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Is the NHF really calling for £42bn more in housing grant?

Following reports that the National Housing Federation (NHF) wants £42bn of grant for new affordable housing across the 2020s, we take a look at what the organisation is actually calling for.

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Is the NHF really calling for £42bn more in housing grant? #ukhousing

Following reports that the NHF wants £42bn of grant, we take a look at what the organisation is actually calling for #ukhousing

If you read yesterday’s FT you may have thought the NHF was getting a bit greedy. “Housing associations call for £42bn to build social homes”, ran the headline. Even spread across the next decade, this would mark a significant uptick in social housing investment.

But the NHF’s ask is actually a little more nuanced.


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Based on a paper from Heriot-Watt University, the NHF believes the country needs 145,000 affordable homes (of a variety of tenures) each year to meet demand. Building these homes would cost – in total - £8.1bn a year in grant.

But there are other ways of funding affordable housing than grant. Half the homes can be delivered through affordable housing contributions in the planning system, leaving an annual bill of just over £4bn. This is where the £40bn annual bill comes from (plus the £2bn announced by Theresa May from 2022 for strategic partnerships).

But even with this £40bn price tag, there is another way suggested to fund the homes beyond simply writing a cheque. The organisation suggests that if 40% of ‘land value uplift’ could be captured, this would provide an additional £1.6bn a year – taking the ask for government down to £2.4bn and much more in line with current spending.

Land value uplift means the increase in value applied when a piece of land receives planning permission for development. Agricultural land, for example, becomes 275 times more expensive once it receives planning permission, even before a single home is built. A tax on this increased valuation could, the NHF is suggesting, raise substantial amounts to fund new affordable housing.

Therefore, with these measures, the NHF is actually calling for £2.4bn a year – or £24bn over the decade – a figure which may be more palatable to Treasury bean counters trying to balance out the many competing demands.

This is not all the NHF is campaigning for. It’s submission ahead of the Autumn Statement seeks a government commitment to deliver 50% affordable housing on public land – a policy which is currently in place in London via mayor Sadiq Khan’s London Plan.

This would involve directing Homes England to build a 50% target into its land disposal and development programme, as well as introducing the target into the remaining years of the Public Land for Housing Programme which runs until 2020. A change to guidance to “reassure” public bodies that they can set a price for housing which takes this into account is also suggested. This does mean selling public land at a lower-than-maximum value.

“All else being equal, prioritising delivery of 50% affordable housing would yield lower overall receipts from land sales, which we recognised would need to be accounted for,” says the NHF in its Autumn Budget submission.

“This could in part be achieved by Homes England and public agencies retaining equity stakes in schemes to generate future income and capital receipts.”

These are the ideas the NHF is currently pushing for. We may get an indication in the Budget later this month whether the Treasury is in the mood to listen.

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