26 June 2018 

Diversity is the Name of the Game - An update on the Letwin Report

By Stephen Goodall  

An excess of “relatively homogeneous” new-build homes has reduced market demand, weakening supply from house builders, concludes Rt Hon Sir Oliver Letwin MP in his draft analysis of build out rates.

The former Conservative Cabinet Office Minister was commissioned in last November’s Budget to examine what could be done to accelerate housing starts and to recommend policy instruments to unblock supply. Since his last update in March, Sir Oliver and his panel have visited 15 large sites of approximately 1,000 and 15,000 homes in high areas of demand across the UK, including sites of strategic importance in London - Nine Elms, North Greenwich and East Village, Wembley Park and Barking Riverside.

The interim report argues that developers could increase the choice of design, size and tenure of new homes without impacting on local markets and therefore speed up the pace at which houses are built and sold.  However, the report further warned that the shortage of UK construction workers would have a “significant biting constraint” on the Government’s flagship policy of boosting housing starts in the region of 200-300,000 a year.

Echoing Sir Oliver’s rhetoric, Theresa May’s third Minister of Housing and Planning, Dominic Raab MP, this morning pledged further action to boost competition in the construction industry and to provide further support to smaller and medium sized housebuilders, including investigating moves to digitalise land registry for those without the resources to look for suitable sites. 

Since Theresa May’s appointment as Conservative leader a more statist and interventionist approach to housing policy has been signalled, which has often gone against the grain of established and prevailing Conservative thinking. However, it remains to be seen if this will translate into the Government wholeheartedly accepting the central tenets of the report's recommendations. Indeed, May is under mounting pressure from colleagues on both sides of her party to outmanoeuvre Labour  through a root and branch review into housing policy, with ten Conservative MPs presenting proposals at Downing Street just last week.

Having analysed the problem, Sir Oliver and his Panel will submit final recommendations on improving build out rates alongside the Chancellor’s Budget this autumn.

We will continue to provide regular updates on the political fallout from the report over the next weeks.

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