Our new housing minister faces significant hurdles to make the house building stimulus package succeed
So now the government has finally decided on precisely what it should announce in its housing stimulus package for England, will it actually work?
Gavriel Hollander addresses this issue in greater depth in our news analysis, but the crucial questions for new English housing minister Mark Prisk are as follows.
First, developers have welcomed the move to ease planning restrictions where affordable housing requirements set by local authorities are rendering schemes unviable. The government has also shown house builders favour by injecting a further £280 million into its Firstbuy programme to help an additional 16,500 people onto the housing ladder. This could ensure a further slump in overall housing starts is avoided if developers feel confident that the lack of affordable housing cash from housing associations for a significant chunk of their schemes can be replaced by a resurgence in demand from first-time buyers. This is a big ‘if’, however, and one that Mr Prisk must keep under close observation.
The second part of the housing supply equation depends on the ability and appetite of housing associations to bring forward new schemes. They need to be able to rapidly find replacement schemes for those elements of their programmes which are no longer going to proceed due to the Planning Inspectorate granting developers exemption from building affordable homes. Associations also need to ensure they are able to make best use of the welcome additional £300 million grant funding and any cash which is available through the £10 billion bond programme to be backed by government guarantees.
This brings me to my third point: what appetite will investors have for the £10 billion bond offering? As we report this week, investors such as Legal & General and banks such as Lloyds are far from certain they and their customers like what they hear from government. They worry that the guarantee will simply translate into lower potential returns than they have secured from over £2 billion of housing association bond issues so far this year. As a result investors may well keep their cash in their pockets.
Finally, will the Planning Inspectorate be able to cope quickly enough with the wall of section 106 appeals which are now likely to come its way? It recently took on a further 20 staff to process the anticipated increase in demand due to the new national planning policy framework and the local plans it requires for which the Inspectorate will be the ultimate arbiter.
Contrary to initial appearances, the ingredients are all there for housing starts to rise nicely. There are, however, significant risks to Mr Prisk being able to deliver something that will be to everyone’s taste.