Opinion
Eradicating the scourge of large volume house-building could boost Wales' economy
Rhisiart ap Siencyn, the former director of the Federation of Master Builders Cymru, argues that the Senedd needs to take control of housebuilding
During the 80’s two-thirds of new housing in Wales was built by small building firms. Today they build less than one-third.
Why is this? And why is it important to us in Wales?
I’ll deal with the first question first. One reason is that Wales’ local authorities’ planning policy no longer caters for local need.
Instead, they have become obsessed with the need for growth. The more houses are in the local authority, the more council tax is paid. And the council then have more money to pay for their grandiose plans!
The fact is that Wales doesn’t really need to build many new homes at all. There are upwards of 30,000 empty homes in our country and bringing those back into use would mostly cover our housing shortage.
The barrier to doing so is that a builder refurbishing an existing building pays the full 20% Vat, whereas volume housebuilders building new homes pay… wait for it… yes, 0% Vat!
To facilitate growth, therefore, councils have to identify vast tracts of land for which they can conveniently grant planning permission.
This land will almost invariably be ‘green field’ and require a major financial transaction between the fortunate landowner and whoever can afford the massive financial outlay involved in converting acres and acres of green field into a housing estate.
Volume house builders can also afford to buy the vast tracts of planning land which they then hold on to for many years and build on at their own pace, as demand rises and falls.
Small, local housebuilders generally can’t afford to do this. Which leaves the field open (pun intended) to large, well-resourced house builders who build whole estates at a time.
The local developers and builders are instantly priced out of the process.
Unaffordable homes
So, why is this important to Wales?
Most of these global sized volume house builders are headquartered outside Wales. They will mass purchase materials and services as cheaply as possible and as a result, will they end up buying little or nothing in our country.
Surely, you say, they employ loads of local builders? That’s often true, but generally on such poor sub-contract/self-employed terms that they make too little to invest in their own businesses or training.
This means that there is very little benefit to the local economy in the longer term, which there would be if small, local building companies built up their own thriving enterprises over many years.
The real problem, however, is that the houses built don’t really meet the local need, which is for affordable housing for the 1/3 of our population who live in poverty.
A planning restriction will usually insist that a small percentage of the new houses are affordable but the bulk will be in a price bracket that local buyers can’t afford.
Large volume house builders care little where they build, what strain it puts on the area’s services, and about the character of their properties.
A housing estate in Aberteifi, Abingdon and Aberdeen will look exactly the same and all will have similarly twee names like Mulberry Crescent that make little reference to an area’s culture and history.
Solution
Currently, therefore, local authorities effectively hand over housing policy to volume builders.
They choose the number of houses built, the type of houses built, where houses are built, what they look like and what they are named.
How could this be changed? It wouldn't take a huge leap of imagination to envisage a local authority planning department which could ensure that conditions are more favorable for local builders.
But this is the hard part. In order to make the costs affordable, the council would have to install the services first; roads, drains etc.
And then they would have to split the planning land into manageable chunks for local companies to bid on and furnish them with the required housing.
This wouldn’t be easy. However, we would get the housing we actually need in the locations we actually need them, and even - praise be – a unique, recognisable identity in keeping with their surroundings.
Also, the area’s builders, who are far more likely to employ apprentices and train people from that area, would prosper. The area’s suppliers would also get a fairer crack of the whip.
The value to the local economy of the construction of housing would increase substantially.
It's not rocket science. But there’s very little incentive for councils to do this at the moment, and therefore it’s an issue that would probably need the government to fix.
Do Wales’ politicians have the will to wrest control of house building in Wales from the vested interests of volume house builders?
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