Homes England ‘open’ to discussing grant rates as it hints at more funding for low-interest loans

In response to a question about the subsidy required to build social homes, Mr Islam said: “We don’t publish grant rates, and never have and won’t do [in the future].

“But based on the intel that we have... you can put your best bid to us.”

The affordable housing director said that as a “steward of public funding” his role is to “push value for money”, meaning he will be working with providers to understand why they have bid for a certain grant rate and how they might reduce it.

When asked about ensuring that the same “rules” are applied across his team when assessing bids, Mr Islam said the programme has remained national to ensure “consistency in terms of decision-making”.

“But it’s not to say that we’re not listening to you as partners in terms of some of the issues that you’re facing on a site by site basis,” he added.

He told attendees that under both the continuous market engagement and strategic partnership routes for the £27.2bn SAHP, providers can “talk to us around those grant rates”.

Mr Islam continued: “I think it’s more about being open with us. You may think that as a delivery agency my team and I are on your back all the time to deliver, [but] at the same time none of us want homes not being completed or stalled.

“We’re always here to support partners to make sure we can continue to unlock difficult sites, and if conversation around the grant rate is needed, we’re open to talking about that.

“I think the conversation is about you presenting us with a case [that] this is the grant you need to build the home, and then we’ll take it from there.”

The affordable housing director was also asked whether the sector can expect more low-interest loans on top of the £2.5bn announced at the Spending Review, which was described by one attendee as a “drop in the ocean”.

He responded: “If the programme goes well, there’s always the opportunity to go back to the Treasury and ask for more funding, and I think the National Housing Bank structure allows us to make that case to government more strongly.

“You’re right, £2.5bn isn’t enough, but I think it’s the first time that affordable loans ability has been targeted at the social housing sector, so I’d say it would be good to understand the lessons learned from the first wave of allocations, and if it does land well then we’d look to go back to government to get more.”

On the interest rate providers can expect, Mr Islam said: “I can’t confirm the exact percentage, but I understand it will be quite competitive for the sector.”

He also explained the agency’s approach to Section 106 homes, stating that the separation from grant funding will not change and is designed not to increase prices.

“This is why I think the separation between the grant programme and Section 106 exists, so we’re not artificially creating a market that inflates prices.

“Some of you may see this as delay but we see it as time to think through a policy measure that doesn’t distort the market.”

Mr Islam said Homes England is waiting to see what the government confirms on policy measures to support the Section 106 market, which is expected “shortly”.