Winter update from Richborough Estates’ chief executive Paul Campbell
Well, that came around quick!
It seems like only months ago that Boris cancelled Christmas 2020 and yet here we are again readying ourselves for the inevitable arguments with the kids about Brussels sprouts and planning Christmas get-togethers and parties.
The market for consented land is currently incredibly strong due to a strong housing market and a structural undersupply of land. There are various reasons for this and I consider below what I think will be the five big topics and issues for 2022.
1.Land Supply Crisis
Local plan progress across the country is woeful and planning consents have been on a declining trend for a while now. We’re seeing this manifest in lower starts which will naturally feed through to lower completions in the coming years. This cannot simply be blamed on Covid as it has been a problem for many years. The high sales rates that housebuilders have enjoyed through measures such as Help to Buy, availability and cost of mortgages and the recent race for space has meant that housebuilders have managed to drive the same or greater volume from less outlets. If sales rates continue then housebuilders clearly need to replenish and grow their pipeline. Ironically if sales rates normalise then housebuilders will probably need more outlets to drive the necessary volume. Something needs to be done to improve this supply. Given the strength of the housing market this is a real missed opportunity to drive volume towards 300,000 a year and tackle the unaffordability and generational unfairness that persists and can be linked to inadequate housing. The scale of The Housing Emergency and the Agenda for Action is outlined powerfully by the Land Promoters and Developers Federation that we’re proud to be part of.
2.The Emergence of Suburban Build to Rent
It seems to be every week now that we hear of another entrant into the suburban Build to Rent (BTR) sector. As outlined above, the land supply crisis means that there is not enough consented land around for the BTR sector to deliver true additionality of supply which is a missed opportunity. The attraction of forward selling stock to a BTR investor is obvious as it de-risks the sales process. But with housebuilders’ forward order-books so strong, will they want to fix longer term revenues when inflation is running so high? It is going to be fascinating to see how the market plays out. I predict that unless we improve the land supply situation then suburban BTR could displace owner-occupiers for stock which would run counter to the Governments’ keenness for home ownership. There are also potential PR risks if owner occupiers start to feel squeezed out of the market.
3.Politics
Local, national and international politics feel as divisive as ever, with every issue seemingly becoming tribal and the sense of balance and perspective being distorted. We’re used to febrile politics in the housebuilding sector of course. But the seemingly schizophrenic messaging from Government of recognising the housing crisis and generational unfairness on one hand, but then speaking to certain audiences as though they are anti-housebuilding, can be confusing for us all. The mixed messages hardly encourage good plan-making. Despite its manifestly flimsy evidence from the likes of CPRE that the housing crisis can be solved using brownfield land alone, or that housebuilders are intentionally “landbanking” (debunked on every occasion that it is looked into), too many politicians peddle this line, and we must all do what we can to shift the narrative.
We have a new housing Minister in Gove and whatever one thinks about him he is one of Westminster’s intellectuals and he has a finely tuned political antenna. The very fact that he took the job when he presumably could have had the pick of arguably bigger jobs, and that his first act was to change the name to Department for Levelling Up, Housing and Communities, tells us something. Most Governments have some sort of intellectual framework in which to develop an architecture of beliefs and policies but with Boris we just seemed to have the ‘get Brexit done’ mantra and not a lot else. So now ‘it’s done’ enter to the stage ‘levelling up’ to fill the vacuum. This can be stretched to mean all things to all people of course (handy in politics) and it now seems Gove’s job is to give some colour and meaning to it. So, we need to keep an eye out for a Levelling Up Bill or the rumoured Regeneration and Planning Bill next year. Expect to see housing numbers (here we go again I hear you groan) shift from London and the South East to Midlands and the North. Expect to hear Regional Mayors say that their Green Belt is just as precious as the South East’s and continue to claim that families will happily live in skyscrapers developed on brownfield land.
I think we can reliably predict that 2022 is going to be a very political one and get ready for everything to be badged under the ‘levelling up’ banner.
4.Resource issues at Planning Departments
There is a real staffing crisis at many Local Planning Authorities and that is going to manifest in slower plan making and decision taking. It is time that investment in planning departments is seen as an investment in the economy. A light needs to be shone on just how bad the problem has become and a huge recruitment drive is needed. In the interim there needs to be short-term measures to resolve this, such as outsourcing certain functions, if recruitment continues to be difficult. At Richborough we have no problem in paying higher application fees if it goes hand in hand with receiving a good service, but far too often our applications on allocated sites are not dealt with pro-actively and it is literally trapping jobs in the filing cabinet.
5.Energy Efficiency of Housing
Whatever anyone’s individual views are on how man-made the planets’ problems are and how we can turn things around, it is becoming one of the big issues for voters and especially the younger generation. For many years, the increasing efficiency standards have been seen as a cost burden and not something you can tangibly pass onto people buying homes. But the potential emergence of green mortgages, where the efficiency of new homes will mean a buyer can access cheaper mortgage rates, could be a game-changer if the efficiency improvements can be monetised. It also offers a golden opportunity to sell the benefits of buying a new home and in the long run it could have a hugely positive impact on getting wider society to support increased housebuilding.
Thanks to our team
2021 has been exceptionally busy for us and we have acquired more sites and submitted more planning applications than we have ever done. That is only possible because of our superb and growing team, the faith put in us by landowners and agents and our excellent professional teams. We’re truly grateful for their help throughout the year.
Take a look at our latest video to see all that has been achieved.
Looking forward to 2022
We continue to benefit from the significant investment into our regions across the country. Despite some of the challenges outlined above, we’re very optimistic that the fundamentals are there for 2022 to be our busiest and most successful year and that growth will continue in subsequent years. We’re always looking to grow our business and please get in touch with us if you would like to discuss any land opportunities you may have or indeed if you would like to join the team.
Covid does unfortunately continue to dominate our lives. Looking at what is happening in Europe we need to hope – or rather demand – that matters don’t take a sinister turn and our Government doesn’t overreach into our lives. After all nothing is so permanent as a temporary government program. The last couple of years has been a very uneven challenge for different parts of society and children have unfortunately suffered particularly badly. That is why we are happy to continue our support of youth homeless charity St Basils again in 2022
So, all that leaves me to do is wish you and your family a wonderful Christmas and 2022. We look forward to working with you and seeing you next year.