The focus on boosting housebuilding in the Budget is important, as a shortage of homes is a key reason why affordability is so stretched in large parts of the country. A wide range of measures were announced to deliver an additional 300,000 homes per year by the mid-2020s.
The long timeframe reflects the scale of the challenge ahead, although there have been some encouraging signs that the number of homes has been rising faster than previously thought in recent years.
Construction of new build properties is still too low – with completions in England over the past 12 months c13% below 2007 levels. But, the picture improves significantly if we add in new dwellings that have been created by converting larger homes into more units and those created by ‘change of use’, such as offices transformed into flats. Indeed, on this broader measure, the number of dwellings being created each year is now only 3% lower than the levels recorded in 2007 (even after accounting for demolitions).
Interestingly, it is ‘change of use’ of buildings – i.e. from shops, offices and other commercial purposes, to homes - which is providing the biggest boost, driven by a shift in government policy. From 2014, automatic permitted development rights were granted to convert offices into residential properties. Since then, so called ‘change of use’ additions to housing have nearly doubled, from c20,000 in 2006/07 to 37,000 in 2016/17. Of these, about 18,000 were granted under the new permitted development rights.