The need for a new strategy on housing is clear, what it should contain is less obvious
Spurred into action
On 21 November last year the government launched its first housing strategy for England.
Since then housing starts have continued to struggle and, although there are 3.8 per cent more first-time buyers than a year ago, this does not represent the desired economic fillip. It is understandable therefore that the Communities and Local Government department has this week taken further steps to spur stalled schemes and is casting around for ideas for an economic stimulus package expected in the autumn. This will be alongside an updated housing strategy. So what should government do to get more homes built?
On planning, the focus on the 75,500 homes on 1,411 stalled sites across England is sensible. Renegotiating the planning deals struck on these schemes may result in fewer affordable homes, but something is better than nothing. The impact this will have on projects that aren’t stalled but are currently being planned is perhaps more important.
Section 106 homes are generally bought without grant by housing associations at a discount on their market price due to the value of the bulk purchase deal and certainty of income to the private developer. The level of this discount varies but it effectively replaces subsidy and, as such, increases the development capacity of the association elsewhere. If fewer section 106 homes are agreed in future, the fewer affordable homes developing landlords will be able to build. This has real implications for the Homes and Communities Agency and its current and future programmes, as around a quarter of its current 80,000-home plan is made up of section 106 properties.
The other aspect to the proposed stimulus package is government intervention by the use of guarantees to lower the cost of borrowing for housing associations. The most likely area for this is in bond finance. The fact the government is prepared to put its neck out to back associations in this way is excellent news. The problem, however, is that it is far from clear that cheaper borrowing will result in more homes being built.
Officials are still scratching their heads on this so it’s definitely one to ponder on holiday - the CLG would welcome any postcards with answers.
Stuart Macdonald is editor of Inside Housing