Angela Rayner’s promise to build 1.5 million new homes this Parliament is looking increasingly optimistic with housebuilding currently at its lowest level in 12 months.
Ms Rayner needs to build 2.5 homes every minute to reach her house building target, and after 8 months in power she’s already thousands of new-builds behind schedule.
What’s more, apart from saying there is not enough skilled labour available to achieve this target, industry experts fear the aim of completing 300,000 homes per year will result in builders doing rushed work producing poor quality homes – it would reduce living standards for new homeowners.
Local authorities, many of them Labour-controlled, are aghast at what they claim are “absolutely impossible” targets. For putting Ms Rayner’s planned housing boom into reality, it would mean constructing 149 homes per hour, over 1,100 per working day.
Based on the Ministry of Housing, Communities and Local Government figures available at the end of last year, building output would need to increase by around 40% from current levels, something developers just don’t see happening.
Residential construction data shows that it was at its lowest for the fourth month in a row in January. That’s according to the international S&P Global UK construction purchasing managers index (PMI), generally regarded as a leading indicator of the health of the economy.
The PMI survey index dropped from 47.6 in December to 44.9 last month. Any reading below 50 indicates a contraction, so these figures indicate a downward trend.
This latest data signals a contraction in overall construction industry output, ending a 10-month streak of sustained expansion. Construction firms were citing the slowdown as due to projects being put on hold by their developer clients in a climate of economic uncertainty.
While house building continued its downturn trend for a fourth consecutive month, civil engineering projects also declined and commercial property construction went back into contraction mode.
In the general economy, new business inflows dropped for the first time in a year, while purchasing activity declined for the second straight month. Employment levels in the UK economy also fell for the first time since August 2024.
Materials costs were also a factor for construction: input price inflation has been rising at the steepest rate since April 2023 and the index shows that business confidence has weakened, reaching its lowest level since October 2023, says S&P Global.
Labour campaigned on a platform promise to “get Britain building again”. In an attempt to remove building blockages, Ms Rayner instigated a UK planning system reform after the July election in 2024. This aim was to boost housing construction. But so far it seems the initiative has had little effect, and other economic factors appear to have taken over, not least the effects of the shock tax-and-spend Autumn Budget.
The S&P data would suggest that the Government’s policies are not only failing to boost construction activity, but they are also part of a general economic malaise, failing to prevent a worsening downturn.
Further delays and costs are involved with the need to conform to environmental concerns. However, in its latest drive to speed up construction projects, the Government has urged its regulators to no longer demand that developers mitigate the environmental impact of new buildings, before they start construction.
Labour says it is to “strip away” the Government’s environmental watchdog (the Department for Environment Food & Rural Affairs (Defra) of its power to delay major house building and infrastructure projects in the future. Instead, developers will be made to pay into a new fund for “nature restoration”, with the aim of offsetting any potential environmental damage, allowing them to proceed with new construction at speed.
In an attempt to unblock the building process the government has unveiled plans to scrap environmental impact assessments for individual projects. However, housebuilders have voiced worries about the proposed environmental "tax" suggested as a replacement.
The Prime Minister and the Housing Secretary have suggested that there is a need to prioritise people’s needs ‘over newts’ in housing policy, more homes are badly needed for families they have said.
The planning reform working paper published by the Ministry of Housing, Communities and Local Government (MHCLG) proposes to streamline the need for environmental assessments in a move to a more “strategic approach” to protecting the environment. The paper says:
"We therefore want to establish a framework that allows for a suitable public delivery body to consider which actions are needed to address an environmental impact (or impacts) strategically, for a relevant range of development types, across an appropriate area and for an appropriate period of time.
"The delivery body will then secure these actions using funding provided by developers, meaning that there will be no need to consider this environmental impact on a case-by-case basis."
If the proposals come to fruition, developers will be required to provide a financial payment that helps fund strategic actions, "so development can proceed more quickly".
Zoe Davidson, a partner at Real Assets Advisory, Deloitte, told the Telegraph that the Government’s building safety regulations are delaying project times and putting “extra strain” on the market. She said:
“It’s important to note that measures such as the Building Safety Act, which, while essential, have added complexity and lengthened timelines for the delivery of residential projects.”
In particular, high-rise developments get delayed by what are known in the industry as “gateway two design checks” carried out by the Building Safety Regulator (BSR). The checks are applied to buildings taller than 18 metres that have already gained planning consent and then are subjected to rigorous inspections.
Currently it is said over 90 major new-build projects are awaiting gateway two sign-offs, according to one report published in Construction News. It records that only 11 out of 130 projects have been passed since 2023.
Another drag anchor on housebuilders is the cladding tax being charged on all new residential developments. The Housing Secretary’s plan to finance and speed up the remediation work on tall buildings will involve developers in an additional liability, contributing to the cost and adding to the existing 4pc tax on profits exceeding £25m a year.
Ms Davidson said that red tape was one of “several things causing a bit more anxiety to the development market”.
Last week Rachel Reeves, the Chancellor, said she was “genuinely shocked about how slow our planning system is”. She has asked regulators across the board to prioritise growth and as she has vowed to cut red tape across the economy in an effort to boost growth.
However, Ms Reeves reassures that she will not “renege” on building safety regulations because of the commitments made to “families that have suffered because of what happened at Grenfell”.
So, January’s PMI figures underline the challenge facing Ms Rayner, the Deputy Prime Minister and Housing Secretary, whose housing brief was to hit her target of 1.5 million homes.
Having ambitious building targets is one thing to get houses built, but if quality suffers to do the people that have to live in them. A damning report published last year by the Competitions and Markets Authority shows that there’s a growing number of owners of new-build homes reporting a high number of snags. The report states:
“Housebuilders don’t have strong incentives to compete on quality and consumers have unclear routes of redress,”.
Not only have many new-builds been built with too little space for comfortable living, but many are also dogged by an excessive number of snags, some of these representing serious structural issues. The state of new-builds in Briton has become something of a cliché, with regular stories of poor build-quality appearing in the media.
In a survey carried out by the Chartered Institute of Building, over a third of buyers indicated a “low level of trust”, while over 60% said they were “very or somewhat concerned” about potential issues with their new-build purchase. One Facebook group with the title “Problems with New House Builds” has gathered together over 40,000 disgruntled home buyer members.
Paula Higgins of the Homeowners Alliance told the Telegraph:
“One of the major criticisms of new-build homes has been related to their quality and in particular poor finishes, defects, unfinished gardens and problems with plumbing, electrics, and structural elements,”
“New-build homes are often criticised for being smaller than older homes, with many being built to maximise profit rather than prioritising space or functionality.”
New-build homes on large new housing developments are notoriously so riddled with defects that there’s been a surge in the establishment of new businesses springing up purely to identify snags. One of these, New Home Quality Control, has gathered almost 700,000 followers on TikTok, where it posts video clips of hundreds of “shocking” and “nightmarish” issues encountered in the homes it has attended.
Cracks in new walls, leaning walls, uneven floors, poor plastering and paint jobs are just some of the common videos shown.
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