or replacing it with another system. Other systems have been proposed but they run the risk of becoming confusing like s106 & CIL became both of which were promoted as simple & fair but became anything but. The main issue I think is planning coming in and getting into negotiations with developers over what their contribution will be & what will be done on site. Developers I think find it difficult to try and account for this variable which essentially becomes and 'unknown variable' over whether it will apply, to what extent and basically the cost. If it we're a flat rate percentage across all site developers would know where they stand as to how the costs stack up and whether a site is viable/worth the risk developing.


    Not replacing the s106 & CIL could be the best way to get homes built, it would remove a lot of doubt over the whole process, remove another area for developers to deal with that can hinder or freeze (landbank) house building and could make a lot more sites viable/worth taking on the risk of building upon. The more houses that are built the cheaper the final sale prices of houses as a whole. I personally think developers were looked upon in the past as making too much money, but I think in more recent years with rising construction costs, land values, etc that is not necessarily the case. The case may tend to be more for an investor is, 'Do I wish to invest in house building or can I make more elsewhere?' - Essentially the same question many Landlords are now asking themselves, and of course, 'What is the risk?'. I personally think s106 & CIL should be abolished and not replaced after all infrastructure is what we should all be contributing to on a person by person basis not hitting an industry what we are relying upon to provide homes for the population its just not the right place to do it.

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    LAs per se have not been allowed to borrow for new build social housing since around 1985

    Hence the move to rely on S.106/CIL to get a relative handful of new builds from all major private developments.

    That explains why only some 300,000 extra social homes were provided since 1981.

    Even those which are provided via S.106 will in part be the affordable 80% MV homes which fail to address the need for social rents.

    Most new social builds now derive from HAs - and given that Cao Subsidy from central Govt was cut from 75% in 1990s to 14% today - HAs need to borrow 86% at average 4.125% interest rate.

    Servicing those loans then needs rents at around the 80% MR level - hence way above social rent level.

    Much of the original Council Housing stock was built in 1940s/50s/60s for around £500 per unit - and even allowing for inflation we are never going to see new builds at that price point again - especially as much of the land involved was CPO of arable land at original use value - eg £100 an acre with 10 homes per acre allowing for roads infrastructure etc - hence £10 per house plot.

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    I think that there needs to be an end to social house building. Unless we move away from social housing we are likely just making the whole social dependancy and hence rising costs of an ever enlarging social housing budget worse. The more social houses there are the more are maintenance costs on the state & benefits bill due to their being little incentive to work.


    Better I think to provide state funded hostels for those in need of social housing with the idea they would later either move into private rental sector or buy their own house in the private housing sector. It would get a lot of people away from dependancy on social housing with its heft associated tax on the state & others. I also think it would produce people with a better attitude than those attitudes often seen in people living in social housing.

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    Council Housing is effectively 2 very different entities if you look at the pre and post 1977 scenarios.

    The core ethos pre 1977 was allocation to overwhelmingly working households - with good jobs so they could pay the rent which then quickly repaid build costs.

    From 1977 allocation switched totally opposite to the most needy/poorest families  - hence we saw HB claimants in SRS go from just 10% in 1980 to 75% today (EHS).

    During that process Govt effectively decided to corral the poorest on Council estates - and naturally public perception of both the estates and the tenants changed for the worse.

    One has to admit that the pre 1977 housing situation left a lot to be desired - as millions of poorer families were obliged to live in slum conditions in PRS with many having just one room in a shared house and whole family living /sleeping in that one room.

    The hostels you suggest are certainly a short term fix for the literally homeless - but today's work arena is very unlikely to offer the poorest the means of working one's way out of poverty- as over the past 40/50 yrs the share of company profits paid as wages has halved from 2/3rds to 1/3rd.

    UK annual wage growth peaked at around 17% cagr in the 1970s decade - but that growth rate halved in each subsequent decade.

    In the 70s wages doubled every 4 yrs on average - but today an average paid worker will likely need some 30 yrs before nominal wage doubles and that is majority of a working life.

    In the 80s Govt publically stated "Let HB take the strain" - and at the same time removed the rent controls and secure tenancies hence the 6/12 month AST has flourished.

    However - if your plan is to have people move from hostels to PRS - then one needs to g'tee adequate private rentals in locations where needed and at affordable rents - and PRS is not set up in that manner - with over 2 million individual landlords who can choose on a whim to exit the sector with a few months notice.

    Bottom line with Social Housing - is taxpayer either pumps in big Capital Subsidy (75% in the 1990s) or we go on as we are with just 14% Cap Subsidy and a growing HB bill to fund so called affordable rents at around 80% MR - noting the 86% borrowing needed for new builds.

    I think we need to wait say 5 yrs post Brexit and look then at new UK pop and it's distribution and typical household incomes and make a new plan around that.



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    Thanks for the info LandyLordy. Well post WWII my Father's side of the family lived in social housing and like you say it was a different beast, he remembered it as having more decent people than the later crowd/what you can get today. They were still pretty poor of course as it was post war even though his Father & Mother worked and later himself. They had all moved out of social housing by 1977 though.


