GMCA considers direct development following Brexit vote

In a report it said the “growing challenge” of delivering housing due to share price falls among developers, and nervousness among investors means there “may be a case for looking again at the GMCA or local authorities carrying out direct development”. Although GMCA has secured a £300m investment fund for housing under a devolution deal, this money is intended to fund developments by house builders – it does not currently build homes directly.

A spokesperson for the GMCA said it would consider building homes for sale to bring in income.

“Urgent work” is required to look at options for increasing housing development and investment, the report said, as housing completion rates are expected to drop as the share values of developers have decreased since the Brexit vote.

The report, published on 29 July, said “one-size-fits-all policy approaches” which attempt to address the “very different problems” in London and the South East “have not been working”.

“Brexit is likely to exacerbate these problems,” it added. It said government housing policies following economic downturns have “tended to stimulate demand, maintaining high prices in the South East, rather than directly providing more resources for building homes”.

The future of the region’s commercial property and infrastructure fund – the Evergreen Fund – is in doubt. The report said: “There is an immediate risk to property investment because the current uncertainty of European Regional Development Fund funding means that it is possible that we will not be able to access the funding required to extend the Evergreen Fund as originally planned”.

The combined authority is widely seen as the forerunner of the devolution deals agreed with the Treasury, and recently signed off on a memorandum of understanding between 27 housing associations and the 10 local authorities to jointly invest in housing and review the role of the social rented sector.

It has agreed a devolution deal, including a £300m housing investment fund. Under this recoverable fund, cash will be loaned out and repaid two and a half times over 10 years, creating £1.5bn of funding in total. The funding will be used primarily to fund market sale and private rented housing.