Do property developers and the construction sector need an overhaul?


Has the House of Lords hit the nail on the head or hammered its own thumb?

Hot on the heels of the Letwin Review finding that property developers are not guilty of land banking, a House of Lords Science and Technology Committee report has suggested that housebuilders need to embrace innovation to meet new home targets. In particular, the report urges greater use of off-site manufacturing processes.

House of Lords Committee criticises current construction practices

The report first states that it has found the housebuilding and construction sector as incapable of meeting the government’s targets of building 300,000 new homes per year by 2020, due to the way in which it currently operates:

  • It says that traditional construction methods do not offer the capacity to build enough homes
  • The report also casts doubt on the ability of construction companies to create the infrastructure required to support the targeted level of housebuilding
  • Additionally, it suggests that the industry must work towards more environmentally friendly solutions which ‘reduce labour demands’
  • It also cites poor productivity within the sector as a major disadvantage

Pretty damning stuff.

The report agrees with Letwin about labour

While the Letwin Review and this report tackle two different areas of concern, they do share at least one common conclusion: the construction sector is severely short of qualified labour resources. The two parties have different ideas about the solution needed.

Letwin says hire more brickies

Letwin puts forward a solution that would see 15,000 more bricklayers recruited and trained in a fast-track manner. This, his review says, should provide enough manpower to increase the number of homes built, providing it is combined with faster planning permissions and easier access to land.

The House of Lords says use OSM

The House of Lords Science and Technology Committee comes to a different conclusion. Perhaps unsurprisingly, given its focus, the committee concludes that the sector should invest more in technology and innovation. Specifically, it says that housebuilders should give greater emphasis to the off-site manufacture of homes. It believes this is the only way to ramp up completions to the 300,000-per-year target.

OSM – could it be the solution?

The report concludes that OSM will increase productivity, reduce labour demands, and be more environmentally friendly. It notes that take-up of OSM is patchy and limited at present, placing the blame firmly at the doors of developers, saying that the sector generally works with outdated and unsustainable business practices.

It suggests that there should be more collaboration between clients, designers and contractors, instead of the fragmented and distrustful environment from which the sector currently suffers!

But there is still a problem with OSM

It all sounds so plausible, but there is one problem. And it’s a problem that the report acknowledges. The UK labour market is lacking the skillsets required to step up with OSM. People would have to be employed and then trained in areas such as digital, procurement, and site implementation.

So, the report says that OSM would tackle the labour shortage in the construction sector, and then goes on to state that there is a labour shortage in the entire labour market to enable OSM to happen!

Encourage young people to train for OSM

The report says that:

The Government must, therefore, ensure that young people entering the workplace are equipped with the digital skills needed for modern methods of construction, including off-site manufacture.”

The chairman of the committee, Lord Patel, said, “There are clear and tangible benefits from the off-site manufacture for construction which make a compelling case for its widespread use. We heard evidence that OSM could increase productivity in the sector by up to 70%.”

He added, “The construction sector’s business models are no longer appropriate and are not supporting the UK’s urgent need for new homes and infrastructure. The construction sector needs to build more trust and create partnerships so that companies can work together to improve the uptake of off-site manufacture, and the Construction Leadership Council should provide the necessary leadership.

Are Letwin and the Lords missing the point?

We believe that whichever way you cut it, property developers are under serious strain. And whether you build using OSM or traditional methods, you can only build as fast as your sales allow you to – a basic rule of business that neither Letwin nor the Lords appear to fully grasp.

If you want to build more and faster, you must sell more and faster. Contact us at Castlereach by calling 0207 923 5680. Discover how our access to a global database of property investors keen to buy UK property could help you achieve this.

Live with passion

Brett Alegre-Wood

About the Author

Brett has over 20 years experience in all facets of property, he owns various companies centred around property and is the driving force behind the education and training at Castlereach. His companies have sold over £850 million in UK and London property and he manages over 1200 properties through his estate agency chain. Today he shares his time between UK, Australia and Singapore. He is married to Arlene and together they have 4 kids. Brett holds both the Level 3 Property Mark Qualifications for Property Sales and Property Lettings and Management.