The UK Housing Crisis: Developers REVEAL Why They Can't Afford to Build! (It's NOT What You Think) How Much Does It Cost To Build a House In The UK?
Property Investors PodcastShow Notes
FREE Training & More : https://linktr.ee/russellleedsIn this episode of The Property Investors Podcast, the speakers, Russell and Anna, discuss the UK's housing crisis, focusing on the difficulty and high cost of development. They share personal experiences with planning permission issues and suggest solutions for both small-time developers and the government.Key Topics and Timestamps:Introduction to the UK Housing Crisis: The speakers note that developers are unable to afford to build in many UK cities, contributing to the housing crisis. The goal was to build 300,000 houses, but only 200,000 were built, leaving a shortage of 100,000 houses per year.Planning Permission Problems: The speakers discuss how hard it is to get planning permission on land, noting that they have owned land for years and are still waiting. They provide an example of a rejected planning application in Leeds, even after a previous application for more apartments on the same site had been approved. They believe the problem is that the government and councils are "not on the same page," with local councils often resisting new housing.Delays in Planning: The speaker gives an example of a Grade II listed building where coordinating a meeting between the developer, English Heritage, and the council took six months, only for English Heritage to cancel and reschedule for another six months, resulting in a year's delay just for a meeting.Cost to Build vs. House Prices: Since 2020, building costs (materials) have increased by 40%. Meanwhile, house prices have mostly stagnated or slightly dipped, leading to a "silent crash".Financial Feasibility in Areas like Liverpool: The average cost to build a house is about £2,500 per square meter, meaning a 100-square-meter house costs £250,000 to build. The issue is that in places like Liverpool, a 100-square-meter house would not sell for £250,000, and building costs do not differ significantly enough between the North and South to compensate for the difference in house values.Hidden Costs and Risks: Development costs also include buying land (which may be worthless even with planning permission in some areas) and planning permission fees.11Shortage of Builders: The speakers note a shortage of builders, with some booked up for two years. Labor costs have also increased by 25% to 30%.Community Infrastructure Levy (CIL): The CIL is another tax on development, costing up to £100 per square meter in some areas.Solution for Small Developers: Buy, Refurbish, Finance (BRF): The speakers advise small-time developers to use the Buy, Refurbish, Finance strategy instead of new development. For example, in Liverpool, buying a rundown house for £100,000 and spending £50,000 on renovation results in a property worth £200,000 and a £50,000 profit, whereas building a new house would cost £250,000 (plus fees) and be worth only £200,000.Government Solutions: Planning Reform: The speakers propose reforming planning by taking it off the councils, making it faster and cheaper, and using AI to help identify buildable areas and give instant decisions.Government Solutions: Financial Incentives: The speakers propose removing CIL and other taxes in areas where development is not financially viable, like Liverpool or Wolverhampton. They also suggest government grants to top up development projects so that a standard profit (e.g., 20% net profit on the end value) can be achieved. They argue that a better planning system and government grants would solve the housing crisis overnightFOLLOW US ON SOCIAL MEDIA:https://www.instagram.com/russellleeds/https://www.instagram.com/anna.n.leeds/
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