The Royal Institution of Chartered Surveyors (RICS) is pleased to respond to this inquiry by the House of Lords Built Environment Committee.
Established in 1868, RICS is the largest organisation of its kind for professionals in property, construction, land, and related environmental issues, setting and upholding professional standards for 125,000 qualified professionals and over 10,000 firms. RICS regulates both its individual qualified professionals and those firms that have registered for regulation by RICS.
Over 80,000 of our qualified professionals work in the UK, where our goal is to deliver a healthy and vibrant property and land sector as a key pillar of a thriving economy while addressing the need for the creation of green, safe communities.
We are not a trade body; we do not represent any sectional interest, and under the terms of our Royal Charter the advice and leadership we offer is always in the public interest.
For our response to this inquiry, we have focused on questions where we have our greatest influence, and ability to be informed and shaped by our members who every day, work tirelessly to ensure quality and safety exists in our homes. The Committee might also be interested in the submission by the Construction Industry Council to which RICS is a member and whose response was shaped by a variety of built environment professionals.
In our response below, we discuss:
3. Does the Government’s target of 300,000 new homes per year accurately reflect housing demand? Is this target achievable?
Before addressing whether the target is achievable, it’s important to understand if the figure itself an accurate representation of demand.
A 2019 report by the National Audit Office highlighted concerns around the 300,000 figure, including the methodology itself – which historically is based on projected household growth adjusted for local housing affordability. Under the standard methodology used for calculating the 300,000 figure, some parts of the UK, especially in north England, saw some local authority projections downgraded by almost a quarter from previous estimations. Since the target was set, the UK is also witnessing the impacts of Covid-19 and post-Brexit migration which wasn’t at the time of the figure, given considerable weighting.
RICS has two market surveys that the Committee might find of interest for monitoring current and projected housing trends in the UK which can help shape that figure. The monthly RICS UK Residential Market Survey is useful tool used by the wider profession and interested stakeholders to monitor current trends and changes within the UK housing sector. It will come as no surprise to the Committee to learn that over the last few months, the market survey has shown a dramatic rise in the number of sales being completed and demand for housing stock – influenced in part by the stamp duty holiday and the impact of Covid-19 on people wanting to live in different housing environments. The UK Economy and Property Market Update is a new monthly survey being produced by RICS to track longer property trends in the UK.
Moving to whether the 300,000 target is achievable, there are several variables that need to be considered including reform to the planning system, capacity to deliver the work (as expanded on in question 6), supply chains and financial considerations.
To give context to the scale of the challenge, since the 300,000 target was first announced by UK Government, the number of new homes has not reached its target. 2019/2020 saw the closest to the target be achieved, just why of 250,000, although 2020/2021 is expected to fall short due to the impact of Covid-19.
Planning
It is well documented that the planning system needs reform and investment. Planning authorities are being expected to approve a record number of new home applications under the government’s plan yet have witnessed significant cuts to resourcing and investments. Recent changes to the nutrient level regulation in English and Welsh waterways have only exacerbated the system, with an estimated 40,000 current homes stalled in the planning system due to regulations.
Supply chain
At the time of submission to the Committee, the UK is witnessing major challenges across supply chains, a combination between attributed towards Brexit and Covid-19.
Raw building materials are seeing dramatic price increases, which in turn are making housing developments go significantly over budget. For those who can access and fund raw materials, logistic delays caused by a shortage of HGV drivers is resulting in project delays.
While elements of this supply chain disruption may be recognised because of Covid-19 and immediate Brexit issues (including the lack of construction workers), until long-term stability returns to supply chains, it will be very difficult to envisage 300,000 homes being achieved.
Financial considerations – introducing Amberfield sites
One consequence of Covid-19 is that the public sector will likely witness significant financial constraints over the coming years due to the economic crisis which has developed. The UK Government commitment to ‘Build Back Better’ seeks to unlock land for housing which is a welcomed announcement.
