According to the house-building industry, the number of properties built each year in England could drop to its lowest level since 1945 due to higher mortgage rates and government policies.
According to the Home Builders Federation, changes to England’s planning framework by ministers and the effect of government environmental rules could lead to a drop in annual supply from 233,000 properties in 2021-22 to just 111,000 in this decade.
This would be the lowest level for more than 80 years. Stewart Baseley, executive chairman of the Home Builders Federation, stated that the government’s “capitulation” to the “not-in-my back yard lobby” and its mishandling environmental policies could lead to a plunge in housebuilding and threaten hundreds and thousands of jobs.
Baseley stated that “short-term, political decisions to appease backbench Conservative MPs were threatening confidence the housing market as Britain was heading into a recession with tighter mortgage availability.
The cost of mortgages has risen due to higher interest rates. Lenders increased their prices last year following the disastrous “minibudget” of Liz Truss.
While the price of some fixed-term mortgages has dropped since then, they remain more expensive than when the Bank of England raised interest rates to reduce inflation.
Last year, Michael Gove, the housing secretary, reduced the government’s goal to build 300,000.00 homes per year in England to stop a rebellion from Tory MPs concerned about building in their constituencies.
Gove wrote to MPs in December saying that the goal, despite being stated in the Conservative party’s 2019 general election manifesto for 2019, would not be a “firm target” but an advisory.
The government launched simultaneously a review of England’s national planning policy framework.
Gove stated that councils no longer need to plan for 20 percent more homes than they actually need and suggested they could reduce the amount land they had to identify for housebuilding.
Ministers had previously ordered local authorities to create “local plans” that included specific building targets.
Research by the Home Builders Federation and Land Promoters and Developers Federation found that 47 councils had delayed this process due to recent policy uncertainty.
The latest delay by Gove’s Surrey Heath council is in relation to its local house-building plan.
Surrey Heath Borough Council had hoped to have a draft of its plan ready by February. However, it stated on its website that it is rethinking its announcement due to changes in the national planning policy framework.
Planning consultancy Lichfields conducted research for the Home Builders Federation and predicted that the changes to the framework would reduce supply by 77,000 properties per year in the short term.
Research also found that 41,000 homes could be affected by government environmental regulations to protect rivers and waterways from pollution.
Natural England provides guidance on so-called “nutrient neutrality” and requires that scores of councils limit residential development’s impact on the environment by limiting house building.
Natural England’s restrictions on housing development in areas near national parks could also hinder construction.
The Department for Levelling Up, Housing and Communities stated that it did not accept the analysis of Home Builders Federation and added that it would deliver 300,000 homes annually.
It stated that the proposed changes to planning systems were intended to help areas get more local plans and deliver more housing.
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