SUMMARY

The number of homes being completed fell by -56% in Q2 2020, compared to the same time last year. On an annual basis, that brought the number of homes delivered down to 217,311 in the year to June. The impact of lockdown on housebuilders was sudden and severe, however, sites were quick to start reopening, with nearly all suspended sites reopened by mid-August. Although completions have rebounded quickly, starts on site have remained at very low levels suggesting developers are cautious about sales rates in the medium term. 

The planning system was able to adjust quickly to remote working in most places. Full planning consents reached 82% of the pre-lockdown level in July 2020.

When compared to the previous year, delivery of new homes has fallen in every region except Yorkshire and Humber. The largest percentage falls were in the South West, West Midlands and North East at over -20%. Supply in London fell 14%, leaving it at half the level needed to meet housing need over the last 12 months.

There are also local variations in our projections of local authorities meeting their Q2 2020 Housing Delivery Test (HDT). Only 56% of local authorities would pass the test. Crucially, 92 authorities would deliver less than 75% of their housing requirement and fall under the presumption in favour of sustainable development. The fall in delivery due to lockdown means many authorities face an uphill struggle to get enough homes delivered during 2020/21 to ensure that by the end of the year they are not facing the presumption in favour of development. The worst affected area is likely to be London’s commuter belt.

The official HDT publication in November 2020 will cover the 2019/20 period, which will essentially be unaffected by Covid-19. The effect of the lockdown on HDT outcomes will not be confirmed until November 2021. The government will have to relax the rules for the 2021 test to avoid the lockdown period causing authorities to fail the test.

The number of grant funded affordable homes completed in 2019/20 was slightly down on the previous year. Section 106 delivery is likely to have been high during that year, as total completion levels reached a new high. But Section 106 is likely to be a casualty of Covid-19 during 2020/21, so maintaining this level of affordable housebuilding will be more reliant on grant funded completions.

Although unable to entirely escape the impact of lockdown, the number of Build to Rent (BTR) completions in the year to June was only slightly down. Generally the number of BTR completions remains on an upward trajectory. Starts have remained stable since January as BTR developers remain confident of longer term demand.