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Residential construction industry tipped to hit £93.6bn in value by 2025

The number of active businesses within the residential construction industry could increase by 30% by 2025 and drive total market value to £93.6bn, according to research by property sales platform Unlatch.

If the forecast is realised, it would see a total of 57,401 businesses active in the residential construction industry.

According to Unlatch’s research, there are some 44,166 businesses operating across the UK’s residential construction industry at present, generating total revenue to the tune of £78.9bn with each business contributing an estimated average revenue of £1.8m.

Compared with pre-pandemic levels, the current number of businesses is down 7.1% while total market value is 11% lower, meaning average revenue per business has fallen by 4.3%.

However, according to Unlatch, annual figures are showing positive signs. For example, while the number of total businesses in the industry is 6% fewer than 2021, total market value and resulting average revenue per business are up 18.9% and 26.5% respectively.

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Unlatch has predicted this growth will continue over the coming years, with the residential construction industry’s value hitting nearly £94bn by 2025. However, the downside to this sector expansion would be that, with more active operators, the average revenue per business would decline by 8.7%.

Lee Martin, head of UK for Unlatch, commented: “Like many sectors of the property market, the residential construction industry certainly faced a number of challenges as a result of the pandemic. While we’re yet to see a full return to form, there are some very positive signs of growth on an annual basis, with the pandemic market boom helping to drive revenue growth.

“This growth is expected to continue through to 2025 and we predict that the biggest worry facing many in the sector will be an increased level of competition, rather than a dent to their profit margins.

“It’s those who continue to innovate and progress the way we deliver residential property to market that are likely to come out on top, not just with respect to the construction process, but also when streamlining the sales process, benefiting both builder and homebuyer alike,” Martin added.

By Jerome Smail

Source: Property Industry Eye

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House builders call for changes in planning process

If developers are to build more and better homes, the planning process and the attitude of planning authorities need an overhaul.

That’s the views of developers and property experts attending the third roundtable in’s series on the Future of Yorkshire, sponsored by Womble Bond Dickinson, which considered housing delivery and modern methods of construction (MMC).

Boris Johnson in 2019 announced a target of 300,000 new homes a year to alleviate housing shortages in the UK. Completions have remained a mere fraction of that, with around 37,000 homes in England in the year to March. Affordable housing schemes accounted for 26,500 of those. Meanwhile average UK house prices remain high, rising to nearly £295,000 in June.

And while demand fuelling high prices might seem ideal for developers, they are also facing rising construction costs, and delays in planning applications in the wake of the pandemic increase costs and can lead to loss of funding for a project.

“It’s very difficult to sell virtues to those who are invested in schemes when we’ve gone through such a period of change that we have,” said Will Martin, strategic land lead at Commercial Estates Group, citing not only the pandemic, but political uncertainty. “In my mind we need a period to settle down and get some more certainty in terms of delivery.”

Rob Gill, head of acquisitions at Casa by Moda, put part of the blame on planning authorities, saying determinations of planning applications by his firm were at a 15 or 20 year low. “I do think we’re getting more and more polarised, the public-private sectors looking at each other and saying, ‘What’s going on? Why is this happening? Why are you doing it this way? You should be doing it that way.’ And it does seem to me politically there needs to be something to bring the two together.”

Shelley Williams, associate residential development lawyer at Womble Bond Dickinson, said planning authorities would have to be more forward thinking and consider commercial interests in future. “It’s the red tape that’s the barrier, in terms of who makes the decision. The private sector can just make their decisions, whereas local authority it has to go to committee. The person you’ve been working with on a specific deal might not be the one who can make the decision. That compounds the delay. It’s quite archaic.”

Emma Gomersal, associate director of real estate at Deloitte, said it was crucial for local authorities to update their framework plans. “That’s what has created such huge delays within many local authorities. They haven’t got an up-to-date plan and officers are constantly having to battle applications coming on green belt land. It’s sapping so much time and resource and effort at that local authority level.”

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Tim Reeve, director of Advent Developments, questioned whether local councillors were qualified to judge planning matters objectively. “I’m a great believer in democracy, but if it’s a policy compliant application, why can it not be approved? It’s very simple – if it’s policy compliant, where’s the harm? And that’s the problem. It’s the subjective interpretation of where the harm is that’s the problem. The delay might be existential to your funding.”

But if planning matters were sorted out, what would future homes look like?

James Lewis, Leeds studio lead at Buttress Architects, was clear. “It’s creating a community and environment that people want to live in, with a central square, a green space in the middle. It’s not about getting as many houses on a site as possible any more. You just can’t do it.

“It’s got to be more sensitive and more environmentally friendly. And people are aware about their energy bills, so they want to understand it’s energy efficient.”

Ryan Shepherd, senior development manager at South Yorkshire Combined Authority, added that infrastructure and connectivity played an important part in creating those desirable spaces, particularly in urban areas where SYCA wanted to attract more professionals and families.

“Our overarching aim is supporting the economic growth of the region. It’s implicitly tied to housing and how you can develop those spaces that retain students from the region and bringing more people in who want to live in those areas.”

The roundtable was part of a series on the Future of Yorkshire sponsored by Womble Bond Dickinson, Mott Macdonald, Buttress Architects and Deloitte. The next in the series, in November, will consider devolution.

By Andrew Staples

Source: The Business Deck