Resetting the Homebuilding Industry: Leveraging the UK General Election
As the UK gears up for the upcoming general election, the homebuilding industry stands at a pivotal crossroads. This election offers a unique opportunity for homebuilders to reassess their strategies, align with new government policies, and address longstanding challenges.
In this blog, we explore how the housing sector can use the election as a fresh start to reset and rejuvenate the industry.
Understanding the Political Landscape
The general election is more than just a change of government; it signals potential shifts in housing policies, economic strategies, and regulatory frameworks. Homebuilders should stay informed about the manifestos of major political parties, especially the focus on their plans for three key areas, including:
1. Addressing Housing Supply and Demand
As The London School of Economics and Political Science points out, ‘Besides social norms, public policy interventions also influence overall demand. For example, the UK Government’s Help to Buy Scheme aimed to incentivise first-time home purchase by providing an interest-free equity loan for the first five years to support deposit requirements.’ Policies aimed at increasing housing supply can therefore have a significant impact, whether that be in regards to land availability, planning permissions, or financial incentives.
2. Increasing Affordable Housing
Initiatives to boost affordable housing can open new markets and funding opportunities. The government website explains, ‘Affordable homes are planned for by local authorities and are built by local authorities, housing associations and private developers.’ So, funding from the government is a vital ingredient in the success of this market.
The government website goes on to reveal that, ‘Over the last five years, around half of all new affordable homes were delivered through developer contributions, according to data published by the Department for Levelling Up, Housing and Communities, with the majority of the remainder delivered through the Government’s Affordable Homes Programme.’ So, developers are also playing a key role in the construction and availability of affordable homes in the UK.
3. Improving Sustainability and Green Building
Emphasis on eco-friendly construction can drive the adoption of sustainable practices and technologies. Unfortunately, this is an area of government policy that many feel misses the opportunity to drive real change. However, Ernest & Young Global Limited advises governments to prioritise sustainable changes with, ‘Detailed, sector-specific road maps, produced in collaboration with industry, (that) can bridge the gap between long-term pledges and short-term action plans with measurable targets.’ The opportunity for governments to create these ‘road maps’ is there and worth keeping a close eye on in case of any policies that affect your development practices.
By understanding these three primary potential changes, homebuilders can proactively adjust their business models and strategies to align with new government priorities.
Embracing Policy Changes
Regardless of which party wins, the focus on increasing housing supply is imperative and likely to continue. The House of Commons paper ‘Tackling the under-supply of housing in England’ revealed that, ‘The housing supply shortage has been described as “A key driver of the UK’s weak economic performance.”’ This means that the importance of increased housing supply stretches further than the housing industry itself and instead impacts the UK economy as a whole.
Homebuilders are therefore in a position of influence and should:
Engage in Policy Dialogue
As an industry, homebuilders have the capacity to transform areas through their developments, recharging communities with homes and job opportunities and ensuring amenities are available to all local residents. This gives property developers a valuable insight into the workings of local communities, how they operate and what they need to thrive. Homebuilders should use this knowledge to actively participate in consultations and forums to try to influence policy decisions, while also ensuring industry concerns are addressed.
Property developers have an opportunity to drive changes to policy and should be especially vocal in the following areas:
1. Streamline Planning Processes
Homebuilders should work with local authorities to understand the best methods for streamlining planning applications. With, ‘2025 targets looming, it’s becoming increasingly important for construction companies across the country, and in fact around the world, to streamline their internal processes towards a more efficient tomorrow,’ advises Let’s Build. So, understand what can be done to speed up your application process before it even begins by investing some of your time and resources by working closely with the local authority.
Plus, if developers can understand how to reduce bureaucratic delays from working jointly with local authorities, they can bring this information to consultations and forums, along with their own expertise to propose reforms.
2. Focusing on Affordable Housing
Affordable housing is a critical issue in the UK, with many parties proposing significant investments in this area. This gives homebuilders an opportunity to seek partnerships with public and non-profit sectors to access funding and land for affordable housing projects. As Habitat for Humanities points out, ‘These collaborations are essential in bridging the affordability gap and creating sustainable communities.’
They go on to advise that, ‘Many affordable housing initiatives incorporate sustainable building practices.’ It is also important, therefore, to invest in technologies and methodologies that reduce construction costs while maintaining quality, to make affordable housing more viable.
3. Prioritising Sustainability
Environmental concerns are increasingly influencing voter preferences and, consequently, party policies. Not only does this mean that a party with a stronger plan for sustainable building practices might win the general election, it is also an indication of today’s consumer preferences.
As a homebuilder, it is important to adopt green building practices wherever possible. This might mean integrating renewable energy, sustainable materials, and energy-efficient designs into your projects.
It is also wise to seek green certifications, like BREEAM, to enhance the marketability of your developments to potential customers, while also ensuring compliance with potential new regulations.
Think About Leveraging Economic Policies
Economic policies post-election will shape the financial landscape for homebuilders. Monetary policies affecting borrowing costs and material prices, which can affect both the output of homes and the number of people able to afford a mortgage to buy those homes.
Stay alert to changes in interest rates and inflation, adjusting pricing and investment strategies accordingly. As Bridgit argues, ‘Although interest rate increases can help with controlling inflation to a certain extent, it can exacerbate supply chain issues, driving up prices for building materials.’ It’s important to be aware of any potential financial delays to your projects so staying abreast of these issues is paramount.
Homebuilders should also align with government plans for improving infrastructure, by identifying and investing in regions benefiting from new infrastructure projects.
Make Plans for Strengthening Community Engagement
As James Lidgate argues in Building magazine: ‘Housebuilders need to ensure that they are creating socially useful developments that contribute to local economies and help transform our UK landscape for the better now and over the long term.’
Post-election, homebuilders can use the fresh political climate to strengthen relationships with local communities by keeping lines of communication open and honest. When building a new development, it is important to clearly communicate project benefits, be transparent about timelines, and honest about potential disruptions. This way, property developers are most likely to gain community support.
To that end, be sure to keep your promise of investing in the local workforce, creating jobs and training programs, as this will enhance community goodwill, as well as project feasibility.
Consider Best Methods to Future-Proof the Business
The election provides a chance to future-proof homebuilding businesses against uncertainties and evolving market demands.
One method of future-proofing your development company is by diversifying your portfolio. Consider a mix of housing types and price points, reducing reliance on any single market segment. One popular avenue for this at present is through investing in Build-to-Rent projects, if you are currently focusing on Build-to-Sell. This opens your pool of potential customers significantly and allows you to broaden your portfolio, while still using the best building practices you have learned over your time in Build-to-Sell.
Another way to secure the future of your business is by ensuring you invest in the digital tools that can help you improve efficiency and reduce costs. These come in many forms, ranging from solutions for planning, managing costs, all the way through to customer care and property management. Just be sure to choose a solution that can be tailored to meet your requirements, such as Spaciable Living, to avoid paying a premium for features you don’t really want or need.
The upcoming general election in the UK is more than a political event; it is a catalyst for change in the homebuilding industry. By staying informed, engaging with policy changes, and adopting innovative practices, homebuilders can use this opportunity to reset their business and ensure they thrive in a new political environment. This election offers a fresh start for homebuilders, to address old challenges with new solutions, and ensure a resilient and prosperous future for the industry.
