I have worked in property all my working life, that’s nearly 40 years! Having done anything from basic property management, through to surveys and valuations, commercial agency, and for the last 20 years, property planning and development, you would think that over such an expanse of time that I would have seen it all. And you would be right. Yet all the experience in the world cannot prepare anyone for the market conditions we are currently enduring in the property industry. I have witnessed several recessions, I even started my working life as the country came out of recession in 1974, but never have I experienced anything like the market conditions of today.
I am fortunate in one respect in that my work is mainly in the South East, in fact Oxfordshire and the surrounding counties, and in another respect that my work is mainly in residential development. Oxfordshire in particular is a robust location when it comes to housing, and values and demand have held up well, yet market conditions are still difficult.
My own experience, and that of my competitors if what they say is true, and I have no reason to doubt it, is that whilst developers still want the best sites, getting them to sign on the dotted line and complete the deal is getting increasingly more difficult. Therein lies the issue at the heart of our current stagnation, a flat spot that has produced the dreaded double dip.
Now, I can only speak for the property industry, and, in the main, only in respect of a part of the country, but I suspect that my experience is not far from the norm. At the heart of the issue is confidence. Or rather the lack of it. The confidence to commit and to take risk. Two essential ingredients to any thriving economy. Getting developers to make that final commitment and complete the deal can be difficult at the moment.
One aspect of change that stands out from when I first started work nearly 40 years ago, and now, is the degree of due diligence attached to everything we do. Take the, once simple, act of making a planning application. I can remember filling in a two-sided form, a couple of notification slips, putting a red line around a plan and submitting the form to the Local Authority. Now, we have to virtually cut down a copse to first produce all the paper necessary for the reports and supporting documentation that today accompanies a planning application. When that is followed by an appeal, the copse becomes a wood! The cost was once a few hundred pounds, now the cost of submitting an application often runs into tens of thousands. Whilst I do not advocate a return to the days of two-sided forms and 1/2500 scale plans, the pendulum has surely swung too far. We seem to go out of our way to make securing planning permission as difficult as possible, in the meantime the housing list for the country grows to c.5M. Not a statistic in which we can show any pride.
Due diligence does not just extend to planning, but to the land and buildings themselves. The search for “issues”, be they legal, environmental, topographical, planning, or whatever, is also far more detailed now than it ever was 20, or even 10 years ago. And this is where developers are very skilled at slowing the process down by adopting the principle of “first get a foot in the door” and then dictate the pace. They are masters of it, and push as hard as you like, they will buy all the time they need, first to satisfy themselves on all the practical issues and then to convince their Board that this is the right thing to do and the right time to be doing it.
Wake up every morning to Robert Peston and his fellow doom makers at the BBC and is it any wonder that confidence is shaky? The news is scary at times, what with the banks dragging down a number of Euro countries, the Middle East and North Africa in turmoil, a government that likes U turns, and has drastically cut its spending, manufacturing that is in decline, unemployment amongst the young at unhealthy levels and new housing at levels not seen since the 1920′s. Yet there must be some good news out there, but do we hear it. Not often!
So, instead, we have the doom and gloom merchants hogging the limelight, giving the impression that we might as well pack up and go home. In the meantime 5M people are screaming for a decent home and the construction industry is wondering where the next big contract is going to come from. Demand for housing is there, yet it remains in short supply, the result of which is house prices at levels the young simply cannot afford. Developers want to buy sites and to build houses, but a lack of confidence in an economy that keeps disappointing, makes them cautious and risk averse, and slow to complete on deals! Who can blame them.
My solution would be a simple one. First, make the planning system easier and quicker to deal with, and don’t just say that is what you intend to do. Do it. Action is required, not words. Start by giving overworked and undermanned local authority planning departments the man/womanpower and investment they need to function properly. Many years ago I read an article that suggested that land for building was scarce. I did not agree with it then nor do I now. We have plenty of land; it is land with planning permission that is scarce. So we must speed up the process, and help those charged with the task.
Secondly, instead of cutting government investment, plough money into house building. Put roofs over people’s heads. Give jobs to the young in the construction industry. Put money into people’s pockets. They in turn will spend it in the High Street. Give some of it back in taxes. Keynes said in times of downturn pay people to dig holes and then pay other people to fill them back in. He did not mean it literally of course, but he did mean that governments should spend money to create employment. He was right.
Let’s instill a feeling of confidence and belief back into the country. A good starting point might be to put Peston and his doom merchant mates in the Tower for committing the equivalent of economic treason. If you think that too drastic, lets at least unplug his mic.