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Seth Rutt: 'Discounted homes and office-to-resi won't solve the crisis'

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Hawkins/Brown’s Seth Rutt questions whether the Housing and Planning Bill goes far enough to address the real issues at the heart of the housing crisis

The government has finally recognised it needs to do more about housing than throwing a bit of cash and slapdash policy at it every now again. But the Housing Bill misses the point.

There isn’t a housing crisis for those who can afford to buy homes - the crisis is for those who can’t. So why focus on getting people to buy at a discounted rate that is still beyond reach for many?

The market finds its own level and developers don’t want to saturate the market with more homes. That would reduce values. An often tweeted graph of housing supply over the last 60 years shows public sector housing as the main option for addressing housing supply.

Graph, housing

Where we are seeing truly balanced tenure is in estate regeneration, where local authorities are able to set the ratio of affordable homes- generally 50 per cent - before any land deal takes place. Some local authorities such as Camden are able to maximise cross subsidy by developing sites themselves.

This contrasts with private land deals, where purchasers will assume a lower ratio of affordable homes to generate a competitive subject to planning offer. A vendor will always go for the highest offer regardless of how the S106 negotiations are likely to go.

In addition, in terms of affordability, most graduates who have paid their way through higher education will struggle to pay off debt and then save for a deposit. This is yet harder with lower loan-to-values (LTV) on today’s mortgages. Even with the Starter Home Initiative, home purchase will be out of reach for most and a resale quickly makes the homes unaffordable again.

Another issue is the government’s extension to the office-to-residential permitted development rights (see AJ 13.10.15) . In terms of design quality, we are working on one project where the client has the highest aspirations for the quality of homes and interior fit-out, in order to achieve the best return.

However, we are designing a scheme in another building where, on a floor above ours, a third party, long-term leaseholder is converting the existing office to new homes.

The level of quality is frankly terrifying and the local planning authority are powerless to do anything about it.

I suspect that in areas with lower sales values there could be a lot of fringe development providing poor quality housing under the radar, save for some input into parallel applications for facade changes.

Building control has already been deregulated in terms of approval and I’m not sure that this can be relied upon to ensure design quality.

In terms of S106 agreements and affordable housing, my understanding is that this currently provides a third of affordable housing. So presumably the projected office-to-residential conversions that would otherwise contribute to that would remain relatively small.

Additionally, any conversion project attracts VAT in any case, which large scale developers prefer to avoid.

So with the exception of major office tower conversions in non-exempt boroughs, perhaps the increase will be less than anticipated.

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