Planning reform will not be enough to deliver the Government’s housing ambitions unless developers have confidence that the homes they build can be sold, a specialist property lender has warned.
United Trust Bank says measures to increase housing supply need to be accompanied by support for demand, particularly measures giving first-time buyers realistic routes onto the property ladder.
The lender’s intervention follows the publication of an independent government evaluation of Help to Buy, which estimates around 15% of new homes built in England during the scheme between 2013 and 2023 were attributable to the initiative.
Researchers also conclude that Help to Buy increased market confidence among buyers and developers, particularly during the earlier years of the scheme following the financial crisis.
DEVELOPER CONFIDENCE
Adam Bovingdon (main picture), managing director – real estate finance at United Trust Bank, says: “Our view, which we keep making and the report highlights, is that planning reform is essential and should remain a priority, but increasing housing supply requires more than simply granting permissions.
“Developers need confidence that homes can be sold and first-time buyers need realistic routes onto the housing ladder. Demand side support has always been a critical part of that equation.”
The evaluation estimates Help to Buy generated £25.1bn of net present social value in 2024/25 prices and classifies its overall value for money as “very high”. Its assessment attributes £28.6bn of benefits to the additional housing supply generated by the scheme.
Bovingdon says the findings challenge some of the criticism levelled at Help to Buy and demonstrate the potential relationship between buyer demand, developer confidence and housing delivery.
CAPITAL FOR DEVELOPMENT
His comments come as Kier Group confirms it will stop investing in new property development opportunities from its 2027 financial year and instead reallocate capital to strengthen its balance sheet.
Kier’s Property division, which invests in mixed-use commercial and residential regeneration schemes, has a residential portfolio of more than 5,000 units with planning permission secured on around 80% of its overall projects. The group says its property business has been operating against a backdrop of wider macroeconomic turbulence.
Bovingdon says: “A credible demand side stimulus could help restore confidence and support the flow of capital required to build the homes the country needs.
“If the Government is serious about achieving its housing ambitions, the focus cannot solely be on planning reform. A package of measures that stimulates demand, whether through a modernised Help to Buy style product, SDLT reform or other targeted support for first-time buyers, should also be part of the conversation.
“The housing market functions best when both supply and demand are addressed together.”
HELP TO BUY LESSONS
The evaluation is not wholly positive about Help to Buy. It finds the scheme contributed to house price increases of around 2% in some areas, particularly less affordable markets, and cautions that economic conditions today are substantially different from those in 2013.
However, its analysis concludes Help to Buy increased new housing supply by around 15% across England, with the initial introduction of the scheme helping to stimulate demand and developer confidence following the financial crisis.
Bovingdon adds: “The report’s findings provide credible evidence that well designed demand side intervention can support economic growth, boost tax revenues, improve home ownership and underpin the delivery of the new homes the UK needs to prosper.
“Whilst it’s good to see policymakers at least revisiting these ideas – now we need action.”
