Planning permission in London results in higher tax yields than elsewhere in the UK due to stamp duty changes. Growth in the regions is uneven, meaning it’s important to identify hotspots...
Industry concerns about a London-centric focus continue in the wake of changes to stamp duty, despite a slowdown at the luxury end of the market. Planning permission in London is worth more than 40% of the total tax yield, but projects in the centre are in decline. As new opportunities spring up in outer London boroughs, where growth is rippling out from the centre and profit margins are relatively safe, the challenge now is to rejuvenate the housing industry beyond the capital.
Across the UK, the east is showing growth, while markets in the west are slowing. Growth across the regions remains uneven, according to industry analyst Glenigan. Identifying hotspots will be key to your company's growth and wider house market recovery.
PLANNING PERMISSION IN LONDON
The total value of project starts in the capital was £2.2bn in Q1 at the start of 2015, down 13% on the same period in 2014. Contractors in London are turning down one in two bid opportunities. Focus in the capital has shifted to commercial office space due to construction costs rising by 10% during 2015, according to AECOM.
PLANNING PERMISSION APPLICATIONS IN THE UK
Across the UK, planning approvals surged in the first quarter by 36%. Applications rose from 83,000 in Q1 to 95,000 in Q2. An east-west divide is emerging, with projects more buoyant in the North East, East Midlands, East and South East. The South West, West Midlands and South West are slow in comparison. Government plans to allow developers to build on disused industrial sites could see housing projects fast-tracked in a bid to improve productivity. It will be worth your while to monitor this area of policy.
The Glenigan Index hints at green shoots in the housing market, and a move away from the capital, though patchy regional recovery remains a concern. The national skills shortage is hampering growth in slower regions, because profit margins are affected by rising labour costs. Your focus should be firmly on areas of growth: industrial starts are predicted to rise by up to 50% this year and activity will boom in key regional centres in the East and South East of England.