RICS calls for the UK Government to go further with land unlocking. One of the biggest constraints to developers and house building is land availability. That’s why we have previously called for a new classification of land to be introduced, ‘Amberfield’.
Amberfield is land identified by local authorities as favourable for development, with government support provided to ensure the plot is ‘ready to go’ i.e. cleared land identified as potential for residential development. This would ultimately reduce cost and timings for developments to commence, and furthermore, support SME’s and self-build projects.
4. What is the balance of demand for new housing between homes for private ownership, privately rented homes, and social housing? How does this affect the type and tenure required of new homes?
Data collected by central and local government should be able to give an identification to the current number of individuals in social housing or on a waiting list for a home.
To look at future home ownership and the PRS, data collected by the English Housing Survey can be a useful reference point to determine short term likelihoods of moves. Importantly, data collected by these surveys should in future, be used as a reference point for understanding the likelihood over someone moving out of the social or private rental housing sector, and the short or long-term ability to purchase a property.
What is more difficult to predict, is the scale of the balance required in three, five- or 10-years’ time. There remains no perfect methodology for calculating the balance of homes required, indeed geographic, social, and economic factors mean different parts of the UK will require a different proportion of homes, at different times.
It is important to recognise though, that simply building more homes will not single-handily address the challenges of getting on the housing ladder. Indeed, research by the UK Collaborative Centre for Housing in 2019, identified that even with the building of 300,000 new homes a year, over a 20 year period this would only likely achieve a 10% decrease in house prices – by far the most significant roadblock for many to purchasing their first home.
5. What can be done to ensure there is a good balance of new homes where they are needed across the UK?
As highlighted above, there remains no perfect methodology for calculating housing demand, especially when looking at a regional level. Indeed, there are too many variables to accurately predicated where demand will sit at this time. Covid-19 is a perfect example, where in the months after the start of the pandemic, demand for homes with gardens dramatically increased whereas interest in inner-city apartments stalled. Equally important to new build targets, is building the right type of home too – a balance needs to be struck between apartments, family homes, homes for life etc.
The monthly RICS UK Residential Market Survey is the only one of its kind in the UK able to produce a monthly picture of where current demand for housing is across the UK. While this does not identify long-term trends, it is a useful reference point to understand where current demands, price fluctuations and buyer interest sits.
6. Is the construction sector able to deliver the UK’s housing demand? What barriers are facing the sector?
We have already referred to some of the barriers facing the construction sector in delivering the UK’s housing demand – including the need to reform planning systems, land classification and supply chains. One long-term challenge to the sector continues to be access to skilled professionals to deliver on the work.
Young entrants into construction
As briefly referred to in question 3, the capacity to deliver the UK’s housing demand is one of the biggest challenges to delivering new homes.
For several years, it has been common knowledge that the UK has a construction worker shortage. By 2025, it is estimated the UK will have a shortage of over 220,000 workers across all aspects of the construction sector. While Brexit has created challenges in the sector, for several decades now the construction sector has also suffered from an ageing workforce with reducing entries into the profession.
More needs to be done at an earlier age to inspire the next generation of young professionals to take up a career in construction. RICS have long called for the construction and the wider built environment to be a priority in investment for school-age pupils.
Currently, the majority of young students will first discover the construction sector as a career post-GCSE. By this time, many have already identified a future career in construction. That is why we have called for the construction and the built environment to be a focus of investment for future GCSE qualifications. Not only will this attract and inspire pupils at a younger age, but also help to meet the UK’s housing and infrastructure needs, while also developing them to understand and address many of the challenges associated with climate change.
As of September 2021, pupils in Wales now have the chance to undertake a Built Environment GCSE, the first of its kind in the UK – and we strongly recommend UK Government introduce a similar course to the curriculum in England.
