Peak housing delivery reached?

The number of Energy Performance Certificates (EPCs) awarded for new homes in England reached just over 255,000 over the 12 months to March 2020, according to data released by MHCLG.

EPC data has, in the past, proven to be a reliable forward indicator of net supply (see chart) and the latest figures suggest that delivery in 2019/20 reached its highest point in decades – something which is expected to be reflected in net supply figures released later this year.

However, this is likely to represent a peak in new home delivery. Separate data from MHCLG suggests new construction starts have been trending downwards since peaking in 2018. This data does not capture all new homes being built, but it can be a good barometer for the market.

Elsewhere, the recent building hiatus as many, but not all, housebuilders opted to shutter sites as a result of the ongoing covid-19 pandemic will inevitably have a further impact on housing delivery as firms implement a phased return to site construction and operating.

Indeed, taking this into account, our expectation is that private housing delivery across the UK in 2020 will be around 35% less than what it would otherwise have been.

As we have noted previously, government support could be key to a faster recovery period once the lockdown has passed.

An extension of time to implement existing and pending planning permissions, given current barriers to developers starting on sites, would be a start, and one that has the backing of the HBF, the trade body for the home building industry. There is also a precedent with the government having granted similar temporary powers between 2009 and 2012 following the financial crisis.

Greater flexibility should also be encouraged with regards to the payment of planning obligations, such as section 106 and Community Infrastructure Levy (CIL) payments. Such outlays are generally paid up-front and a move to allow practical staggering or staged payments would be welcome.