Partner Article

We need holistic change to attract housing investment

At the beginning of the week we heard of the growth that is happening in the UK housing market – except for two regions, Northern Ireland and North East England.

Why not in the North East? It is probably because this region continues to suffer from ongoing low demand and the shortage of finance for both home buyers and investors. We need a more holistic approach to development and investment.

The news from the house builders is that they cannot get enough greenfield sites to develop, which is where buyers want to live and for which they can get mortgages.

We have seen the result in the share price of the major national house builders, with significant increases where they are achieving success in other parts of the country. It’s a somewhat ironic situation given that the majority of the volume house builders – the likes of Bellway, Barratt and Leech – started life in the North East.

There is also a lot of excellent work being done in the regional housing market. We have seen significant investment inNewcastle’s Scotswood and the ‘BIG’Gatesheadproject when both councils have shown innovation and a willingness to take risks for delivery. While government funding for this type of project is no longer available but the initiatives will, on completion, have a significant and successful impact in the area.

Each of these projects was planned and implemented during and at the end of the housing boom and the housing market has since changed, especially funding and how the development process works through the new planning system.

In terms of the rented sector, there are many positives in the North East. We have Europe’s largest housing landlord Grainger Trust, which is investing significantly to grow its leasing stock; there is also a growing interest at the smaller end of the market from those who wish to buy-to-let; and the North East boasts the most successful regional social landlords in the country with excellent reputations for development and management of houses to rent and affordable homes.

What will it take for this region to bolster its much-needed position given the talent, expertise and innovative ideas that are so evident?

We do need a better supply of housing land for development. The joint application of the National Planning Policy Framework and the Localism Act should allow this to happen quickly but it needs a change of culture. Change is apparent with planners but it has not yet moved in to the consultation process, where a degree of NIMBY-ism is apparent.

We also need greater vision in the application of our plans for housing development and the locations released to allow this to happen. A comprehensive approach is essential. This must recognises that the release ofgreenfieldsites will in the short-term meet current demand but, with charge on the planning gain, will in the medium-term allow councils to invest in brownfield sites to make them more attractive to house builders, the buyers and lenders.

There are a number of initiatives that are already underway that have potential for the North East. The Homes and Communities Agency, charged by the government to achieve a step change in the supply of housing, is seeking to facilitate change in brownfield land and bring it into use. And there is money available from the North East Local Enterprise Partnership’s Growing Places Investment Fund to help kick-start those sites that have planning permission but have stalled.

In another interesting development, the government is committed to releasing constraints on the Real Estate Investment Trust – seen as being very successful in the commercial property sector – to actively trade in housing investment. This will release more funding for the housing sector and bring forward private sector money to invest in buy-to-let in a tax advantageous manner.

Of course, it’s up to those of us in the North East to make the most of the tools available.

This was posted in Bdaily's Members' News section by Kevan Carrick .