The government recently diluted its target of building 300,000 new houses a year – a topic which has been hotly debated since it was originally set in 2017, facing backlash from local councils who do not want new residential buildings in their constituencies.
However, target or no target, the truth is that the UK is critically short of housing stock and that new residential homes are needed. The fact that not enough homes have been built over the last decade, particularly in urban areas has been one of the major factors contributing to the housing crisis in the UK in recent years. According to Sky News, in the decade to 2021, the population grew faster or at the same pace as the number of homes in 150 out of 309 local authorities.
Housebuilders have struggled to keep pace with the rising demand for housing because of stringent regulatory compliance measures and a shortage of both materials and skilled workers.
This has led to a situation in England where only one per cent of residential properties are vacant, a much smaller number than the rest of Europe, including Germany, where the number is 8.2 per cent.
While building more homes more quickly is an ongoing process, it is important that the government works with housebuilders now to ensure that the next decade will resolve the shortage in residential dwellings and increase the resilience of the housing market in the UK.
In addition to addressing some aspects of the UK’s housing crisis, new build dwellings can also significantly contribute to the government’s green agenda. With the UN Gap Emissions Report 2022 arguing that with the current policies in place, the world could warm by 2.8°C this century, there has never been a more important time to fully integrate sustainability into housing policy.
Under the Future Homes Standard 2025, new build will play a central role in this. The Future Homes Standard is a set of standards that will complement the Building Regulations to ensure new homes built from 2025 produce 75-80 per cent fewer carbon emissions than homes delivered under current regulations.
The fact they are more environmentally friendly than much of the UK’s current housing stock also adds value for individual homeowners. In a survey completed by Zoopla, three quarters of new home buyers said it was important that their home is built with minimal impact on the environment. The housing market is not just having to respond to new green regulation from the government, but also to the shifting priorities of UK consumers, who increasingly factor environmental factors into their purchasing decisions.
Many UK households are also under increasing financial pressure in the form of the cost of living crisis, soaring inflation and higher interest rates – something else new build can address. The increased energy efficiency ratings from 2025 means that those living in a new-build property will be saving large amounts of money over the long term.
With experts predicting that energy bills in the UK will rise to well over £4,000 by April 2023, increasing the energy efficiency of the UK’s housing stock could provide individuals and families with much needed financial relief.
Indeed, a recent report by Home Builders Federation (HBF) found that buyers of new-build properties will save an average of £2,000 in energy bills each year, with the average annual running costs for a new build totalling £1,500 as compared to an average of £3,570 for older properties.
The difference is stark – stark enough in fact, that Leeds Building Society has improved its affordability assessment for new-build properties, allowing homebuyers to borrow more for an energy efficient new-build home than for a less energy efficient property. It would be great to see more lenders follow suit, not only encouraging greener consumer behaviour, but also acknowledging the affordability challenges faced by consumers as a result of the Bank of England’s decision to raise the base interest rate, which now stands at 3.5 per cent, seven times in 2022.
The reality is that not only does the UK not have enough homes, but the homes it does have are often incredibly energy inefficient and expensive to maintain.
Whilst increasing the focus on new build will not completely solve these issues, it will certainly go some way to addressing them and is important, if not essential, for the strength of the UK’s housing market moving forward.
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