The £3bn Affordable Homes Guarantee Scheme is welcome, however there are calls for a new longer-term ‘infrastructure style’ funding model to be introduced for affordable housing to address the housing crisis. And what about the lack of funding provision for under-pressure local services? LABM garners opinion from across the sector to the Government’s Spring Statement.
Challenges facing public services
Responding to the Spring Statement, Lord Porter, Chairman of the Local Government Association, said: “The Government acted on our calls to find extra one-off funding for councils this year in the last Autumn Budget, including for social care, potholes and high streets. With councils still facing a funding gap of more than £3bn in 2019/20, it is disappointing that the Chancellor has missed the opportunity to use the Spring Statement to provide further desperately-needed funding for our under-pressure local services this year.
“The money local government has to maintain the services our communities rely on is running out fast and huge uncertainty remains about how local services will be paid for into the next decade.
“Last year’s Autumn Budget was the earliest for a number of years but was still held at the end of October. The Government’s plan to publish the Spending Review alongside the Autumn Budget this year could exacerbate the funding challenges facing councils and will severely hamper their ability to plan ahead for next year and beyond. It is vital that the Government publishes the Spending Review much earlier and ensures it genuinely secures the financial sustainability of councils.
“Now is the time to invest in our people and our places.
“Brexit cannot be a distraction from the challenges facing our public services. If we truly value our local services then we have to be prepared to pay for them. Fully funding councils is the only way councils will be able to keep providing the services which matter to people’s lives, continue to lead their local areas, improve residents’ lives, reduce demand for public services, and save money for the taxpayer.”
£3bn guarantee scheme welcomed, however new money needed in the next Spending Review to deliver more social housing
James Prestwich, Head of Policy at the National Housing Federation said: “We welcome the announcement of a £3bn guarantee scheme, which we called for in the Autumn. It will help housing associations borrow more cheaply and therefore build more homes. However, whilst this is an important contribution, we desperately need new money in the next Spending Review to build more social housing.
“This is more crucial than ever in the midst of Brexit uncertainty — the lack of affordable housing is now pushing hundreds of thousands of working families to the brink — the number is rising year on year, many are living in debt, at threat of eviction or homeless.
“We need to build 145,000 affordable homes every year to house these people – this is not a one off investment, the government must commit billions of pound every year into building more social housing. We hope, as the Comprehensive Spending Review approaches, the government will see sense and commit the significant investment needed into social housing.”
Terrie Alafat, Chief Executive of the Chartered Institute of Housing (CIH) added: “We welcome the Chancellor’s £3bn affordable homes guarantee scheme to support the delivery of 30,000 new homes. A previous scheme that allowed the Government to underwrite borrowing by housing associations to fund affordable housing delivery worked well, so it’s good news that it is coming back. We have always said this would be a sensible and positive move. We need to see the details of the scheme, but the key question is whether the homes being funded are genuinely affordable, especially considering that we need 90,000 new homes per year at the lowest social rent.”
Bjorn Howard, Group CEO of Aster Group, commented: “The new £3bn fund is a vitally needed sign of support for affordable housing. Having the right mix of homes in the market is crucial to meeting the needs of those people who are most acutely affected by the housing crisis. The Government has acknowledged that and the investment announced in the Spring Statement should help fuel affordable alternatives to expensive private rent and traditional ownership.
“It was also positive to see the Government recognise the need to unlock land in areas of the south of England like Didcot through the £717m housing infrastructure fund.
“Housing associations will continue to play an important role in building more homes and we look forward to hearing more detail on how this affordable housing fund will be delivered.”
Mark Dyason, Managing Director of the development finance specialist, Thistle Finance: “The political climate may be highly febrile, but the housebuilding sector as a whole will have applauded the Spring Statement. The introduction of a new £3bn Affordable Homes Guarantee scheme will be music to the ears of developers, as the target of 30,000 additional affordable homes could further drive activity levels across the sector.
“That said, some might argue we need to be closer to hitting the Government’s current affordable housing targets before piling more pressure on the development market, which is already struggling to find enough skilled workers.
“Of course, even a Guarantee scheme may not be enough to convince some developers to change their investment decision in the current environment.”
