Report reveals skills shortage and planning are holding back UK house building

A severe shortage of skilled workers in the house building industry and the current planning system are combing to hinder efforts to tackle the UK’s housing crisis, according to new research.

The report, which surveyed those within the housing supply chain, from SME contractors to major national developers, found real concern among these businesses on the effect of the sector’s skills shortage not only on individual firms, but also on national house building rates and the UK economy as a whole.
However the research from Lloyds Bank Commercial Banking did find some approval for measures announced in the Summer Budget designed to tackle the current housing shortage, for example, plans to grant automatic planning permission for building projects on disused industrial sites.
While the pace of house building is generally acknowledged to be improving, there remains much discussion about how it can be accelerated to match demand. According to the report, there are a number of key issues preventing the effective tackling of the housing shortage, including slow planning decisions, public opposition to development and lack of skilled workers.

Some 24% of respondents said that the skills shortage is the biggest broader challenge currently facing their business while 35% believe there is a lack of suitable candidates to fill existing and new jobs.
House builders said the skills shortage is most acute among electricians and site managers with project managers, quantity surveyors and architects following closely behind, reflecting the supply chain wide nature of the problem.
But house builders appear to be taking steps to redress the balance with 31% prioritising investment in recruiting apprentices in an effort to increase the pipeline of talent coming into the industry.

When asked what one change house builders would advocate for the alleviation of the housing shortage some 23% said greater local authority support to promote and fund building projects, while the same figure sought additional government support.
Existing government schemes such as Stamp Duty reform and the Help to Buy equity scheme were flagged by 73% and 63% respectively as having a positive impact on the housing crisis.

And despite the challenges cited in the report, house builders seem to be optimistic about the future, with respondents giving an average score of seven out of 10 when asked to rate their confidence in the success of the UK house building industry in the future.

The research also found that 87% of respondents want to create new jobs in the next 12 months, and if replicated across the industry, this could mean the creation of more than 100,000 new house building roles.
As an indication of future house pricing the first index to be based exclusively on house builder feedback predicted house prices will reach £232,826 by 2020, up 17% from £198,883 today.
Some 84% said that rising house price increases were not affecting demand for new homes, and just 16% believe people are becoming priced out of the market and 42% said they can meet their affordable housing obligations but have concerns about the effect on their profit margins.

The research found that 90of respondents claimed that they are equally or more environmentally friendly now than they were five years ago and expansion in existing regions is seen as the number one way of achieving growth for housebuilders, with 36% of respondents rating this as an opportunity.

‘This report sheds light on the key areas of support that firms in the sector need to ensure the long term success and sustainability of the industry. Clearly, house builders are very concerned about the barriers preventing them from playing a role in alleviating the housing shortage,’ said Alasdair Gardner, head of house builders for Lloyds Bank Commercial Banking.
He explained that in January the Lloyds Banking Group Commission on Housing launched an independent report that set out a roadmap towards the sustained supply of good quality new homes.
‘House builders told us that slow planning decisions are a challenge, something the commission reflected in its call for clearer targets for local authorities on planning process timeframe. Clearly, skills is also a huge concern for industry operators too,’ he pointed out.

According to Stewart Baseley, executive chairman of the Home Builders Federation, the outlook for house builders is more positive than it has been for some time, and the findings of this report reflect that.

‘Output has increased significantly in response to the higher effective demand generated by a general improvement in the economy, and the Help to Buy equity loan scheme. A shortage of skilled people has become the biggest concern and the industry is investing massively in training,’ said Baseley.
‘If a positive policy environment and a stable economy can be maintained, the industry will continue to grow to deliver the Government’s ambition to build more homes and tackle our entrenched housing crisis,’ he added.