Slow speed of housing delivery due to absorption rates, says Letwin

The reason for the slow delivery of housing developments in the UK is not to do with construction methods, but is down to market conditions on individual sites, according to a leading Conservative MP. Sir Oliver Letwin, who oversees the

Cabinet Office, has undertaken a review of build out of development sites. He told a Westminster Social Policy Forum event: “The reason why it takes so long to build these houses out on these very large sites has to do with whether there are people, who at the prices at which they are being sold, want to buy more houses in that place at that time or not.” Letwin added: “Unsurprisingly, builders

like to sell the houses that they’ve built very quickly.” The current generation of large builders are “very conscious” of what happened to many firms during the last recession, and “try desperately to make sure they have only built the number of houses that they can sell of that kind, in that place at

that time, at that prices.” He said that while his review has made

recommendations on tackling this, there were “truths” such as that builders do not set the prices, but rather the secondhand market. However, he also added that a further ‘truth’ was that “almost all of the homes that the very large builders build are astonishingly, and to my mind appallingly, predictable.” Letwin continued: “If you know the builder, you broadly know the product. The degree of monotony that is generated on these sites is quite unlike what we saw in other countries, where large sites are highly various in many respects.” He said this was largely a problem occur-

ring in homes for sale on the open market, and that “there is precious little else on most of these sites.” Letwin believed that driving down house prices was not the solution. “If you would make the assumption you are not going to drive down the price, but want to increase the rate, then you have to address

kinds of demand that are not being addressed at the moment,” he said. “One way is to vary the product, so that even amongst the open market for sale houses there are different kinds of things, because there are different kinds of people and differ- ent people have different desires.” He concluded: “There’s another set of

untapped demand for homes that are not being built on these sites.”

Industry panel tackles the big issue: how can we kick-start new build sales?

Housebuilders and developers recently attended a panel event in London on possible ways that the industry could improve the new-build housing market, with talking points including research and development, greater personalisation and Government tariffs. Hosted by Property Wire, and chaired by Gilles Barrie, former Property Week editor, the event kicked off with Dave Bexon from Redrow, who stressed that it was a critical time for housebuilders, and the last thing the sector needed was the Government to introduce “draconian” tariffs for foreign investors. It was noted that more develop- ments have been launched overall, due to foreign buyers favouring first phase, off- plan pre-sales.

Riccardo Iannucci-Dawson from sponsors

Yourkeys pointed out that the construction sector only invested 2 per cent into R&D (reportedly the same as the farming indus- try), compared to 25 per cent invested by the tech industry, and that to improve efficiencies and greater revenues the indus- try needs to invest more into technology. Andy Frankish from The Mortgage Advice Bureau gave insights into how


radically different the mortgage landscape will be during 2019. This is reportedly largely due to the introduction of ‘Affordability Passports’ as an alternative to mortgages, providing greater flexibility for buyers to make offers on new homes more rapidly. Nick Wright, from CBRE, stated that

housebuilders and developers need to “bite the bullet” and offer much greater personali- sation. He told the audience that millennials are just the start of consumers demanding greater choice, and that the spoils of that market will only go to the companies who best respond to those consumers. The attendees also heard from Paul Smee from the Conveyancing Association, on legislation just introduced by the CLC (Council for Licences Conveyancers). He told that this states that all property lawyers must now publish prices, service and quality information on their websites to help foster innovation and competition across the legal services market. Finally, Iannucci-Dawson closed the

event by stating that Yourkeys addressed many of the issues raised, including the new requirements imposed on conveyancers. He

stated that Yourkeys was one solution that helped accelerate the sale of new-builds and reduced the number of sales fall- throughs, helping to kick start sales in 2019.

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