UK HOUSING CRISIS IN THE MIDST OF THE PANDEMIC.

By Evan Maindonald, Founder & CEO of Melt Property.

The recent COVID-induced lockdown caused an unprecedented drop of 20.4% in UK GDP in the second quarter of 2020 - the worst quarterly fall since records began. It took us back to where we were in the mid-’80s in terms of levels of economic activity. Following on the heels of a 2% decline in Q1 – also lockdown related – technically this places us in a recession.

I use the word ‘technical’ because the overall Q1 decline was caused by a 6% decline in March – which means that there was 4% growth in January and February. That was a strong start to the year, and the signs are that, with lockdown now lifting, things are coming back to life with a bang.

Without lockdown, it’s likely that we would have seen a couple of quarters of strong growth in the #rst half of 2020. Despite this, there’s no doubt that the pandemic has accentuated what is one of the critical issues that the UK is faced with: the housing crisis.

For many years, we have struggled to meet levels of demand for housing or address the affordability issues which have arisen as a consequence of this. Its effect is felt across the nation. The imbalance between need and supply of housing puts people out of the market and causes a series of economic and social problems.

The young and the poor struggle to afford to own their own home. the most vulnerable are forced into substandard living conditions or, even worse, are at risk of being made homeless. Lack of suitable accommodation results in a less flexible labour market – people either cannot afford to move or are not willing to due to the compromises they have to make. This creates an inflexible economy and limits growth.

For many people, the recent lockdown has caused a re-evaluation of current living conditions and a reassessment of family needs and priorities. However, the options available are constrained, given the supply/demand imbalance. The situation plays an essential role in defining the way people live.

The key thing that drives the lack of suitable and affordable housing is a planning system which constrains the number of houses that can be built and keeps prices high. In that context, the recently announced changes to the planning system are a step in the right direction. In this article, I share my thoughts about these changes and their likely impact.

With the recent sweeping changes that relax and simplify the UK’s planning laws sparking controversy, are we right to assume that building more and more properties is the answer to our needs as a nation? Where does that founding belief come from, and is it correct to follow it blindly?

Whatever we believe about our needs as a nation, some basic facts remain. We currently have a shortage of suitable housing stock. It is estimated that 8.4 million people in England are living in an unaffordable, insecure or unsuitable home. The main thing that keeps us from dealing with these issues is the planning system.

By placing constraints on the number of properties that can be built, it limits the supply of new housing stock and keeps house prices rising. It’s basic economics: supply and demand. Shelter – a suitable place to live – is right at the bottom of Maslow’s hierarchy of needs.

That’s why it is so important to us and why we need to and solutions which enable us to build more homes – and better places for people to live.

What problems do the new plans expect to solve that the old ones haven’t? And how long might we have to wait to and out?

By creating certainty about what can be built where, the proposed changes to the planning system will reduce risk for developers and provide greater confidence for them to proceed with projects. It should also provide greater flexibility in terms of design.

The new zoning system should take the pressure of local planning authorities and streamline the delivery of new homes. It will take at least a few years for the impact to be seen. Ultimately, this will depend on the detail of the plans, some of which are yet to be clarified.

At a time of seismic and sudden consumer attitudes to where and how they want to live, is it time to think more radically than even today’s overhaul?

Planning policy faces the difficulty of striking the right balance between public opinion about development near them and public opinion about the availability of suitable, affordable homes. These two sets of opinions are difficult to reconcile. It is often the same people who object to development that call for more and better homes.

While more radical changes might ultimately be needed, these latest announcements by the Government appear to be a welcome step in the right direction, while not being so radical that they will be socially unacceptable in a more general sense. We need greater flexibility in terms of types and tenures of housing.

I hope that is exactly what the Governments aspirations and plans translate into. Suitable housing is a basic necessity. If it’s not available, the lacerations this creates in our social and economic fabric are an issue for all. If we don’t act upon this now, we will drift into a much larger scale housing crisis which will continue to affect us in generations to come.