This year’s British New Homes Senate was held on 8 October at 30 Euston Square in London, where industry stakeholders gathered to discuss issues relating to the new-build market.
In this article, Mortgage Solutions looks at the highlights from this year’s event.
More construction workers needed for housing delivery
Speaking of the government’s plan to build one-and-a-half million homes over five years, one speaker said there was a way to go before the sector could deliver the 300,000-plus new homes required each year. They said planning restrictions needed to be tackled, as many developments were held in the development stage for a long time.
Another panellist agreed, saying some projects were held up for around 70 weeks.
The speaker said the government’s goal to reform planning would “not touch the sides”. They said there were fewer bricklayers in the UK than in the 1970s, so finding the required workforce to deliver these homes would be challenging. The speaker suggested the government support regional housebuilders, who often provide training for construction workers.
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In a later panel discussion, one speaker said the government could meet its housebuilding target, but this would likely be done through a ramping-up of building at the end of its term after foundations had been laid to make this possible.
One panellist said the target focused on the industry’s mind, but consideration needed to be given to the types of properties being built and certainty on tenure.
A delegate asked if there was a concern about the wrong kinds of housing built in certain areas.
One panellist said no, because housing would be needed “everywhere, of all types”. However, they said this should be considered carefully, as putting affordable homes in an area with poor transport links might not attract enough buyers.
Another panellist said in some cases, infrastructure would need to come first to get people to buy into a potential development.
Someone asked how to maintain quality when the targets seemed to prioritise speed and quantity.
A panellist said if the collective quality of new housing was poor, more controls would be brought in.
They said the clarity of national policies, putting terms in building regulations, an ethos of delivering homes up to standard, and the holding of housebuilders to account by local government to provide some “healthy tension” were essential.
Lagging with retrofits
During a separate panel session, one delegate asked if the reason more air source heat pumps were not being installed was because housebuilders and sales executives did not understand them, and questioned if that was why the UK was falling behind in retrofitting homes.
The speaker said in their experience with solar panels, the first 10 years were spent educating people on the technology.
The delegate responded by saying this was not the case in their view, as there was a lot of demand for air source heat pumps, but they came with months of waiting.
The speaker said it was down to the selling operation, which was starting from low levels and needed to be sold both to the supply and demand channels.
Another delegate asked the speaker if they thought the government would reach its sustainable housing target, and the speaker said yes, but finding the workforce with the skills needed “would be a major problem”.
Encouraging people to go green
Another speaker said most green mortgages were tied to a home’s Energy Performance Certificate (EPC) or standard assessment procedure, which were both subject to reform, and asked where that left the sector.
The speaker said if the metrics of measuring efficiency were subject to change, there needed to be more thinking around what this meant for green lending and what qualified for a green loan.
Another panellist said most mortgages rewarded already efficient homes, but there were now more options with enhanced affordability allowing people to borrow more to buy an energy-efficient home, which created a premium for this kind of property.
The speaker said integrated retrofits were the next step in green mortgages, where people would be helped and rewarded for improving the quality of their homes. However, they said there was still low demand in this space.
Challenges with valuing energy-efficient homes
One speaker said the Future Homes Standard meant better quality homes that would not need future retrofitting and were designed to meet changing consumer values. The speaker said there would be a new generation of homes by 2030, and it was up to the valuation community to understand these changes and factor them into calculations.
Later in the panel discussion, one panellist echoed this, saying valuers had a challenge with these newer, efficient homes because it would ultimately come down to what people were prepared to pay.
The panellist said it would need to be determined how much of a valuation came down to the green aspects of a home, and this was currently hard to extrapolate. They said it was difficult to say what was happening without observing the second-hand market.
Additionally, the panellist said that while a retrofitted second-hand home or a new-build home may be more energy efficient, this did not mean that the people living in the property were operating it sustainably.
The panellist went on to say there was a lack of detail to know whether higher values were linked to energy efficiency and not other features of the property.
Creating demand for new homes
The next session covered planning reform, opening with a statement on what kind of homes would be included in the government’s housebuilding plans. The speaker said it would come down to demand, as housebuilders would not be encouraged to deliver homes without this. However, this was being impacted by affordability barriers for first-time buyers.
One speaker said affordability was a continued problem for first-time buyers and said it was good to see some lenders doing something about this, but more innovation was needed. They noted that after the Help to Buy scheme ended, 30,000 first-time buyers left the market, which showed there was a need for more affordability-boosting options.
Another speaker said although other schemes had since been announced, there was less consistency and more varying conditions, making it harder to keep up and understand what support was available.
One speaker said the absence of Help to Buy at a time of stretched affordability created the “perfect storm”.
Someone else said it was important to have a mix of schemes that served different tenures, as this would be better for the market. The panel agreed that there needed to be long-term solutions to housing affordability.
Another panellist said the shared ownership code could boost sales under the scheme, but the government still needed convincing, as it seemed to be more focused on social rent. The speaker said shared ownership could be a good solution for people leaving the rental sector.
They said the code would help with transparency, but there was still room for reform. The speaker suggested shared ownership was “the way forward”.
Another said a code would give the market confidence.
