By the end of 2024, the UK will most likely be headed to the polls. Housing planning reform is high on the political agenda. While Britain’s two main political parties are targeting 300,000 new homes built per year, builders have constantly fallen short of this target. Although we are cautiously hopeful of a housing market rebound, partly because of the stabilization of interest rates and building costs, builders continue to face a myriad of ongoing challenges, making achieving this target in the near term an uphill battle. Creating an environment conducive of higher homebuilders will require significant reform from policy makers.

Key Highlights:

— Homebuilders continue to face major headwinds such as planning and permitting issues, changing regulations, and weak buyer affordability.
— Small builders continue to bear a disproportionate share of building challenges such as bureaucracy and access to suitable land.
— Without adequate housing supply in place, government schemes supporting first-time homebuyers continue to exacerbate the housing problem.

“Builder development challenges continue to restrain homebuilding activity and require significant government reform to reduce the red tape and ease restrictive planning regulations, lower the barriers to entry that prevent small builders from competing, and attract skilled workers. We expect housing plans for both political parties will continue to fall under intense scrutiny until election day. It remains to be seen whether either party’s planned reforms will be enough to move the needle and finally deliver on promises,” said Margaret Rabba, Vice President, Diversified Industries.

For more information, visit dbrs.morningstar.com