Thursday 24 November 2016 7:00 am

Nic London says government planning procedures are impeding small housebuilders

Figures released earlier this month show that nearly 200,000 homes were added to the housing stock in 2015-16 – a good start to delivering the 1m homes the government has pledged this parliament.

But more needs to be done if we’re going to continue to build enough houses for our burgeoning population, and we will need to mobilise Britain’s small and medium sized enterprises (SMEs) to get the job done.

One such builder is Nic London, of N London Construction, who says that “the big contractors aren’t failing, they’re just at full capacity and cannot increase. They’ve reached a ceiling, and if the government wants to get these homes built, they’re going to have to engage with smaller construction firms, or they simply won’t get built.”

London’s background is in bricklaying, whereafter he set out in 2001 as a housebuilder. His projects range from new build properties, to loft conversions and basements, but his speciality is so-called “eco-homes”. “We find products that are eco friendly to construct energy efficient property. Blocks made out of hemp and lime, for example, they’re sustainable and work as an insulator; or slate roofing tiles made out of recycled plastic bags and bottles.”

Despite potential long-term savings and green credentials, he doesn’t think eco-homes will take off in the UK. “We tried to market the hemp block, but few were interested. If they could be mass produced and made cheaper, then maybe. There have been incentives for solar panels, air source heat pumps and other eco friendly measures, but we’re not yet geared up for raw materials like they are in France or Belgium.”

Access to labour

London keeps his full-time staff slim. “We have five management personnel, and a team of builders – all of them subcontractors,” he says.

Using subcontractors, rather than employing a staff, is commonplace in the building industry, due in part to the unpredictability of work. “You might have a contract for 12 months, but no matter how big you are, you don’t know if you’re going to have work for the following 12,” he says.

Because he doesn’t have employees on his books, London says a shortage of foreign labour since the Brexit vote has pushed up costs. “The cost of labour has doubled,” says London. “Our cost ratio of materials to labour has been about 60:40 since the recession, but now it’s switched to 40:60. We paid bricklayers about £120 a day, but now they can demand what they want – £180 to £200 a day, because so many people have left.”

London says that common perceptions about EU labour undercutting British business were never the case. “It wasn’t cheap labour, it was a good standard, but because there’s so much less of it, it’s doubled in price. I think long term, the lack of labour is going to impair our ability to build the 50,000 homes a year London needs. Historically, we’ve only been able to hit 20,000 – maximum – in one year. Now it’ll be even harder.”

House Building Boosted By Help To Buy Scheme And Overseas Investment
We paid bricklayers about £120 a day, but now they can demand what they want – £180 to £200 a day, because so many people have left.” (Source: Getty)

Planning permission

Access to labour isn’t the only impediment to helping SME builders overcome the housing shortage. London’s main qualms are the layers of bureaucracy and protracted processes involved with planning applications. I ask him if government insistence that the process has become easier following recent Housing and Planning Acts is true?

“That’s rubbish, total nonsense, we’ve had an application in for three years to build five houses,” he says. “The planning rules relax when it comes to things like loft conversions or extensions – permitted developments – but with new homes or flats, the process is horrendous. There’s not enough planning officers in the borough to deal with the applications, and not enough senior officers to issue those decisions.”

Asking London to elaborate on the bureaucracy of the permissions process, his frustration becomes apparent. “They’re supposed to deal with applications within eight weeks from validation, but it takes three to four weeks for validation. Then, if it takes more than eight weeks, you have the right to appeal to the Planning Inspectorate. However, that can take eight months, so you hang on for your local authority, but it could take them another three to six months, and even after that they could reject your application – it’s ridiculous”

Homebuilder fund

In October the government announced a £5bn stimulus, formulated as a way of galvanising the house building industry, comprising £2bn set aside to make public land (with planning permission) available to builders, alongside a further £3bn “Home Building Fund,” for providing loans to stimulate new building projects.

London won’t be taking advantage of the loan scheme though: “for me it wouldn’t work,” he says. “They want companies who have already got planning. Although it’s extended to builders like myself, it’s only worth it if you’re willing to wait two or three years. You’d be sitting on the land, waiting for planning.”

The £2bn set aside for making public land available doesn’t help smaller builders much either, says London. “The government has a huge landbank that they sell, but it’s usually only to big developers who want to build thousands of homes. If they broke the sites up, created smaller pockets, then they could break away from the big contractors and give it to multiple smaller builders who could focus their efforts and get the job done quicker.”