When the going gets tough

Although the housebuilding industry led the economy’s plunge into the abyss, and the figures for new construction are miserable, one good thing might yet come out of this bust: in theory, a buyers’ market should encourage developers to improve design.

The Homes and Communities Agency is preparing its design standards, and the mayor will soon be launching London’s own design guide – including the new “Parker Boris” space standards. These will add to the list of existing standards: Building for Life, Secure by Design, Code for Sustainable Homes, Lifetime Homes and so on.

Constant attempts at regulation are a sign that we’re not getting it right. Cabe’s recent audit of housing design was damning – 82% of schemes are not even rated “good” – and lower margins may press developers to cut further corners. So the question is: is good, sustainable design an unnecessary cost or a sound investment?

Well, it depends on timing. Developers must estimate both the build cost and the sale price before bidding for land: the difference between the two is what they can afford to pay for the site (minus, of course, their own margin). If the market turns between the time they buy the site and sell the homes, they’re in trouble.

Changing regulations that raise the build cost have the same effect, hitting developer margins on current schemes. But neither new rules nor falling house prices should be fatal over the longer term, as both should simply reduce the amount developers pay for land bought, mindful of the new conditions. The problem is really just one of predictability: developers need to know that the rules will not change suddenly after they have bought a site. The clear timetable for introducing the Code for Sustainable Homes provides this certainty, but this would be undermined if the government gave in to pressure to bail out struggling schemes by relaxing the code.

With land prices falling fast, now is exactly the time to introduce proper design standards across the board, so that the costs are factored into land prices when the market picks up. Landowners, not builders, will be the losers. Society as a whole should not be forced to pay the costs of another generation of poor quality homes.