JLL Residential

JLL responds to Housing White Paper released today

London, 7th February 2017. Felicity Young, +44 (0)20 7087 5108

Adam Challis, Head of residential research at JLL comments on Government’s release of the Housing White Paper today: "With a focus on expanding new housing supply, both in terms of the number of units and pace of construction, this White Paper is likely to prove amongst the most pivotal in a generation. It has become clear that months of wrangling has more to do with delivering the scale of ambition rather than the same NIMBY-ist and protectionist politics. While assurances about Green Belt protection have been sought and received, the main story here is a Government that has finally decided to prioritise new supply over demand-side stimulus. For too long, housing delivery has failed to keep pace with growth in demand across all tenures. The White Paper is the first step in trying to shift the equation back in favour of expansion."

1. Planning for the right homes in the right places

Commenting on Land banking: "Government has never accepted the industry’s argument that a store of land is vital to maintain build rates.

"Increased risk for holding land will only mean that housebuilders hold a store of sites pre-permission, rather than push developments through more quickly. It is likely this measure will have the opposite effect of its intent, by increasing the risk of holding oven-ready sites for development.

"We wouldn't attack the stock of raw materials for other manufacturing industries; this issue is misunderstood. Policies that increase the risk of holding land will undermine the objective of increasing the number of homes that are built."

Commenting on the proposal to encourage residential development above car parks, Nick Whitten – residential research director at JLL says: "A trend towards urban living has disproportionately put a strain on the UK’s town and city local authorities to allocate sites for residential development – typically in areas where land is unavailable.

"JLL has identified just under 10,500 car parks in the UK’s towns and cities with the possibility to comfortably accommodate up to 400,000 homes, enough to house circa one million people. These car parks are all well connected, within one mile of a railway station. Furthermore, 80% are surface car parks meaning it is possible to develop housing above without the loss of parking.

"Nearly half of the car parks are under local authority control meaning Government has, directly within its means, the ability to enable development of circa 200,000 homes on car parks."

2. Building homes faster

Commenting on modular/ off-site construction: "It is encouraging to see support for Modular/off-site construction, from public land to planning and in many cases through direct investment from the HCA. This is the centre piece of Government’s new supply push as it addresses the major structural shift away from traditional build methods that rely on a declining workforce. We need to see favourable planning processes, together with lower up front public land costs as two of the most obvious requirements for this new method of construction to succeed.

"This is a genuine long-term solution that will create a structural shift in the way we build. It will take many years before off-site construction makes a big difference, but Government is spot on by supporting this sector.

"More detail on the £2.3B Housing Infrastructure Fund shows Government is serious with its commitment of this grant funding to unlock large, stalled sites. There is a clear call to action here for housebuilders to engage, but will have to accept faster delivery on these sites as a result.

"It is no surprise that the greenbelt will remain protected, except in exceptional circumstances where there is strong local need and an insufficient volume of brownfield land alternatives to support delivery. This will continue to be the exception not the rule for new development land."

3. Diversifying the market

Commenting on Build to Rent: "Recognition of the opportunity this asset class represents is an important step from Government in supporting overall supply. Institutional investors will provide up to £50 Billion of long-term, stable capital that will support new delivery. Private Rented Communities will improve both the quantity and quality of new rental properties, the fastest growing tenure in the UK."

4. Helping people now

Commenting on Starter Homes: "Starter Homes remains within manifesto commitments but this programme has been scaled back and diluted significantly. This should be heralded as a good thing as it shows Government has listened to the industry. We support the aspirations of most people to own their own home, but this was bad policy that did not reflect genuine affordable need."

Commenting on the rental marketLucy Morton, Head of Agency at JLL, says: “We have long campaigned for greater regulation and transparency in the lettings industry, so the Housing White Paper’s commitment to continuing to drive up safety and standards is positive and wholly supported by JLL.

“Additionally, encouraging institutional investment into the Private Rented Sector is a welcome measure; there is increasing demand from people who want the flexibility of renting or who see it as a long term prospect, and they should have the option to live securely in high-quality developments. Designated Build to Rent schemes that permit long term and professionally managed tenancies are one way to address this. Interestingly, though, when it comes to long term tenancies, our average tenancy has increased to beyond three years and often, it is the landlord who will commit to a longer term and it is the tenant who wants the flexibility of a break clause after six months.  
 
“When it comes to lettings fees, at JLL we have always advocated complete transparency of all charges made by agents to both landlords and tenants. We have also historically campaigned for the Government to regulate letting agents which it still fails to address.”

Commenting on SDLT forgiveness for retirees: "Methods to incentivise downsizers is encouraged and this must be about improving choice for retirees. This is best achieved through planning to stipulate a proportion of supply which is allocated for retirement homes and represents a more aspirational product. Nevertheless any measures that will encourage mobility people to move are to be welcomed."

IN CONCLUSION

"The White Paper is refreshingly short of gimmicks. This is a serious policy document with long-term solutions at its heart. A lot will be achieved under this new framework if allowed to bed-in."
HEAD OF RESIDENTIAL RESEARCH

ADAM CHALLIS