The government has effectively privatised the provision of affordable and social housing, but commercial realities make it difficult for SME developers to contribute, says Kunle Barker
It was an overcast and sticky August afternoon as I made my way through Lambeth Town Hall for another pre-application meeting. I had spent the previous week, supposedly on holiday in Brighton, pulling together reports, surveys, opinions, plans and sketches from our stable of over 20 consultants. I was the project lead on a £55 million multiuse scheme in Lambeth and the project was entering a crucial stage – hence my family’s reluctant permission for me to spend most of our holiday working.
As I climbed the stairs to the meeting room, the myriad points we needed to cover whizzed through my mind, and I tried my best to organise and prioritise them. The meeting was crucial and, as I struggled to find enough seating for everyone, my mind skipped to the budget I had been updating the night before. We had a long list of consultants and a longer list of reports and surveys to prepare, and this was beginning to add up to a king’s ransom.
According to research by the London Tenants Federation, we are demolishing more social housing than we are building
One of the key points I would be making in that meeting was that we (the developer) were committed to providing affordable housing as part of the scheme – housing that we were not obliged to offer but would do so nonetheless. As the meeting went on, a conundrum presented itself to me: if this process continued and the cost continued to escalate, we would be forced to reduce the amount of affordable housing on the scheme. Without digging a hole or laying a brick, the scheme’s viability was already creaking under mounting commercial pressure.
The problem is that there is nothing affordable about building homes in the UK. So how are developers supposed to provide affordable homes on their schemes? It does not surprise me that, according to research by the London Tenants Federation, we are demolishing more social housing than we are building. Economics makes that inevitable. To make project viabilities work, developers must carve every single square foot of value from a site, and affordable housing is the casualty. This is not about greed, immorality or unbridled capitalism on the part of developers. It’s just the commercial reality of the situation.
Increasing economic challenges make it hard for SME developers in particular to focus on building schemes that deliver long-term benefits to society. There are, of course, notable exceptions, but in general, bigger schemes can take advantage of economies of scale.
The truth is that it is the government that should be building affordable/social homes as it did in the post-war years. Creating safe, well-designed homes that improve the lives of British citizens should be a social endeavour and not purely an economic one. That’s the problem with effectively privatising the provision of affordable and social housing: it becomes a financial endeavour instead of a social one.
The founder of one of the top five building companies in the UK once told me that his company spent more money on planning applications than bricks. It’s unlikely that the government would take back responsibility for providing social housing from the private sector but it could at least legislate to make building homes more affordable. Simplifying planning and making more land readily available to SME developers would make a difference. After all, who wants to build unaffordable affordable homes?
Kunle Barker is a property expert, journalist and broadcaster