Upskilling and embracing MMC
Modern methods of construction (MMC) are an increasingly popular method being utilised to meet the UK’s housing demand. With sufficient investment and government support, MMC can represent a big solution to some of the barriers facing the construction sector in meeting housing needs. MMC allows for off-site manufacturing to occur, reduces the chances of on-site delays occurring and embraces new technological and green house-building methods. MMC also creates opportunities for upskilling existing workers and can replace manufacturing communities which may otherwise be seeing closures and automation replacing traditional jobs.
7. The Government has published its proposals for reform of the planning system. How can the planning system be shaped to meet housing demand?
As highlighted in our response to the UK Government consultation “National Planning Policy Framework and National Model Design Code”, we expressed concerns around the reforms proposed to PDRs. While we are supportive of repurposing commercial buildings for residential need, these needs to be delivered in tangent with reforms to the planning system. In our response to the consultation at the time, we stated:
“While we understand government’s desire to ensure redundant buildings are re-used it is difficult to reconcile the proposed expansion of Permitted Development Rights removing any planning control with the introduction of a highly prescriptive design coding down to the smallest scale.”
Ultimately, RICS has concerns, as supported by multiple other built environment professionals, that removing PDRs could result in new residential blocks failing to integrate with current and future infrastructure needs, removing the potential for diverse high streets with opportunities for start-ups and SMEs as well as creating homes not suitable for future families.
PDRs can play a role in helping to meet the UK’s housing demand, but they must be accompanied by sufficient investment and resourcing of planning authorities. Covid-19 will no doubt lead to a growth in the number of vacant commercial properties, especially offices, and these do present opportunities to be covered into homes. However, if such changes do occur, the expectation should be that they are sufficiently reviewed and approved by planning authorities to ensure safety, sustainability and quality needs are met.
Section 106 has already proven a unique lever for governments to utilise to link housing developments up with wider community’s needs. Indeed, without Section 106, it is likely many developers may have opted to purely construct owner-occupied or buy-to-let properties which could offer longer-financial returns than social housing.
Proposed reforms to social housing which would exempt developments under 50 homes having to provide affordable housing is already a sign that without Section 106 influence, meeting the diverse housing needs might not be achieved.
What needs to be explored further, is understanding the extent to which local planning authorities can determine the scale of which social housing is needed, and the ability to set Section 106 requirements within that.
RICS would argue that in the case of meeting the UK’s housing demand, Section 106 can expand beyond purely providing social housing. Section 106 can extend to wider community benefits (through initiatives such as Community Benefit Funds/Infrastructure Levy’s), which can incorporate the creation of job, apprenticeship, and training opportunities. This would create long-term construction opportunities for communities and act as a catalyst for future house-building programmes.
Arguments can be made that Section 106 needs reform – as demonstrated from the failure of major housing schemes to deliver on the number of affordable or social homes as outlined during the planning phase citing financial and labour constraints. While these may well be a few one-off examples, there is no doubt Section 106 can act as a strong policy lever for governments.
8. What can be done to improve the quality of new homes? How can the design and aesthetics of new homes be improved?
Housing quality continues to be an ongoing debate in the UK – with regulation over quality standards largely extending to health and safety issues rather than wider well-being considerations.
Different tenures of the housing sector continuities to experience different regulatory standards relating to quality. Social housing must adhere to strict standards including spacing, whereas in the PRS there are strict rules over building safety and the ratio of bedrooms to bathrooms. The owner-occupier sector however has little regulation compared to those in other tenures.
While the owner-occupier is more difficult to regulate given the nature of the ownership, there are steps UK Government can take to ensure quality is delivered in new homes.
All homeowners, whether buying an existing or new property should be encouraged to undertake an RICS Home Survey. While there are varying levels of surveys available, even the most basic reports can independently verify some of the biggest risks to the property which would impact quality and safety.
9. Is the workforce equipped with the professional, digital and other skills required to meet housing demand, for example in the construction, planning and design sectors? What can be done to overcome skills shortages?
See question 6 which covers aspects for skills shortages and technological innovation relating to MMC.
11. What are the main opportunities and areas of innovation for meeting the UK’s housing demand?
September 2021
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