Growth through housebuilding: Northern property industry reacts to Spring Statement

Opposition politicians couldn’t stop themselves gleefully referring to it as the ‘Emergency Budget’, but what does Rachel Reeves’ speech mean for the development and construction industry across the North?

‘A 40-year high for housebuilding’

The Office for Budget Responsibility has said that reforms to the planning system will allow 1.3m homes to be built in the next five years – which Reeves said will put Labour “in touching distance” of its 1.5m home target.

When Reeves’ statement did focus on the construction industry, it very much emphasised how the NPPF reforms and Planning and Infrastructure Bill are unlocking huge housebuilding potential across the country.

She summarised the aim of her Spring Budget as: “Get Britain building, drive growth in the economy, and put money in people’s pockets.”

PLanning reforms, investment in defence, and the £600m investment in training up skilled construction workers, has led to an optimistic – if cautious – mood throughout the industry:

Henri Murison, chief executive of the Northern Powerhouse Partnership, said: “We will be working in the run up to the governments 10-year Infrastructure Strategy and the Spending Review to get the North the investment needed to raise our long-term productivity, from regeneration in Bradford to Net Zero infrastructure like Carbon Capture on the Humber.

“This is about growth mission-led spending and planning reform, which together will directly lead to better paid jobs, as well as delivering against the clean power mission and wider journey to Net Zero.”

Erol Erturan, managing director of West Yorkshire-based Adept Civil & Structural Consulting Engineers, said: “The upcoming Planning and Infrastructure Bill should help get infrastructure and housing projects on-site more efficiently, and the growth in framework opportunities within the defence sector does provide some new opportunities for the property sector.

“We also welcome the £600m investment in construction skills. While it will take time to turn the tide, training up to 60,000 new workers is a crucial step in ensuring that projects are delivered on time and within budget. This investment in skills is vital for restoring confidence in the market, improving viability, and driving more investment.”

This was echoed by Hughie Clarke, business development and marketing director of building consultancy firm EDGE, who said: “Recovery of the commercial and residential sectors remain sluggish, and market uncertainty has eroded investment and sector confidence. However, the additional £2.2bn in defence funding presents new opportunities for SMEs to engage in UK-wide defence infrastructure projects.

“Looking longer-term, the plans to ‘get the country building again’ are more promising. The forthcoming Planning and Infrastructure Bill should help accelerate the delivery of infrastructure and housing projects, while the £600m investment in construction skills is a much-needed step. The sector has been hamstrung by a shortage of skilled workers for several years, making it impossible for the industry to gain momentum.

“The projected reduction in inflation to 2% by 2027 offers some hope that cost pressures may finally start to ease. Fluctuating material costs has been a significant barrier to forecasting and getting projects off the ground. Stability brings confidence.”

Affordable housing and private market woes

There has been a palpable sense of relief mixed with long-term concerns from the social housing sector, following the announcement of further investment into affordable homes. Following commitments of £500m in October and £350m in February, this week Reeves said an additional £2bn would enable a further 18,000 homes across the country.

Stephen Sorrell, social partnerships director of affordable extra-care housing provider Preferred Homes, said: “Before this announcement, there has been concern across the sector about potential delays to delivery.  For us, four of our eight initial affordable rent extra care housing developments were potentially set to be delayed by a year.  Extrapolate this across the sector, and you get a sense of how significant the new funding can be.

“The bridge funding should help maintain momentum while we await news of the replacement for the Affordable Homes Programme in June.”

Cllr John Merry, chair of Key Cities and deputy Mayor of Salford, said: “Key Cities is committed to working with the Government to deliver on its mission to stimulate growth through boosting housebuilding. However, this must be part of a long-term strategy for addressing the UK’s widespread housing needs…

“Key Cities has long called for realistic housebuilding targets, a permanent retention of Right to Buy receipts, and an affordable rent model that reflects social rent levels rather than inflated market prices… Moving on from the Spring Statement, local leaders need long-term financial certainty, devolved powers to make housing decisions at a regional level, and a strategy that integrates housing with infrastructure, skills, and economic growth.”

Echoing concerns about rental prices, but for the private sector, Kate Lay, partner at Manchester-based Landwood Group, said: “Despite the promised planning reforms aimed at boosting GDP by 0.2% and February’s inflation decline to 2.8%, the Chancellor’s Spring Statement provided little optimism for the private rental market…

“The market is already strained and the reality is that the challenges are mounting for landlords. High interest rates and rising costs have already made buy-to-let less profitable… Business rates also remain a concern for commercial landlords. While there’s short-term relief for retail and hospitality properties, without long-term reform, the current system will continue to place a financial burden on landlords, making it harder for them to sustain their businesses.”

Peter Jackson, managing director of Bolton-based Seddon Housing Partnerships, echoed the affordable housing sector’s caution for a long-term plan: “Plans to fund 18,000 more social homes with a £2bn injection into the sector is a good indication that the Government is aware of some unease in the sector and it wants to help… The current funding cycle process can prohibit a registered provider’s ability to plan a long-term pipeline of work.

“I would advocate for the affordable housing sector to be funded and considered in the same way as infrastructure, bringing an end to stop-start programmes of work… It is really encouraging to see a significant commitment of £600m being put to the training of the next generation of people coming into our industry.”

And Lee Bloomfield, chief executive of Bradford-based Manningham Housing Association, noted the impact welfare cuts announced in the budget could have on the tenants of affordable housing: “With many on the lowest incomes already struggling to make ends meet, I fear the cuts to the welfare budget confirmed by the Chancellor will make this task all the more challenging.”