PM calls for ways to build more homes as bank mulls housing association bond plan
Plans for housing to jump-start the economy
The government is hatching an urgent plan to spark a house building boom after the prime minister turned to the housing sector to help kick-start the ailing UK economy.
The four most senior members of the cabinet have called on officials across Whitehall to examine ‘within weeks’ how more homes can quickly be built to provide an economic boost, but without further government spending.
A senior Whitehall source said: ‘This is really good news as the direct economic benefit of housing and house building has clearly been recognised at the highest level of government. The thrust is how to get more homes without any actual direct investment.’
Options being considered include using government guarantees to encourage private sector investment in housing, and the possibility of using housing association balance sheets to support further development through extending the £1.8 billion affordable rents programme.
The news follows reports that the Bank of England is considering buying housing association bonds as part of a plan to extend its £325 billion economic stimulus programme known as ‘quantitative easing’.
However, Kate Barker, a non-executive member of the Office for Budget Responsibility and author of the influential Barker Report into housing policy in 2004, said she was sceptical about the proposal. ‘I’d be surprised if this this turned out to be the way forward,’ she said.
‘Bonds are pretty well available to housing associations so it makes you wonder what the issue is. Is the problem that they cannot raise the money or is it that the sector needs more subsidy?’
Ms Barker added that the prospect of removing barriers to the launch of social housing real estate investment trusts was more likely to stimulate a building boom.
The vast majority of recent bond issues by housing associations have been oversubscribed, meaning they have had more potential investment available than required.
Issuers have also been able to raise money at historically low rates.
Simon Dow, chief executive of the Guinness Partnership, said the bigger problem for landlords was the continuing absence of long-term bank lending rather than the price of bonds.
Last week chief secretary to the Treasury Danny Alexander convened a meeting with representatives of leading housing associations to discuss how to build more homes.
The G15 group of London-based landlords and umbrella body London Councils have begun work on a report that it will present to government making the economic case for investment in the sector. It is understood that the report will also suggest new ways of funding development.