Shortages and planning delays hinder UK housebuilding - Survey

Worsening shortages of materials and labour combined with planning delays will hamper efforts to increase housebuilding in Britain in the next 12 months, according to an industry report.

Planning remains a major barrier to increasing the supply of new homes over the next year, according to a survey conducted by the industry body the Home Builders Federation, the construction finance provider Close Brothers Property Finance and the builders merchant Travis Perkins.

Delays in securing planning permission were cited as a problem by 94% of small to medium-sized developers.

Boris Johnson’s government has pledged to increase housebuilding to 300,000 new homes a year by the mid-2020s to tackle Britain’s chronic housing shortage. The 243,000 homes built last year was the highest number in 30 years, but the report casts doubt on the target being met.

Seventy-eight per cent of housebuilders said the supply and cost of materials such as bricks, timber and cement, posed a huge problem, compared with just 20% this time last year.

“In March we were paying £9 a sheet for 9mm oriented strand board [a type of engineered wood], and up until recently we were paying £32 a sheet. Every single product has gone up,” said one firm that took part in the survey. Another said that in order to secure materials in short supply they have to be bought in bulk in advance, using cash that could be used elsewhere in the business.

Worker shortages and rising wages were cited by 59% of builders as a major issue, compared with 19% last year. The coronavirus pandemic has sparked a global supply chain crisis that has led to ships being stuck at ports and shortages of goods ranging from cars to bricks.

The UK construction industry has grappled with shortages of skilled workers for years as a result of ageing workforces, but the double shocks of Brexit and Covid have exacerbated these problems. Many firms highlighted the lack of eastern European workers at the lower end of the trades. The labour shortages have resulted in considerable wage inflation, something that smaller firms are less able to absorb than larger builders.

An estimated 800,000 people are employed in the UK’s homebuilding industry either directly or indirectly in planning, design and construction of new properties.

The report did contain one bit of good news: an increase in the number of apprentices employed by housebuilders.

Almost 60% said they employed apprentices in their business, compared with just a third last year. Firms in the north were leading the way, with 88% hiring apprentices, compared to 59% in the Midlands and 52% in southern England.

Stewart Baseley, executive chairman of the Home Builders Federation said: “SMEs [small and medium enterprises] are literally having to put their businesses on hold whilst local authorities delay the start of construction as their planning departments don’t have adequate capacity to process applications effectively. Allied to concerns on materials and staff, planning delays threatens the demise of even more SME builders.”

Many of those surveyed felt that the planning process disadvantaged smaller firms in particular, partly because larger builders have the financial clout to absorb the costs of long and complex planning processes, and because councils make the planning process smoother for large housebuilders, as larger schemes enable local housing targets to be met more easily.

Frank Pennal, the chief executive of Close Brothers Property Finance, said: “The combined challenge of both labour and material shortages, rising costs and planning delays are a serious risk to the delivery of new homes across the UK.

“Developing homes takes months and years and while some of these issues might only be short term, they risk leaving a lasting legacy on the provision of new homes.”