The housing challenge for the Northern Powerhouse

It is almost three years since George Osborne, then the Chancellor of the Exchequer, first spoke about his desire to build a Northern Powerhouse. A lot has changed since then, not least for Osborne who is now leaving the House of Commons to pursue a career away from politics’ frontlines.

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Damien Druce | LendInvest
26th May 2017
Damien Druce LendInvest
"Andy Burnham in Manchester has talked long and hard about the need to produce housing across a range of types and tenure, emphasising how new developments must have good infrastructure links."

But one fact remains, just as clear today as it was back in 2014: If the North is truly to develop into an economic powerhouse, then addressing the housing issues faced in the region is essential.

According to analysis by Policy Exchange, during the 1980s housebuilding in the North raced along at twice the rate seen in London. Across the decade, an average of almost 30,000 new homes per year were built in Northern areas, compared to around 15,000 in the capital.

In recent years that has changed dramatically. Between 2006 and 2016, while housebuilding in London increased by an average of 28% compared to the 1980s, Northern cities have seen housebuilding numbers fall by 28% on average.

So what is it that’s holding back housebuilding in important industrial hubs like Manchester, Liverpool and Sheffield? How do we eradicate those barriers, create the homes that satisfy demand and attract more talented people to make homes and careers in the region?

The first is funding. It’s no secret that development finance funding dried up in a big way after the financial crisis, particularly for the small scale developer. But while that situation has undoubtedly improved in recent years, a lot of the focus has been on southern areas, where lenders and their underwriters are more comfortable. Many development lenders don’t have local expertise to draw on when it comes to northern regions, so those projects appear riskier and less likely to get funding. Little wonder so many don’t get off the ground.

And then there is the age old problem of the planning system, which has always been clunky. NIMBYism isn’t a problem unique to the north, but it is undoubtedly a factor holding back housing production.

This is mitigated somewhat by brownfield development around city areas, but when you head into the leafier areas like Cheshire, it becomes much more acute. This was something I saw first hand in my years as a councillor for Cheshire East Borough Council - local residents in these areas have been particularly successful when forming pressure groups, to block the developments that northern towns so desperately need.

Successive governments have talked a great game when it comes to addressing the planning problems, but there is still an awful lot to do. As we hear from attendees at our LendInvest Property Development Academy courses, the planning system remains a real barrier for developers. Finding a way to navigate through it is far more complicated - and costly - than it needs to be.

Politics is of course a big factor too, but the devolution of power to regional ‘metro mayors’ offers a new opportunity to boost housing development outside of the south east. Andy Burnham in Manchester has talked long and hard about the need to produce housing across a range of types and tenure, emphasising how new developments must have good infrastructure links. Luckily for the people of Manchester, he is now in a position to do something about it.

Improving mobility and accessibility across the North is very much a work in progress in itself. While HS2 will, eventually, boost connectivity between the North and London, it’s still much too difficult to get from East to West and back again. Connectivity, for instance, between Sheffield and Manchester is simply not good enough. If we can improve that infrastructure, and build more reliable routes across the North, it will in turn boost the housing situation.

Of course, for all the efforts of metro mayors, planners and developers, there is one thing that will always stifle housebuilding in the North - the weather. Manchester is known as the rainy city for a good reason, and that regular drizzle doesn’t just dampen the mood - it can prove a practical stumbling block to housing developments too, causing frequent delays.

There’s nothing we can do about the rain, but there’s plenty that we can do about the other issues holding back housing in the North. They must be addressed so that our region can reach its full potential.

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