Building the Future Commission: introducing the housing and planning stream

The ambition of the housing and planning stream of the Building the Future Commission is to help create a sector capable of tackling the current housing crisis and meeting the coming net zero challenge, while building new communities that are both physically attractive and economically dynamic. While the sector currently has its head down trying to deal with the impact of the coming recession amid runaway materials price inflation impacting on sales and viability, the cyclicality of the market means that in the medium and longer term the challenges are even bigger.

In consultation with Building’s panel of 19 commissioners – including housing figures such as Hill boss Andy Hill and Bob Kerslake, chair of Peabody and former head of the civil service – we have drawn up a list of the key challenges facing the sector which we will look to investigate in the year ahead.

Housing

Modernisation and quality

How the industry builds and to what quality are fundamental questions likely to help determine the long-term success of the sector. While volume housebuilders are perceived to have made some improvements in quality of construction since widespread fears were voiced over new home quality in the middle of the last decade, the industry remains far from perfect, and trade skills shortages are a deepening problem.

Longer term, questions remain around what construction modernisation will mean to a sector that has until recently largely stuck to traditional brick and block methods of build. Can it profitably – and safely – embrace modern methods of construction, and, if so, in what form, and can it move production to use new materials more suitable for a low carbon future?

Sustainability and net zero

Modernisation of the industry’s building method is one of the ways the industry is transforming itself to deliver homes that will meet the government net zero climate targets. The Future Homes Standard, which comes in from 2025, under which gas boilers will be banned in new homes, will ensure homes are “net zero ready” and will likely require a major upskilling by the industry and its supply chain.

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But the estimated £5,000 per house uplift in cost is in fact just the first step in a process to deliver a net zero industry. Longer term, housebuilders will have to ensure that they are not just building to the right efficiency standards, but also using materials without huge embodied carbon footprints – suggesting a move to organic materials such as timber.

Competition and new entrants

The questions of what shape of industry would be best suited to delivery of 300,000 homes a year, and how that might be achieved are important ones for the industry to answer. Many have long bemoaned the decline of SME housebuilders, which as recently as the 1980s produced 40% of the UK’s homes, but now produce little over 10%.

The reliance on a small number of increasingly large volume builders raise competition concerns for some – as evidenced by secretary of state for housing Michael Gove’s recent referral of the sector to the Competition and Markets Authority – and leaves the sector less resilient to economic shocks. Previously when the UK has produced in excess of 300,000 homes a year, a high proportion has come from public housing, suggesting sources other than private sector supply are needed. While the build to rent sector has successfully established itself over the last decade, other emerging new build sectors such as council homebuilding and later living have struggled to establish themselves at scale.

Affordable and other housing tenures

There is plenty of evidence to suggest that the housing crisis is not so much caused by the 25 million-odd stock of homes being simply not enough, but is more about the fact homes in too many areas are unaffordable to too many of the people that need them. 

The housing crisis is not so much caused by the 25 million-odd stock of homes being simply not enough, but is more about the fact homes in too many areas are unaffordable

Simply building more market housing might not be enough to help. This would imply that solving the crisis is rather more about building far more genuinely affordable housing for people to access below the market value. But how this can be done, when the government is not willing to substantially increase the funding to allow this to happen, is a major question for the industry, and has led to the growth of a new breed of “for-profit” affordable housebuilders. 

Planning

Targets and distribution

The weeks running up to Christmas saw an almighty political battle over the need for housing targets in the planning system, not just at a national level, but at an authority-by-authority level too – with the housing secretary ultimately watering down targets under heavy pressure. With councils set to be allowed to opt out of the requirement to provide for local housing need amid growing politicisation of the issue, and councils abandoning work on their local plans, the question of how to calculate how many homes to build, and where to put them, has never been more urgent.

In the short term this is about what formula is used to calculate need, and the extent to which the wording of national policy binds councils to this number; in the longer term it is about finding a way that local communities can be persuaded to accept new development. On a national level, there is also a need to think about how the location and design of new communities addresses – and does not undermine – the net zero challenge.

Resourcing and delivery

Even more than policy, however, the current resourcing crisis in the planning system is seen as a major barrier to delivery.

Planning departments have seen their budgets cut more deeply than any other part of local government since 2010, and delivery of the system by hard-pressed council staff has worsened notably since the covid crisis. Housebuilders regularly cite the lengthy delays in simply getting applications validated or planning conditions discharged as major barriers, particularly to smaller builders, many of whom cannot afford the time taken for applications to be approved, contributing to insolvencies.

Infrastructure delivery

The planning system is used as a lever by which to deliver all sorts of local infrastructure – from utilities and local roads, to affordable housing and bio-diversity improvements. However, the plans to replace the current far from perfect Section 106 and Community Infrastructure Levy systems with a single Infrastructure Levy are causing significant practical concerns. It is not yet clear how a simple flat-rate system will work without causing perverse disincentives for development either in lower value areas or on brownfield sites, while gathering enough value from high-value greenfield sites.

On top of the everyday infrastructure, the planning system is also being expected to tackle additional environmental challenges such as nutrient pollution that it was never set up for. Longer term, the system needs to be reformed to be able to cope with new demands, such as additional water and energy infrastructure necessary as the climate and power demands change.

Placemaking and beauty

At least part of the answer of how to get communities to accept new development will be in upping the quality of the places that are routinely delivered by the industry. The government’s beauty agenda, which stipulates design codes in every council, is one attempt to address this, but short-term business models, highways regulations, and council fears over taking on financial liabilities for landscaping often mitigate against attempts to do things differently. Places will need to be built with a mix of uses and at a reasonable density that is enough to encourage inhabitants out of their cars if climate change goals are to be met.