Land for equity deal part of £1.5bn fund
Public land is to be offered to builders in return for an equity stake in developments, as part of plans to spend the extra £1.5 billion for housing announced yesterday.
The scheme is one of four ways in which the money will be allocated by the Homes and Communities Agency, which is tasked with delivering 20,000 homes over two years through the investment.
The public land programme will see the HCA and other public sector organisations offer land to developers in exchange for an equity share. This particular aspect of the plans is designed to deliver 500 homes ‘initially’ and bring new players into the house building market.
The remaining 19,500 homes will be delivered through the extension of existing schemes.
Up to £750 million will go into the National Affordable Housing Programme to be allocated to the HCA’s existing development partners, which will be expected to produce and extra 12,500 homes.
Up to £500 million will be added to the £400 million kickstart fund, which helps get work moving on stalled developments. This is expected to contribute 4,000 homes on top of previous expectations.
The remaining £250 million will go to local authorities, to build 3,000 homes. This is on top of a £100 million fund for the same purpose, which was announced in the Budget.
Prime minister Gordon Brown announced the £1.5 billion investment in housing yesterday, as part of a range of reforms set out in a policy paper, Building Britain’s Future.
HCA chief executive Sir Bob Kerslake said: ‘We are well prepared for this. We have had an excellent response from our housing association and developer partners to our flexible grant rates through which we were able to fully deliver our programme last year, and the response to our existing £400 million kickstart programme has also exceeded expectations.’
The HCA said it received 305 bids for the existing kickstart scheme, but would not give the value of the bids.
Successful bidders for the existing £100 million local authority fund are expected to be announced in September.
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Readers' comments (3)
Andrew Fiske | 30/06/2009 4:45 pm
Just read on the HCA's website that they are committed to a programme of public house building - perhaps that's the answer build more pubs.....
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Mr. Sharabi | 30/06/2009 6:38 pm
Build more pubs? That suits me to the ground (hic). Why wont the government move away from this dreaded equity stakes model? People either want to rent, or buy outright. Creating this grey area in the middle, and then reinforcing it with taxpayer money, just seems to me as an attempt by the government and developers (with government and bank officials on board) to further inflate a naturally deflated housing market. The answer is simple, increase housing supply for outright sale at affordable prices (using government / taxpayer money to create the subsidy) and the demand shall be quenched, and we will all see the vast majority of house prices stabilise to affordable levels on a national scale.
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Harry Lime | 01/07/2009 10:16 am
Doesn't surprise me at all they're moving for this model, and I think it's far more sustainable, and gets more units for their cash. The Kickstart scheme suggests developers offer "Homebuy Direct" i.e mortgage for 70% and govt and builder share the 30% Builders prefer this as they think they'll get a "better" class of person who can afford the 70% in the current market and as the market (hopefully) picks up it's easier to sell the full price houses on a scheme if the only affordable units they'll be surrounded by is this sort of shared equity. Councils will have to be on their guard as many developers when the market improves will try to argue this is the only type of affordable housing they should provide and try to squeeze out social rented.
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