Housing crisis: Focus on expediting delivery period from present 3 years!
Even as demand continues to outstrip supply of housing in the UK, the timeline for delivering a house continues to remain close to 3 years! This is clearly an agonisingly slow pace, especially when the cost of construction, continues to climb, adding to the house prices.
Grant Thornton UK, one of the leading accounting and consulting firms, in its latest report “An Instinct for Growth”, has identified two key impediments for the growth of housing in the UK – “on average, it takes over a year (13 months) from planning permission for spades to be in the ground and construction to begin; after construction begins, it takes an another 20 months to complete development (on average)”. The findings are clearly a worrying sign because at this pace of housing delivery, demand will always outpace supply.
When a developer submits a Planning Application, a range of outcomes are possible – Permission granted, Application refused or Application withdrawn – and many a times, the outcome cannot be predicted. The stakeholders of the housing sector must come together to expedite housing construction and delivery process. It will create a win-win situation for all stakeholders concerned in the long-term.
The Grant Thornton report noted that at a time when the economic outlook has weakened, solving London’s housing crisis could unlock future growth in the capital. Additional house building projects in themselves will help to create jobs and stimulate growth.
“Pivotal to achieving this is the 32 London Boroughs and the City of London Corporation working closely alongside all other stakeholders, such as developers, investors and large employers,” the report said.
The observations are appropriate because making housing easily available will create an environment where dynamic businesses can attract and retain the people they need, driving faster growth.
Tracking the performance of the housebuilding process is critical to identifying the key areas for improvement, and, as a result, the opportunities to increase supply. There are some areas, which need immediate attention. For instance, the rate of attrition – homes given planning permission but not built – is increasing over time, from 28 per cent in 2010 to 36 per cent in 2013.
The stakeholders must address this issue because if planning permission has been granted and houses are not built, it will aggravate the situation, leading to price inflation.