The real cost of regulation

No argument there; apart from the obvious benefits of making property more widely available, the lack of houses was bending the whole economy out of shape. So why has it made building homes so incredibly difficult? During the boom, when housebuilders commonly ran on 20% margins, it was plausible to make them pay for everything from transport infrastructure and power generation to social housing. These days any kind of profit is a cause for celebration, so if we want more homes built, we have to make that our top priority – and arrange the rest of our policy accordingly.

One thing we almost certainly won’t be doing is opening the public purse. The Homes and Communities Agency’s spending has been brought forward, and its piggy bank is rapidly emptying. If the Conservatives get into power, it won’t be refilled anytime soon. As we heard this week, local authorities are set for massive cuts, so there is little chance of cash coming from there. This means that if we want to raise output, we need the private sector to unleash their JCBs. Hence the third aim of our charter: to cut the regulatory burden on housebuilders. The Three Dragons consultancy has suggested that as grants fall, the requirement to meet level six of the Code for Sustainable Homes, provide infrastructure and include 30% affordable housing will make development land effectively worthless.

Another problem has been regulation by stealth. The introduction of Lifetime Homes rules, which will require new homes to be accessible by wheelchair users, was driven by the Department of Work and Pensions’ concerns about accommodating an ageing population. Meanwhile the communities department and what’s now the Department of Energy and Climate Change have been bringing in regulations to cut carbon dioxide emissions. On top of this are the section 106 agreements, which some councils continue to insist on. The decision to turn down planning permission for a 2,500-home scheme in a Cambridgeshire “growth area” because it did not contain 40% social housing is a case in point.

The requirement to meet level six of the Code for Sustainable Homes, provide infrastructure and include 30% affordable housing will make development land effectively worthless

In fairness, some areas of Whitehall seem to understand this: the fact that Davis Langdon has been asked to find out what these regulations cost those who comply with them is excellent news. And at the end of last year John Healey, the housing minister, pledged to make the Code more practical, and began a consultation that took a more pragmatic line on things like site waste management and Lifetime Homes. We’ve also have a definition of zero carbon that allows some energy to be generated off site. But it is all piecemeal and complex. There’s a consensus that regulation is necessary, particularly with respect to the green agenda. It’s common ground, too, that regulation from the centre is better than local requirements – nobody wants another Merton Rule. But we need to take a more holistic approach to the regulations that we do have, and the government needs to realise it can’t have everything it wants – at least, not if it wants new homes built.

Can we have some more, please?

Thanks very much to all of you who’ve supported our Charter 284 campaign so far. In the run-up to the election we’re producing a manifesto for building which we believe will not only help the sector but benefit the economy. It’s imperative we get the message across that every £1 in capital spending generates £2.84 in GDP. If you haven’t already, please send us your support at www.building.co.uk/charter284