It seems 2023 was a year of change where everything remained the same, but 2024 may yet see a drastic shift in housing’s outlook. Tim Clark looks back at another turbulent year and asks, what next?
For housing, 2023 has been a year of turning points; economically, politically and demographically.
Starting with the economics, housing has had to deal with a cost of living crisis like all aspects of the economy. However for the private sector, any hike in the Bank of England base rates hits home more acutely than, say, shipping.
According to Noble Francis, economics director at the Construction Products Association, brick deliveries – which can be used as a proxy for house building starts – fell by over a quarter year-on-year in October this year.
Needless to say, housing starts and sales became more sluggish, with rumours surfacing in December that some developers were discussing the sale of new-build homes to housing associations to fill the market sale gap.
The indications are that the housing market will have a difficult year in 2024 as higher interest rates bed in, and developers focus on completing the schemes they have, rather than break ground on new schemes.
2023 is also the year when it became harder to ignore the glaringly obvious problem with local authorities’ balance sheets. Although a council cannot technically “go bankrupt”, the public sector equivalent – a Section 114 notice – deals a significant blow to an authority’s discretionary spending power, with most services stripped back to a bare minimum.
In May the government stepped in to oversee Woking Borough Council after it racked up £1.9bn of debt in failed real estate investments, mostly housing related.
As the year wore on, council bankruptcy dominoes continued to fall, with Birmingham and Nottingham notifying the government that they could no longer balance their budgets, over-burdened with debts and raising questions over just what 2024 has in store.
It wasn’t only councils that were struggling financially throughout 2023; the much-vaunted modular housing sector also took some severe knocks as major firms closed their doors.
In May Legal & General halted production at its factory in Leeds, and cited planning delays and economic malaise as reasons why the venture wasn’t a success. L&G had poured hundreds of millions into modular homes, with former chief executive of the group Nigel Wilson a personal advocate of the method of construction.
Problems in the sector were compounded in June when developer Berkeley Group scaled back its off site operations, stating that it was “seeing some of the financial stress” in supply chains, citing Brexit, the pandemic, and the ongoing conflict in Ukraine.
Topping both L&G and Berkeley however was the collapse of Ilke Homes with debts of £319m. The company filed a notice to appoint administrators in June, and the full scale of its unpaid debts were revealed in October.
The modular sector has had a volatile short history, with successes and failures. One of the (admittedly few) bright sparks for the sector was the completion of Europe’s tallest modular tower – a 135-metre tall residential scheme in Croydon by Tide Construction in October.
What 2024 will bring to the modular sector is anyone’s guess. However we can expect both successes and failures to continue in the coming year and beyond.
Time to embrace the conspiracy theories?
Politically, 2023 saw some predictable, and some unusual announcements when it came to housing and planning.
Prime minister Rishi Sunak helicoptered into a housing scheme in Norwich in August to announce that the government would unlock up to 100,000 new homes by 2030 by scrapping nutrient neutrality rules. The House of Lords promptly killed off the measure, leaving both Sunak and communities minister Michael Gove red faced. The government looks set to try again with nutrient neutrality reform in 2024.
New rules affecting biodiversity net gain were also delayed at the eleventh hour, giving developers and housebuilders time to bed in the government’s own new guidance, which was finally published in December.
Gove has, however, been the driving force behind a number of initiatives to boost housing throughout 2023. In July he launched plans to extend permitted development rights to help reach the target of building one million new homes by the end of 2024.
Autumn also drew the party conference season, and with it a slightly bizarre series of government releases which indicated that 15-minute-cities were part of a wider “conspiracy” against the motorcar which the Conservatives vowed to fight against.
Quite what the government was looking to rail against – apart from closing the local post office – wasn’t clear; even to planning teams involved in designing local facilities.
The chair of the Academy of Urbanism, Jas Atwal, warned that the rhetoric can have impacts. “There can be a lot of cynicism and distrust in planning, development and transport, as people feel that plans, proposals and often the associated political promises made, are not delivered over time,” she said.
“This can be further echoed by social media, where disinformation and inflammation can create fear and anxiety about any proposals for change.”
The housing minister role also continued to be a revolving door throughout 2023.
In February, Rachel Maclean was appointed as housing minister, becoming the 15th person to occupy the role since the Conservatives took office in 2010. Maclean’s term lasted until the day after she introduced new legislation to Parliament promising to reform leasehold laws.
Maclean was then unceremoniously replaced by Lee Rowley, a former housing minister, in November. Housing Digital called into question whether the role was fit for purpose – seeing as the ministerial seat is so rarely occupied by the same minister for long.
The housing sector responded, stating that to be effective, housing should be considered on a par with health and have its own seat at the Cabinet table. Whether that happens is a problem for the next government.
Levelling Up & Regeneration Act
The biggest legislative beast to be passed in 2023 was the Levelling Up & Regeneration Act (LURA) – which scraped through in late October in the final days of Parliament before the fresh King’s Speech.
Over four years in the making, the LURA promises a number of significant overhauls, and like its sibling piece of legislation the Building Safety Act includes a number of contradictions within its own pages.
The Act promises to both empower local communities, who should now have more power to control what is built within their own boundaries.
“Helping communities to play a more informed and meaningful role in the planning and development process, and exploring how to address the future needs of a changing community, are crucial to building realistic responses to many challenges,” Atwal adds.
“From providing homes, creating distinctive places, and delivering more walkable neighbourhoods with good access to services.”
In another late announcement the government posted its response to the long-awaited consultation on the National Planning Policy Framework on the 19th December. Those changes are still being analysed by the sector.
Building Safety Act
The housing sector hasn’t heard the end of the Building Safety Act either – as more aspects of the new Act are woven into law. The measures to introduce a responsible actor into all builds has been published and implemented; the coming year will see the impacts of such measures. More cladding claims are expected to come to light as litigation – which is currently being negotiated behind closed doors – makes its way to court.
As one property lawyer told Housing Digital “The BSA was passed in 2022 and enacted in 2023, but 2024 is the year when we are going to see its impact in the courts. And everyone is watching very closely.”
Are housing associations affected? Very much so, as major landlords fighting to claim costs for remediation HAs are front and centre of the legal fight.
New lease of life for social housing?
With a general election set for 2024, and a new Labour government widely anticipated, it may be useful to understand what the current opposition party’s plans for the housing sector may be. Let’s start with the numbers.
Labour has outlined plans to build 1.5 m new homes with its housing recovery plan, which aims to reform planning to boost housebuilding and deliver affordable housing, as well as give local communities “a voice” on how such homes will be delivered.
Such promises have been heard before, and it will be intriguing to see how Labour plans to enact the measures.
Labour leader Keir Starmer recently praised Camden council for building 51 new council homes, part of a 119 home development within his constituency of Holborn and St Pancras. As Sir Keir put it, the new homes represented “life chances, aspiration and equal opportunity for everyone”.
It may be those ideals that Labour use to frame their grand housing plans.
According to the Guardian an election may be held as soon as May, and a Labour manifesto expected to be completed by the Spring.
Within it we could expect a new generation of “new towns” akin to those built in the post-war period, further devolution to regional mayors who may get further planning control, support for first time buyers and fast-track approval for brownfield development.
Of course many of these aims will be delivered after an election if Labour win, however the framing of such plans will be finalised in the next twelve months.
Whatever the outcome of the election, with the housing issue rising further up the ministerial to-do list, the coming twelve months should be definitive for the future of the sector.
We’re all hoping that 2024 brings with it renewed emphasis on the importance social housing has, and both political and financial backing to achieve change.
Image credit: Jakob Weyde/Shutterstock
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