Covid-19 crisis to cause housing delivery to plunge by one-third, planning consultancy predicts

The coronavirus pandemic may see the number of new homes created annually plummet by one third this year and stay around that level for the remainder of the current Parliament, research by consultancy Barton Willmore has found.

New homes: pandemic is having a major impact on delivery

Based on the impact of the 2008 recession, the last severe downturn to hit the UK, the planning consultancy estimates that net additional dwelling levels will fall from last year's post-financial crisis high of 244,000 units to around 160,000 in 2020/21 - a drop of 84,000 units.

With the majority of construction sites closed and the many industry practitioners furloughed, Barton Willmore expects a "sizeable slow down" in housing delivery in the current year.

This low level of new units created will be maintained at around 150,000 dwellings per annum throughout the first half of the decade, hitting an "all time low" of 140,000 in 2023/24, the firm said.

The consultancy predicts this depressed level of completions, which works out at around half of the government's annual target of 300,000 new dwellings, could become a "major political problem".

The UK must hold its next general election by December 2024.

Barton Willmore forecasts that completions will only recover in the second half of the decade, rising to return to a level of 240,000 units per year in 2027/28. Only by 2029/30 is output predicted to exceed the current level. 

Mark Sitch, joint senior partner at Barton Willmore, called for "significant" planning policy changes to encourage housebuilding.

He said the presumption in favour of sustainable development, enshrined in the National Planning Policy Framework, should be reinforced with a rebalancing of the weight being given to the benefits vis-a-vis harm of development.

Sitch said these policy changes should be set alongside improved financial support for local authority planning departments, which should include ring fencing of pre-application and application fees to support decision- and plan-making.

And he said the review of the standard methodology for calculating local authority housing projections, which the government has promised for this summer, should now be treated as a "priority".

Commenting in the report, planning barrister Christopher Young QC, of No5 Barristers' Chambers, called for a replacement of the "hopeless" standard methodology, which he said perpetuates the "constant decline" in household formation ratios, with "ambitious" regional housing targets.

He also called for government backing for a "whole new wave of infrastructure proposals of all scales" to allow large sites to progress.

Young said: "We were already in a terrible housing crisis before Covid 19 struck. And now it is only going to get worse. Major initiatives from the government are required in response.

Commenting on the Barton Willmore research, Mike Derbyshire, head of planning at Cambridge-based property consultancy Bidwells, said the forecast that housing output will slump by around 35 per cent this year is "troubling".

He said: "The current crisis has snatched away the momentum which was gathering in UK housebuilding after the number of new homes hit a 11-year high last year.

"To pick up from where we left off post-crisis as best we can, the government must now look to pull other policy levers rather than just fiscal support.

"There is work to be done in streamlining the planning system."

Derbyshire added that the development industry hoped to see the mooted inclusion of a new zonal planning, which would provide an alternative to the current land use planning system, when the planning white paper is published.

New housing completions form the principal element of the government's net additional dwelling figures, but it also includes housing conversions and subtracts housing lost to demolition or conversion to other uses.

The net additional dwelling figures form a key part of the housing delivery test under which local planning authorities are assessed by Whitehall each year.

Those authorities where the new homes created in their areas as a proportion of their housing requirement, measured over the previous three financial years, are below certain thresholds are subject to sanctions.

The Barton Willmore paper can be read here.