By any standards, UK construction is in the doldrums. ICAEW’s Business Confidence Monitor for Q1 this year put the industry’s confidence level at -8.6. Meanwhile, more than half (51%) of businesses in the sector reported issues with customer demand – the highest of all industries that quarter, and a rise on Q4 last year.

The Resolution Foundation’s January report, Mountain Climbing, pointed out that the UK’s housebuilding strategy is focused on residential planning reform: making the system clearer, more rules-based and better resourced, so that developers build more homes. However, the question is whether such reforms can deliver a sustainably higher housebuilding rate in places that need it most for growth and living standards.

On current trajectories, the report warned, every region in England looks set to undershoot its housebuilding targets. As such, the government is likely to miss its manifesto pledge of 1.5m new homes for England. In the Foundation’s view, this is the outcome of higher interest rates, construction costs and regulatory changes. London in particular stands out; its pipeline has all but collapsed, with housing starts hitting a 20-year low and forward-looking indicators trending on the weak side.

The National Housing Bank and New Towns could help

Two state initiatives provide rays of hope. On 31 March, the government launched the National Housing Bank, touted as a “once-in-a-generation investment offer” to speed up the delivery of new homes and mixed-use schemes.

Based at Homes England, the bank has announced a £100m tie-up with Aviva to build thousands of high-quality family homes in UK towns and cities, with Liverpool and Manchester earmarked for the first builds.

Just days before the launch of the new bank, the Ministry of Housing, Communities and Local Government unveiled its New Towns Draft Programme: a wide-ranging consultation seeking stakeholders’ views on proposals for seven sites in England, whittled down from 12 announced last year.

According to the proposals, each site will include at least 10,000 new homes, with ease of access to local workspaces and facilities in mind. This can sometimes be a challenge in long-established towns that have grown organically over centuries.

Ros Rowe, Subject Expert for ICAEW’s Construction and Real Estate Community, says: “New Towns can deliver housing at scale, but it’s not just about building homes. It’s about delivering a set of cohesive, new communities, generating income and supporting UK growth with the right people in the right locations, and the right industries within easy reach.”

New Towns could improve housing supply

As Rowe points out, this bold scheme brings its fair share of complexities. For example, will the government turn the money on and off, or provide consistent funding? And will the delivery of these New Towns be marred by the impacts of geopolitical tensions? 

ICAEW’s Construction and Real Estate Community is working with industry specialists who can advise ICAEW members on the many implications of delivering sustainable new communities.

One is Adam Leslie, Director at Deloitte and a specialist in public sector investment, infrastructure and regeneration. In his view, the seven projects hold significant promise, not just for themselves, but surrounding communities, too. 

“New Towns aim to alleviate housing pressure and affordability issues in existing nearby towns by providing new housing supply,” he says. “They will also contribute to improved regional infrastructure – eg, transport links and utilities – that can serve a wider area. Furthermore, new employment centres within the New Towns can offer job opportunities for residents of existing towns, while increased economic activity can have positive, spillover effects.”

Ben Aspinall, Managing Director at property regeneration consultants AspinallVerdi, notes that the projects will help to boost UK builds with social objectives at their core. “Affordable housing, particularly social rented accommodation, will form 40-50% of the New Towns,” he says. “This will require funding alongside the infrastructure finance.”

Leslie also welcomes the scheme’s “strong emphasis” on social purpose. “This commitment is reinforced by the government's intention to back delivery with the Social and Affordable Housing Programme, indicating a significant drive for social housing provision within these developments.”

For Michael Keaveney, Director of Land, Development and Acquisition at Grainger Plc, the scheme’s biggest benefit is simple. “We need more housing of all tenures,” he says. “New Towns offer part of the solution in delivering additional homes with the infrastructure to create thriving, mixed-tenure communities where people can live, work and play.”

London is streamlining planning in response

Shortly after the publication of the New Towns Draft Programme, London Mayor Sadiq Khan and Housing Secretary Steve Reed announced that they had removed key regulatory hurdles and added incentives to kickstart housebuilding in the capital.

“Khan's approach to streamlining planning and reducing constraints in London could serve as a valuable template for accelerating builds elsewhere,” Leslie says. “Particularly in the context of New Towns.”

Leslie notes that the government’s New Towns Taskforce recommended various planning and regulatory reforms, including an immediate commitment to an interim planning policy to protect New Town locations, a fast-tracked statutory consultee process and a review of the current legislative framework.

“The use of Development Corporations, which have enhanced planning powers, aligns with reducing bureaucracy,” he says. “While the scale and nature of New Towns – often on large greenfield or brownfield sites – differ from London’s urban infill, the underlying principle of simplifying and accelerating processes to meet targets is highly transferable and encouraged within the New Towns framework.”