The coronavirus pandemic could cause a 35 per cent reduction in privately built homes this year.
According to research from Knight Frank, the impact of the pandemic could result in fewer homes being built this year than the number built in the year following the financial crisis.
Privately new built homes completed in 2020 is likely to be as low as 104,000, representing a reduction of 56,000 homes.
Although developments across the UK had the capacity to build 250,000 homes, many developments were at different stages of completion and will experience a variety of issues before they are built and habitable.
Construction businesses will already be struggling financially and may be unable to work immediately following an easing in restrictions. The government launched a new loan scheme for SME businesses earlier this week in a bid to support a loss of income. However, the Federation of Master Builders believe that unless grants are available for smaller builders and developers, many sites may struggle to restart their construction projects once social distancing restrictions are lifted.
Additionally, many materials may be unavailable as supply chain issues delay construction and labour could be limited as people recover from the virus, self-isolate or are unable to migrate and work whilst travel restrictions are in place.
Whilst the sector will want to pick up where the Boris bounce left the property market pre-virus, it is clear that economic constraints will hinder a swift recovery. The report suggests an extension of Help to Buy and relaxing planning permissions will incentivise developers and provide a confidence needed to the maximum number of residential properties are built this year.
Justin Gaze, Knight Frank’s head of residential development, commented:
“Faced with supply chain challenges and a national material shortage, developers are under increasing pressure to adhere to tight social distancing controls, while also coping with an ever-dwindling availability of skilled workers. This has cast a dark cloud over the capacity for housebuilders to deliver at scale and speed.
“Now is the time for the government to intervene and support the private sector in getting building again. There needs to be a pragmatic approach. Extending Help to Buy and relaxing planning regulations to give developers greater flexibility on Section 106 and Community Infrastructure Levy payments would be greatly welcomed.
“Introducing a stamp duty holiday and streamlining the conveyancing process would also be a major stimulus. These measures would no doubt act as a real driver for the wider UK economy; helping to create jobs, new housing and ultimately receipts for the treasury via increased liquidation in the market.”
