Is sustainable construction possible?

UK housing trends have seen significant shifts during the past quarter of a century, a period which has seen the average house price escalate by more than 400%.

As fewer young people see home ownership as a realistic affordable goal, the proportion of the population renting has increased.

Many find themselves unable to afford to buy their own property amid a shortage of affordable housing.

Population growth means the number of people needing to be housed is rising, which in turn is increasing pressure to build on higher risk sites, such as flood plains.

Against this backdrop, the role local authorities play is also changing. While council houses were built in large numbers during the decades following the Second World War, the number of local authority new builds has reduced dramatically in recent years.

And following the large-scale sell-off of council houses through the Right to Buy scheme, introduced in the 1980s, there remains a shortage of social housing which has only partly been filled by the rising role played by housing associations.

Much of the social housing to be built in recent years has been constructed and let by housing associations, now known as private registered providers, which provide affordable accommodation for those on low incomes.

Local authority-owned housing stock has fallen from 3.66 million homes in 1994 to 1.59 million in 2018. It now represents 38% of all social housing stock, according to government data, with the remainder owned by housing associations and other public sector providers.

The number of new council houses built in the UK has been on a steady decline since the 1970s, with the number of houses built and let by local authorities flatlining at less than 1,000 each year after 1994. It was not until 2011 that the number of new build houses completed by local authorities each year rose back above 1,000.

Although local authority housebuilding remains low compared with the post-war years, there has been a moderate increase in recent years. In 2018, the number of local authority new builds completed was 2,640, the highest since 1992.

But the overall level of housebuilding has seen only a modest increase over the past 25 years. Government data shows 165,090 new homes were built in 2018, compared with 154,640 in 1994, an increase of around 7%.

During that period, the UK population has grown by 15%, rising from 57.8m in 1994 to an estimated 66.6 million in 2018.

A failure of housebuilding to keep up with demand has helped drive up property prices in the UK, which have generally carried upward momentum for the past 25 years.

In May 1994, the average UK house price was £55,383. The boom years of 1999 to 2004 saw the average house price rise from £75,995 to £143,855. The years that followed have seen more challenging economic conditions but no let up in house price increases. At the start of May 2019, the average UK house price had risen to £228,903.

With falling house supply and increasing demand driving up the cost, an increasing number of predominantly younger people have found themselves renting for longer periods.

Between 2001 and 2011, the proportion of homes that are owner-occupied fell for the first time in a century as the number living in private rented accommodation increased.

More than half (58%) of the UK’s 24.2 million dwellings remain owner-occupied. Of the remainder, 4.8 million are now privately-rented, with 2.5 million rented from housing associations and 1.6 million from local authorities.

For local authorities, the biggest concern now is for the safety of those living in the accommodation they provide.

This risk was highlighted by the Grenfell Tower Fire in 2017, which claimed 72 lives and prompted a major re-evaluation of safety standards for high-rise buildings.

The UK government established a Building Safety Programme to better manage fire risk for high-rise residential buildings in response to the disaster.

The use of combustible materials has been banned on new high-rise homes, with existing properties requiring remediation work to ensure they are safe.

So far, 95 high-rise buildings have had dangerous cladding systems removed, including 50 properties managed by either local authorities or housing associations.

But many more do not yet meet safety standards, particularly in privately-owned properties where there have been disputes as to who is liable for the cost of the remediation work. 

This prompted the government to announce in May this year that it was making available an additional £200m of funding to remove unsafe cladding from privately-owned high-rise buildings.

In addition to the critical need to make existing homes safe, the provision of new homes will be a major challenge for both the current and future governments.

Within this challenge, one of the major issues is where to build. Local communities will often exert all the pressure they can muster to stop new builds in close proximity to their existing homes, amid fears of disruption to their existing way of life as well as any potential impact on their own house price.

And many of the sites available for house building are also located on flood plains, where the risk of damage is increasing due to the impacts of climate change.

The Environment Agency has warned the number of properties built on flood plains is likely to double over the next 50 years due to demand created by population growth and decades of insufficient house building.

Building on flood plains brings increased insurance and risk management considerations. The EA has said it will work with the government, insurers and financial institutions to ensure properties are resilient to flooding, through measures such as raised electrics, hard flooring and flood doors.

Local authorities will have an important role to play in ensuring existing communities become more flood resilient, and that all new developments are build to a standard that reflects the evolving risk landscape.



Published date: 10th July 2019

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Risk Management Partners Limited is authorised and regulated
by the Financial Conduct Authority.
Registered office: The Walbrook Building 25 Walbrook, London EC4N 8AW.
Registered in England and Wales. Company no. 2989025.