Build the homes Wales needs and unlock hundreds of millions in community investment
A new report from the Home Builders Federation (HBF), The Social and Economic Impact of Home Building in Wales, has revealed the substantial contribution the private home building sector makes to Welsh communities, local economies and public services, while highlighting the significant opportunities that could be unlocked by increasing housing delivery during this Senedd term.
The report comes as the newly elected Welsh government commits to ensuring that “everybody in Wales should have the right to a safe home at a cost they can afford”.
However, whilst the Welsh government has set a target to deliver 20,000 new social homes by 2030, there is a lack of focus on the delivery of private housing despite Wales requiring an additional 23,000 market homes during this Senedd term to meet housing need.
Delivering these 23,000 homes for market sale by 2030 could unlock:
- Thousands of new Affordable Homes, backed by £200m of private sector investment through Section 106 agreements
- Around 3,700 school places, backed by approximately £65m invested in new and improved schools.
- Investment in community facilities equivalent to around 110 multi-use games areas or 180 football pitches through £21m invested in open spaces and recreation.
- Around £650m in additional tax revenues to support public services.
The report highlights the link between private market housing and affordable housing delivery. Around one-third of all affordable homes in Wales are delivered by private home builders through Section 106 agreements, with little or no direct government subsidy. Without sufficient market housing delivery, much of this affordable housing supply would not come forward making the Welsh government’s affordable housing ambitions harder to achieve.
Supporting the delivery of private homes would also support the government’s priority to boost economic productivity. Each year, the industry supports £1.1bn of economic output and invests more than £100m in local infrastructure and community amenities through Section 106 agreements and other contributions, including new schools, open spaces, sports facilities, roads and wider community infrastructure. Home builders also support local communities through volunteering initiatives, community projects and environmental improvements that extend beyond formal planning obligations.
The industry currently supports approximately 17,500 jobs across construction sites and the wider Welsh supply chain, while investing in the next generation of skilled workers through more than 200 apprenticeships, graduate roles and trainee positions every year. Delivering the extra homes would create another 12,000 jobs across Wales.
Despite the significant contributions house building makes to the economy and communities across Wales, home builders continue to face significant challenges which means investment may reduce in the coming years. Local Development Plan (LDP) coverage continues to be poor, with 11 out of 25 LDPs expired – meaning many plans contain unviable or undeliverable site allocations that home builders cannot bring forward. Whilst a lack of affordable mortgage lending, rising interest rates and broader economic uncertainty as a result of the war in Iran are suppressing demand.
The commitments in Plaid Cymru’s ‘First 100 Days’ proposals to examine options for reducing planning bureaucracy, extending permitted development rights, developing a new National Development Framework and establishing new development bodies to support housing delivery were welcome. But industry is also calling for urgent interventions to ensure Local Development Plans are in across the whole of Wales, to support demand by extending Help to Buy Wales beyond September and the setting a national all-tenure target for housing delivery.
Neil Jefferson, chief executive of the Home Builders Federation, said: “The findings show that the benefits of building homes go far beyond boosting housing supply. Home building creates jobs, supports local businesses, delivers vital community infrastructure, generates significant tax revenues and helps provide the affordable homes that Wales needs.
“The opportunity is significant, and the home building industry stands ready to work with the Welsh Government to increase housing supply in the years ahead. With the right policy environment, we can deliver the homes, economic growth and thriving communities that people across Wales need.”
Sam Rowlands MS for Fflint Wrecsam, former shadow housing minister, said: “I am pleased to support the Home Builders Federation as they launch their new report on the social and economic impact of home building in Wales. Housebuilding plays a vital role in supporting jobs, apprenticeships and local investment across Wales, whilst also helping to deliver the new homes that communities urgently need. It is important that we continue to look at how planning and housing policy can work more effectively to unlock further delivery.”
Mathew Davies, chair of HBF Wales and managing director of Davies Homes, said: “HBF members stand ready to help the Welsh government achieve its housing targets by delivering high-quality, mixed-tenure developments that include a wide range of affordable homes for the communities that need them most. In doing so, the sector will also help create a strong pipeline of future talent, supported by vocational training and partnerships with further education colleges, ensuring the workforce required to sustain housing delivery in the years ahead.”
Increasing housing supply can also help address energy affordability and climate goals, with Wales having the oldest housing stock in Europe. Around 90% of new-build homes achieve EPC A or B ratings and produce 74% less carbon emissions than older properties, saving households an estimated £420 annually on energy bills.
Since its launch in 2014, the Welsh government’s Help to Buy Wales scheme has helped buyers purchase around 15,000 new homes and supported approximately 11,000 first-time buyer households onto the housing ladder. The data shows that the scheme has significantly increased overall housing supply while helping to reduce affordability barriers, as 64% of participating households had incomes of £40,000 or less.