As the construction industry continues the journey towards Net Zero, the twin pressures of climate change and the housing crisis have prompted a remarkable evolution in recent years. With the need to adopt more sustainable building materials, timber has emerged as a viable alternative to traditional construction materials – and the structural timber sector is well placed to serve this growing demand. Here, Andrew Carpenter, of the STA, explores the development of the structural timber sector and provides insights into its outlook for the future.

Industry Analysis

The market for the structural timber sector is incredibly promising. The global construction industry’s growing emphasis on sustainable practices, coupled with the increasing adoption of timber-friendly methods of construction, is expected to drive market expansion further. As governments and organisations in the UK adopt stricter environmental regulations, the demand for sustainable construction materials like timber continues to soar.

There is a very real opportunity for timber frame to outperform the housing market and to increase its market share in the UK. The Scottish market is clearly the most developed market within the UK when it comes to the use of timber frame, and it has a long tradition of using the material. According to an NHBC HMI Report in 2019, 92% of homes in Scotland are built in timber frame, equating to around 23,000 units. While that percentage is significantly lower in England at just 9%, the volume of units does not have the same disparity, with almost 14,000 homes being built in timber frame. In the more recent NHBC HMI Report in 2022, the trend shows an absence of any significant uplift in timber frame in England, which is surprising as we might have expected this, given the desire to see work shifted off site. Meanwhile in Scotland, it is becoming increasingly rare to see any other form of production than timber frame.

This signifies not only the massive scope for building in timber frame, but that there is a clear appetite for the material. Government initiatives to promote timber construction, such as financial incentives, streamlined permitting processes, and educational campaigns, further contribute to market growth.

Indeed, the role of the UK Government cannot be overstated for the future of the timber market, and with a new government party likely in the next general election set for January 2025, housing will be at the centre of everyone’s manifestos. However, looking to the current Government, their main objectives for the early part of 2023 involves enhancing the quality of social housing. The £12 billion Affordable Homes Plan remains a significant focus, with ongoing developments concerning the role of Homes England, which is undergoing rapid changes. Homes England, with its £7.5 billion funding allocation, actively promotes Modern Methods of Construction (MMC) and places great importance on the carbon agenda.

However, there is growing concern within the sector, as several Housing Associations are taking action against what they perceive as a flawed financial model. Failed mergers and the continuous stream of maladministration judgments from the Housing Ombudsman indicate that there may not be a significant improvement in the number of homes being delivered.

Housing Shortfall

The ongoing supply-demand imbalance continues to be a significant concern for both the government and individuals seeking quality homes in all sectors: private, rental, and affordable. This issue is not limited to major cities, and given the current market conditions, it is unlikely to be resolved without a more substantial and proactive strategy to address these challenges directly. Housebuilders in the UK are particularly worried about planning-related issues and the authority granted to local councils to reject development projects. Additionally, the removal of local-level house building targets has raised further concerns.

Recent data released by the Department for Levelling Up and Housing and Communities (DLUHC) in April 2023 revealed that planning applications in England reached their lowest point in 16 years. Local authorities received approximately 409,459 planning applications in 2022, representing a decline of around 14% compared to the previous year.

The Home Builders Federation (HBF) has published a report indicating that housebuilding in England is expected to decline to its lowest level in over 70 years. Stewart Baseley, Executive Chairman of the HBF, warned that the increasingly anti-development policy environment poses a genuine threat to housebuilding.

New Investments

Despite a decline in overall housebuilding, there are encouraging developments in the timber frame sector. Taylor Wimpey’s recent announcement of investing in its own timber frame manufacturing facility in Peterborough means that the three largest housebuilders in the UK now possess in-house manufacturing capabilities. Additionally, Barratt Homes has made investments to expand the capacity of the Oregon Timber Frame facility in Selkirk, while also establishing a new manufacturing site. In one of the more recent developments, CALA Homes has acquired Taylor Lane Timber Frame, and they have stated that the purpose of obtaining the business was as a means to ‘progress towards their sustainability targets and support delivery of the group’s ambitious growth plans in the South of England’.

These developments serve as a clear indication of the advantages that timber frame construction brings to the UK housebuilding industry, enabling efficient delivery of housing at volume while aligning with the government’s carbon reduction targets.

Although the government, through the DLUHC, maintains its commitment to delivering 300,000 homes annually by the mid-2020s, analysis from the HBF predicts that England will see less than 120,000 housing starts per year. Furthermore, in December 2022, Michael Gove weakened the DLUHC’s local housing targets, granting more flexibility to local councils. On April 13, 2023, in an interview with Conservative Home, Rishi Sunak acknowledged the “effectively ditching” of housing targets due to pressure from Conservative Party members, suggesting a new planning policy that grants more local control. However, emerging evidence suggests that this reversal may not be the case and, unfortunately, this procrastinating only serves to create further uncertainty in the market.

Positive outlook

A coming together of those within the industry will be essential to growth in a challenging 2023, but with keen collaboration and a continuation of building relationships with investors and insurers, the industry stands in good stead for success.

The outlook for the structural timber market certainly remains challenging but positive. The wider construction industry must address climate change if the UK is to meet its commitment to net zero by 2050, and adopting more widespread use of structural timber remains the surest way of both meeting this environmental goal and overcoming the challenges facing the housing market.

For more information about the STA please visit: www.structuraltimber.co.uk  

Full article on page 60

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