    I think on the state funded hostel idea this would for some be a long term solution and could be a decent enough place for them to live but still disuade them or their children from having more children, i.e they get one room or small studio flat and that's it regardless of how many kids they push out, if they want better then it would be down to them. I think this would be a better solution than the pre 1977 slums but would have a simliar effect. It would help avoid building too many houses/flats and save the gov/taxpayer a lot of money. They could be staffed to help keep order & assist the residents with their problems/issues. I think it would be a goid way to get away from the social problems that seem synonymous with post 1977 social housing.

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    Hi Stewie - I am sure you can see that public perception of state funded hostels as you describe would be regarded as a return to the Victorian Workhouses.

    Also if you peruse the LHA Bedroom Calculator online - you will see that any household with even one child is expected to have min 2 bedrooms and up to 4 bedrooms for larger families depending on exact age of the kids in the household - so any fewer bedrooms would be regarded officially as overcrowding.

    You may also have heard of current Govt plan to restrict HB in hostels to LHA Maxima - eg if someone in a hostel costing maybe £200/£300 weekly gets that paid by state - then in future that can be cut to just LHA rate - and thereby close many such hostels.

    You will also have seen the data showing that if you push people on to the streets average life expectancy is then just 47/43 for males/females respectively.

    If you subscribe to Inside Housing website you will glean a lot of data around what is actually going on in social housing - especially regarding benefit cuts which are making even social landlords wary of allocating new tenancies to benefit claimants - as they too want to g'tee their rental streams.

    That is especially so for HAs who are developing new homes - as they usually have a covenant in their loan agreements which mandates that they maintain rents at a certain level

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    I think that all needs to change. Those that don't contribute/contribute little of significance can't complain at efforts made by government/others to provide accomodation for them. A state funded hostel would need to be run on a pilot basis first and seek to show it is nothing like a nineteenth century workhouse. It would have to show if is a decent place to live and well. There's no reason that they couldn't gain a positive image. Basic support could be provided in such state run hostela to this that need it. I think a log of problems with social housing & estates is that those allocated to it are often left un supported. They need the odd person on hand to assist them rather than let them run amok. I don't think guidelines with overcrowding/number if bedrooms should be adhered to, its basically down to them to provide if they want that not others. Laws of course may need to be changed.

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    Between 1953 and 1981 UK home ownership increased by 2/3rds from 35% to 58% - so I guess your parents were part of that group.

    Ownership then peaked at 71% in 2003 before slowly falling back to 63% today - which is probably more viable long term.

    We no longer have "jobs for life" - and medical advances post war mean that we have many people surviving with either acute or chronic illness (some congenital) who are unable to earn an independent living.

    Back in 1948 - only 37% of people survived to age 60 and that "survivor cohort" on average drew pensions for around 5 yrs.

    Today over 91% reach 60 and that cohort can expect close to 20 yrs further survival.

    Overall today that translates to a far slower turnover in housing than 70 yrs ago - and my estimate is that translates to around a 15% stock shortage versus 1948.

    That said in past 50 odd yrs UK added 2/3rds to original housing stock (extra 10 million homes) thereby reducing average occupancy rate by 30% - down to 2.3 persons per dwelling today.

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    I think the main issue overall with both housing being built and the PRS is that the gov re trying to bat their problems with social housing tenants onto the Private sector with UC on the PRS side with Landlords struggling to obtain the HB money from tenants and with developers s106 & CIL to try & offload responsibility for providing social housing/affordable housing on developers through Housing Associations.


    I think this is making matters worse not better. Both PRS Landlords and Developers are saying, ' no thank you, we're not that stupid' and batting the problem right back by avoiding involvement in these schemes as the government wishes. As time goes on this will create a bigger & bigger problem and will come to a head one way or another. Batting the problem back and forth between PRS, Developers & Gov won't help I don't think it's really the problem that needs sorting out.

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    Agree strongly that the current S.106/CIL  model where new Social Housing is expected to be provided as "crumbs off table" when there is a large private development is plain stupid.

    Govts though since the 1980s have largely abdicated from building high volumes of Social Housing (averaged over 142,000 pa from 1946 to 1981) whereas since 1981 we added only some 300,000.

    Capital Subsidy for new build Social Homes is cut to just 14% so the 86% commercial loans mean that we shall not see social rent levels on those new builds - and if we continue allocation to poorest families we then accept a progressive increase in HB bill.

    So the taxpayer has 2 choices - boost the Cap Subsidy back to 75% plus or pay an ever increasing HB bill.

    PRS is of course taxed on the £9.3 billion pa LHA bill and at £8 bn taxes repays around 85% of that cost

    SRS pays no taxes on the 65% of all HB/LHA it gets - so no kickback to taxpayer.

    Kingston Council charges £1000 pcm rent for a new build 2 bed flat - so extra £12000 pa on HB bill - unless allocated to a working family which is unlikely.

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