December 6th, 2019. Luke Egan
Could Redistributing the Houses of Parliament Refurb Budget Solve the Housing Crisis?
The House of Parliament and Palace of Westminster will soon be refurbished to safeguard this landmark for future generations – something most would agree is of national importance. However, with a budget set at an eyewatering minimum of £4bn, this got us thinking…
If redistributed, or matched, what national crises could be solved? Could the much-discussed housing shortage be solved? Could we beat homelessness in the UK?
We’ve crunched the numbers, done the research, and examined the plans.
Read on to find out what we found.
Solving the Housing Deficit
Although 430,000 affordable homes have been built since 2010, Shelter estimates a 3.2m deficit of homes in the UK, meaning we’re still a considerable way off providing the entire population with affordable housing.
But, what if that £4bn Houses of Parliament refurbishment budget was redistributed?
Well, using internal data, we calculated it costs just over £99,843.75 to build a 3-bedroom home in the UK. That would mean over 40,000 new properties (40,062) could be built and almost 121,000 people (120,186) homed* with a budget the same as the Houses of Parliament repairs.
Ben Lloyd, Managing Director and Co-Founder of Pure Property Finance, said:
“As development finance specialists, we deal with professional developers every day and are well-aware of the demand for affordable housing across the UK and the influence Brexit is having on borrowing.
“Although we would never suggest cancelling the refurbishment of such a prized national monument, we were shocked to see how matching the refurbishment budget could help towards solving the deficit.
“We placed millions of pounds of commercial property finance last year and will continue to ease the affordability and process of building across the UK for the foreseeable.”
Supporting the Homeless
According to local authorities, the number of people sleeping rough across England has been steadily rising since 2010, with 4,677 in 2018.
However, Chair of the UK Statistics Authority, Sir David Norgrove, stated that the figures were untrustworthy due to inconsistencies between local authorities’ methodologies.
Shelter estimated the number of recorded homeless to be more like 320,000, which highlights a large disparity between the number reported and the more ‘realistic’ figures. The report noted 170,000 people were without a home in London alone.
Polly Neate, CEO of Shelter, stated:
“It’s unforgivable that 320,000 people in Britain have been swept up by the housing crisis and now have no place to call home. These new figures show that homelessness is having a devastating impact on the lives of people right across the country.”
So, returning to our research…
If it costs just over £99,000 to build a 3-bedroom home in the UK, building a home for each homeless individual reported by local authorities would come to just £466m (£466,969,218).
However, we should remember that the government estimated figures are widely discredited. Based on Shelter’s figure of 320,000 homeless individuals and the £4 billion budget, 40,062 homes could be built. If three people were placed per household, this would house over a third half of the 320,000 homeless individuals (37.5%).
As well as providing a permanent address for over 120,000 rough-sleepers, this could also boost the economy by giving these individuals the opportunity to return to work.
City Population Vs. Percentage of People That Could be Rehomed
With the housing deficit numbers ringing in our heads, we decided to take our research one step further…
We gathered the population statistics for every UK city and compared them against the number of homes that could be built with the £4bn the government plans to spend refurbing the Houses of Parliament.
The charts below show the number of cities that could be completely rebuilt with £4bn worth of government funding*. You could rehome the entire city of Oldham and almost all of Colchester, Burton upon Trent and Saint Peters. This could see new towns and cities being built across the UK.
*Based on three people per household.
Due to lower population sizes, you could rehome the below cities, under the same principles almost four times over.
Below, you can see that £4bn could pay for 2% of the country’s capital to be rehomed in new accommodation, whereas major cities such as Edinburgh and Leeds could also show significant rates.
Based on data obtained from Shelter, with £4bn of funding to build over 40,000 new homes, 71% of the 170,000 people living on the streets of London could be granted a full-time address.
Furthermore, the homeless population of all non-London regions could all be housed, with an additional 10,120 homes that could be built on top of this.
Let’s Chat Development Finance
Regrettably, it’s unlikely the UK government is going to plough an additional £4bn into building. But that doesn’t mean funding isn’t available.
At Pure Property Finance, we match our clients with millions of pounds in finance each year – a vast majority of which goes on to pay for housing developments and refurbishments. So, if you want to do your bit to tackle the housing crisis, and hopefully make a small profit in the process, get in touch with our team of friendly and knowledgeable development finance brokers to discuss your specific needs.
Pure Property Finance conducted research into the average cost to build a standard size home. This figure was calculated by working out the average cost per square foot to build a home for Pure Property Finance clients; £112.50, this excludes the cost of purchasing land. This was then multiplied by the sq ft of workable floor space of the average 2/3 bed small-large terraced house popular with first time buyers. This gave us a figure of £99,843.75. Based on the Houses of Parliament refurbishment cost of £4 billion, this would produce 40,062 homes, should the funds be reinvested or matched.
Based on public research, there are estimated to be 320,000 homeless people in the UK. Provided three people are housed in each new home built, this would close the homeless gap by 37.5%.
Article By Luke Egan
December 6th, 2019
Luke heads up our specialist property finance team where his focus is to drive our transactions valued between £100k and £5m.
Luke and his team manage enquiries from initial enquiry through to redemption. Luke also sits on the internal credit committee with Ben and Tom.
Luke joined Pure back in 2014 following a successful role in the Barclays property finance team that lasted over 8 years.See more articles by Luke