Housing market ‘like a game of solitaire’, say East Mids housebuilders

A group of leading East Midlands housebuilders have said the housing market is “like a game of solitaire”.

Contractors and developers are ready, willing, and able to meet government contracts said Robert Westerman of Westerman Homes, but the industry is under a great pressure from the government to deliver – and with a list of constraints.

Small and medium sized builders and developers are expected to cut through a huge amount of red tape before building can commence. Westerman’s company has been building homes in the East Midlands for more than eight decades, but typically, one of the biggest issues for his company is the planning process.

“The planning process is often problematic and complex,” he said. “This makes it difficult for us to build homes. Whether it’s unnecessary processes or local government issues, it can cause long and costly delays meaning that we are pulled from the job in hand – building homes and meeting the challenge of the national housing crisis.”

There are other challenges too such as land accessibility and capacity. And while the industry is trying to build quality and quantity, developers are often pilloried for not delivering – or for profiteering on the delivery of homes.

But that’s not fair, according to Julian Bestwick of Leicestershire-based Jelson Homes. “Building houses comes with hidden costs for house builders,” he said. “With section 106, loans, bonds and interest on the money you have borrowed to build – plus the growing costs of the planning process – there is a great deal that the developer has to pay for up front before there is even a spade in the ground. This process needs to be streamlined.”

And there are other issues – such as building the right property for the right people in the right place. On a recent Westerman housing scheme, planning stipulated a number of affordable homes to be sold on the open market. “While the rest of the scheme sold well, the affordable properties stood empty. It wasn’t good to see. We are told that first-time buyers are in dire need of homes, but this is an example where they weren’t taken up and the reasons weren’t clear.

“However, we hear that nationally first-time buyers are on the rise. Help to Buy has helped with this but I’m not sure if it is really helping the people who are trying to ‘switch up’ – looking for a three or four bed semi as their next move.

“We therefore need to look at this carefully. Are we providing enough properties for those people looking to move up the ladder? Are we providing enough homes for those people who are looking to buy a second home – such as two and three bed properties? I am not sure that we are and this needs to be addressed. Is it the first-time buyers we need to focus on, or should we be looking more to the second and third moves – so we can get people out of their first homes to make way for more first-time buyers? You have to make the space for people to move on. It’s like a game of solitaire.”

Janet Stirzaker of Keepmoat Homes talked about the ‘older’ end of the housing market – that people are hanging onto houses too big for them. Encouraging people in their own homes who had lived there for decades to leave and downsize wasn’t easy to do – because there aren’t the options available.

“The question is, are there suitable properties for people to downsize to? People are staying in houses which are too big for them,” she said. “But my opinion is that we have to build the communities that people need. It’s down to urban design and ensuring that we build new housing schemes, that we are providing a mix of properties – and it also means that older people don’t have to go into sheltered living.”

“People are living to an older age and are staying fitter for longer. This means they are staying in their properties for longer and want to hang on to their larger homes,” added Henry Taylor-Toone, head of financial reporting at ground engineering contractor Van Elle.

“The other challenge is that we are building houses on estates which are miles away from city centres. Young families move there but they are a long way from amenities. We have to think more about how we design our communities and make sure that they are sustainable for years to come.”

Stirzaker added: “Our city centres shouldn’t just be geared towards singles and couples. And yes, you have to take land values into consideration and you have to have private rental properties in the city. Developers are open to risk but we must create a better mix of properties.”

Kevin Hard, who heads up housebuilder Stagfield said: “We need to be producing housing that people actually want to live in – as well as homes that have quality design, create value and attract house buyers in the longer term. The housing crisis is what it is, not just because there is a shortage of properties for people to buy or rent, but because they aren’t the homes that people want to move into – or indeed the areas they want to be in.

“While there are numerous large-scale schemes on the edge of conurbations, these are not necessarily the properties that people want to buy because (a) they don’t want to be part of a big estate, (b) they have to commute longer and (c) perhaps amenities are poor. As a house builder, we aim to create homes which are not just attractive and quality living spaces, but in places where homeowners really want to live.”

Peter Conboy of Igloo Regeneration, which is behind the development of 500 houses and apartments at Trent Basin in Nottingham, agreed. He said: “Urban design is really important. Making the street look right is important for placemaking. We have to create places where people really want to live.”

Growing UK company ilke Homes works at the volume end of home building and has capacity to build up to 2,000 per year. Partnership director Peter Watson said: “Our attractive range of house types is designed to perfectly serve the needs of modern living and includes homes for open market sale, as well as homes for affordable and private rent.

According to Watson, modular shouldn’t be seen as an alternative, but as part of the housing mix.

“Modular homes come in a range of sizes from first time buyers to larger family homes,” he said. We’re paving the way for the future of the housing industry by using modern construction methods, manufacturing processes and precision engineering to offer homes to housing associations, local authorities and developers. Our homes are consistently high quality and delivered in half the time.”

Not only is there a capacity issue for house builders and developers, along with land accessibility and planning, but there is a major issue finding the right people to build the properties. The skills gap is having a major impact on construction across the UK, and there is a real fear that this is a major prohibitor to the government’s 300,000 target.

“The huge skills gap in the construction industry could have a major impact on the housing industry,” agreed Andrew Tilford, of Wildgoose Construction. “While finding land for construction and regeneration is a crucial problem, so is the severe shortage of construction workers which means the government could miss its housebuilding targets. But the scope of workers we have on site these days has changed hugely and it is a constant challenge to find the people you need.”

The profile of people has vastly altered on site, he said. The shortage of bricklayers has hit an all-time high, according to new figures. Construction SMEs report it’s not just bricklayers, but also carpenters, plumbers, and plasterers they are crying out for.

Kelly Boorman of RSM said there had been a “ten-year bubble” during the recession where young people had not gone into the industry because of a lack of jobs. This hiatus had created a major impact on young people going into the industry, she added.

But companies like global property and construction consultancy Gleeds is trying to combat that at grassroots level. Jon Enever of Gleeds said: “We as a company don’t just speak to graduates, but we go younger than that. We go into schools and talk to leavers about the construction industry. More often than not, they have no idea about the jobs available and it is up to companies like ours to explain the scores of different options available to them.

“From the diversity point of view, we are trying to get more women into the industry and also more ethnic minorities. The school leavers we have at Gleeds are just amazing. They want to learn and in turn, they are driving the new generation of our business.”