By Adam Challis, UK and EMEA Head of Residential Research, JLL
Henry Ford famously asserted that his cars came in any colour you like, as long as that colour was black. Hold that thought.
For a Government seemingly doing and saying a lot of sensible things on housing, it isn't half taking a lot of flak for it. Is our scepticism of those in charge so high that we default to 'something must be wrong' anytime a new announcement is given? OK, fair enough – there is plenty of precedence. But maybe not this time.
Dull is the New Exciting
A nothing Budget announcement was, ironically, both radical and good common sense. The least-worst thing a Government can do in times of uncertainty is to provide consistency, with only small adjustments to the tiller where needed. A bit of money given to stave off some of the looming care home crisis, a bit of money taken to correct the tax system that favoured the self-employed.
I don't think the word ‘housing’ was even uttered. Unprecedented stuff and such a relief given the amount of upheaval we have become accustomed to in recent years. The point here is between the Autumn Statement and the Housing White Paper, Government feels it has done its job to drive structural change in the industry. Over to you, folks.
I for one did not join the chorus of disappointment regarding the White Paper. I was asked by a journalist on the day to work out what was missing (as clearly there must be something missing). My response – gimmicks. We are so used to politicking through housing policy that it felt a bit odd that the White Paper was full of good, sound, straightforward ideas and a lack of populist programming.
There are in fact some bold strokes in there, if you are willing to read the full 104 page document. However, if you haven’t read it at this stage, you aren’t going to. Tell you what - let me summarise.
For housebuilders, you may want to stop reading now. You do your job and Government has acknowledged that you can’t do much more to ratchet up delivery rates. This White Paper is not for you.
- For Registered Providers, Build to Rent creators of Private Rented Communities, and SMEs; there is more direct and indirect support on the way, alongside a willingness and capacity at the HCA and in Local Planning Authorities to work with you. Engage. If you want to build more and in more locations, Government wants to help.
- For the modular construction industry, get ready. You have been patronised by the industry for years and years. Now, the best of you will grow rapidly. You will also be disrupted by much bigger players. You will be flavour of the month for big capital seeking exposure to UK housing. It's sink or swim times and for those up for the challenge it should be pretty exciting.
- Finally, Local Authorities. Under localism, many of you will play a political game on housing delivery. That is understood, so there is a standardised formula that ensures you play by Central Government’s rules. Housing delivery targets by the back door. You will have the opportunity to raise a bit more money to pay for a lot more work. Localism will also mean you need to explore – pretty aggressively – local solutions to generate revenue streams through your existing estate. With that lack of capacity, many firms including my own will be offering you a range of solutions around land disposal, asset management and in the capital markets.
Now back to Henry Ford. This is a Government that has adopted a mass production mindset. It would seem that the UK's industrial strategy is about to disrupt the housebuilding sector in a major way. It won’t happen quickly – the best changes rarely do. But this is a Government that is clearly ambitious on solving the housing crisis. There is a kaleidoscope of solutions out there, and those that have merit will find support. But, there is also only one acceptable outcome.