The UK is set to lose out on tens of thousands of new homes this year, with leading developers warning that several months of site closures will put key government housing targets in jeopardy and exacerbate a national housing shortage.
Amid a lockdown to contain the coronavirus pandemic, building sites across the UK have closed, bringing work on 220,000 new homes to a standstill, according to estate agency Savills.
John Tutte, head of Redrow, a major housebuilder, said he didn’t expect work to begin again until July. “There’s likely to be a fairly prolonged period of no activity — happening to coincide with what is normally the busiest time of the year for us — and then a slow recovery,” he said.
Redrow has shut its building sites, furloughed 80 per cent of its workforce and tapped into the Treasury’s Covid Corporate Financing Facility, a government loan guarantee scheme that is designed to help companies regarded as making a material contribution to the UK economy.
“We would hope to get started before July, but you probably still lose [three months] build,” said Pete Redfern, chief executive of Taylor Wimpey, one of the UK’s three biggest builders. Taylor Wimpey has also shut down its sites and made a £5m fund available to subcontractors for work they are yet to complete.
Privately, other housebuilders have admitted the same. Losing that supply will undermine the government’s target of 300,000 new homes built a year by 2025, up from 241,000 last year.
“It looked like there would be an upward progression this year and next year. Now that’s obviously not going to be the case. Whether we’d ever have got to 300,000, I guess we’ll never know,” said David O’Leary, policy director at the Home Builders Federation, the trade association for housebuilders.
“A small blip [in construction] is probably fine, but how we come out of this is more important,” said Will Jeffwitz, head of policy at the National Housing Federation, which represents housing associations.
The NHF estimate that the UK needs 340,000 new homes a year in order to meet demand, 145,000 of them affordable. “The consequences of not building enough is that more people will be living in unsuitable, overcrowded or poor quality housing,” said Mr Jeffwitz.
The government could delay its rollback of the controversial Help to Buy scheme to kick-start construction, said a number of housebuilders. The scheme was introduced to help people on to the property ladder through an equity loan on a new build property, but it has been criticised for pushing up house prices and builders’ profits.
The scheme is set to be scaled-back from April 2021 and ended entirely in 2023. However with lenders capping the maximum loan-to-value ratio on new mortgages to as low as 60 per cent, many would-be buyers now find once affordable properties are out of reach.
“I don’t think anything’s off the table. Help to Buy has been shown to work in getting builders building,” said Mr O’Leary.