Time the government moved beyond white papers and warm words—and committed to really helping small property businessesby Christian Faes / September 25, 2017 / Leave a comment
If you were to compare the line-up of housing policy debates at this year’s party conferences with the agendas that rolled out last year, you might be forgiven for thinking the exact same conferences are taking place. The subject of housing—or, indeed, the endemic lack of new housing—will dominate policy discussions at conferences once again. The future of housing is an issue of huge strategic importance to the British economy and society.
One year on since the Communities and Local Government Secretary, Sajid Javid, promised a step change in the government’s approach to get Britain building, the reality is that very little has changed. We are about to enter a new conference season with an almost entirely unimplemented Housing White Paper, a new housing minister (yes, the tenth in a decade), and a profoundly familiar rallying cry from those of us who want to see fundamental change in the future of UK housing.
There is public and political consensus that too few homes are being built. Successive governments have set housebuilding targets that they’ve failed to meet. At the same time, the housebuilding market has become monopolised by a small group of dominant companies.
This reality isn’t working. It’s time to reset the record, change the tune.
By reinstating true market plurality, we have a great opportunity to fix this problem. In an oligopoly where even the largest players are not incentivised to outperform and targets are consistently missed, increasing the level of competition by reintroducing more players is a healthy, practical solution.
Small and medium sized property professionals are essential for a healthy housing market but have been in sustained decline for decades. Since the last housebuilding boom of the late 1980s, the number of property SMEs active in the market has been decimated, falling by 80 per cent. In 1988 small builders were responsible for four in ten new homes built compared with just 12 per cent today. The ones still in operation are forced to meet a tax and regulatory framework that distorts the market in favour of the larger housebuilders and an increasingly constrained funding environment. Thirty years on, another generation of property SMEs risks disappearing from the sector as market conditions constrain their ambitions to scale up.
The impact of this decline on the economy is obvious. We complain that the country has a productivity problem…