The housing crisis is one of the biggest issues facing the country right now. Councils across the UK are struggling to find enough affordable housing for those that need it, the government is trying to come up with solutions and, all the while, housing stock is becoming harder to procure.

Those in property development have their role to play. There UK needs more housing, and that’s a fact. With this in mind, let’s look at how those working in the property market can ease housing shortages and benefit at the same time.

The Government Needs You

If you work in property development, it’s highly likely you have read about the various plans and schemes aimed at easing the housing crisis and enabling more people to get on the property ladder. Now, the government is putting a firm emphasis on the role of property developers in these efforts.

A recent speech from Prime Minister Theresa May saw her talking about the role of property developers in “restoring the dream” of home ownership. She talked in detail about a need to rewrite planning laws to make it easier for private housebuilders to step up and fill the gaps in construction of new homes.

For property developers, this represents a golden opportunity. There is a huge potential market of home buyers out there that are just waiting for someone to meet their needs. The government proposes to go way beyond its white paper on the issue published last year and allow councils to borrow more money to invest in housing. For property developers, this means councils with new sources of cash who are going to be looking for the land and expertise of property developers to make new housing developments a reality.

The Flip Side

On the other side of the issue, many government plans to increase housing stock have gone nowhere. People are sceptical about anything the PM announces to do with the issue, as there has been scant improvement from other schemes and proposals. For property developers, this means their existing portfolios will only increase in value.

A paucity of housing makes existing stock more valuable. It’s a simple equation but one that is good news for property developers. The longer the shortage of housing goes on, the more people will be willing to pay for those that are available, and property developers can benefit from snapping up housing and property fresh to the market. People need homes, and someone has to provide them, and with such a demand, property developers are perfectly placed to reap the rewards.

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It’s no secret that there is a chronic housing shortage in the UK at the moment. The average estate agent typically has 42 homes on their books per branch but currently in London, where the housing shortage is at its most severe and concentrated, there are just 33.

The Prime Minister recently indicated that developers are to blame for the lack of housing in the UK, which is impeding millennials from stepping foot on the property ladder, but just how much truth is there behind her statements?

A vicious cycle

At present, land with planning permission for housing costs around £6 million per hectare. These steep rates are perhaps the reason why the Prime Minister feels that developers are to blame for the housing shortage in the UK. There is a lot of speculation that developers hoard land once they have purchased it, sit on it for a while until they obtain planning permission and then sell the land on for significantly more than what was originally paid.

There are also issued being raised regarding the bonus structures that many construction firms use, which mean that development bosses are cashing in on commission not on the number of houses that they build, but on their profits or share price. This could go some way to explain why many construction firms lack the incentive that is needed to build more houses and address the UK shortage.

This problem isn’t anything new either. An investigation by The Guardian in 2015 revealed that a staggering 600,000 plots with planning permission were owned by some of the largest property builders in the UK, but weren’t being built on.

Steps to change

In an attempt to deliver the homes that the UK needs, the Prime Minister has implemented reforms to the National Planning Policy Framework, which will see the use of land being maximised, protections for the Green Belt being strengthened and a greater emphasis being put on transforming planning permission into new homes.

But just how much of an impact will these changes have? They seem to have been met by stiff opposition by some interested parties, who feel that involving and empowering councils is a better course of action to take, but only time will tell whether the Prime Minister’s decisions will mend the draught that is currently stifling the UK property market.

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