New funding deal required
The G15 house around one in 10 Londoners, manage 600,000 homes nationally and are the biggest providers of affordable homes in the capital. Ahead of the Comprehensive Spending Review planned for later this year, the Group is calling for longer-term, ‘infrastructure’ style funding for affordable housing to help tackle the country’s housing crisis.
Paul Hackett, Chair of the G15 and Chief Executive of Optivo housing association, said: “Brexit uncertainty and the deepening UK housing crisis underlines the need for longer-term funding for affordable housing. The new funding announced for the affordable homes guarantee programme is welcome, but our sector’s cross-subsidy model of delivering affordable housing is broken and a new funding deal is imperative if the Government wants to hit its target of 300,000 new homes a year.”
“The Government must invest in this essential infrastructure to give the country the high-quality, genuinely affordable homes it needs.”
Supply of new homes biggest problem
Joseph Daniels, CEO of modular smart homes provider Project Etopia: “The Chancellor earned the nickname Spreadsheet Phil because he’s hot on his numbers, and his initiatives for new housing provision are a clear acknowledgement of the housing market’s staggering lack of them.
“Supply of new homes remains the country’s biggest problem so the Government’s previously declared shift away from Help To Buy towards these new promises for tens of thousands of new homes represents a telling and important shift in ministers’ chosen strategies to solve the housing crisis.
“Help to Buy has been a popular and successful initiative to give first-time buyers a leg up onto the housing ladder, but as a demand-side solution it would never have provided the antidote that only building can.
“Recent initiatives to help first-time buyers onto the ladder, including stamp duty relief, only work if there are enough houses for them to buy in the areas they want to live in.”
More work needed to future-proof homes
The Chancellor Philip Hammond announced in the Spring Statement that, from 2025, all new homes will be future-proofed as standard, with ‘low carbon heating and world-leading levels of energy efficiency’. In response, Caroline Russell AM, Chair of the London Assembly Environment Committee, said: “We welcome the move towards new homes that do not rely on fossil fuels. If we are to challenge the impact of this climate emergency then the Government needs to lead the way with the toughest standards.
“However, the measure does not go nearly far enough. We need to confront the homes in the capital that do not meet even the most basic energy efficiency requirements as well as those which are failing to keep pace with modern ways of living.
“Our latest report Keeping Out The Chill calls for a widespread campaign of smart retrofitting that will save money, keep homes warm and dry and cut the amount of carbon-fuelled energy that is simply wasted.”
More costs and more delays will hamper housebuilding, warns FMB
New biodiversity measures will result in more costs and more delays for the nation’s small and medium-sized (SME) housebuilders, worsening the housing crisis, warns the Federation of Master Builders (FMB).
Brian Berry, Chief Executive of the Federation of Master Builders (FMB), said: “The Chancellor claimed to support housing delivery but actions speak louder than words and the burdensome and poorly thought-through biodiversity targets for developers will bring yet more costs and more delays for builders. Just as the environment for SME housebuilders starts to improve, these measures could end up stalling our progress. The Government wants to make developers, large and small, increase the biodiversity on their sites by a whopping 110% and for an average site of 10 units, the additional cost could be in excess of £2,000. Needless to say, this would also create delays to projects by adding additional hurdles for builders to negotiate during the already bureaucratic planning process.
“Rather than hampering the building of new homes, if the Government wants to be ‘more green’, it should focus instead on retrofitting the more than 24 million homes that have already been built and which account for around one fifth of the UK’s greenhouse gas emissions. This will not only help reduce the UK’s carbon footprint but will also tackle the scourge of fuel poverty.”
Strategic housebuilding plan needed
Phil Spencer, property expert and co-founder of Move iQ, commented: “Any boon to Britain’s chronic housing shortage is, of course, not to be sniffed at — but the Chancellor’s plans simply do not go far enough. Britain needs a long-term, apolitical and impartial plan to build the homes we so desperately need and not short-term soundbites to keep prospective voters happy.
“Sorting out Britain’s housing crisis will not be a quick-fix; and certainly won’t be accomplished over any one Government’s time in power.
“It’s time that housing experts were brought into the process of developing a strategic housebuilding plan — one that can’t be with tinkered with for the purpose of gaining votes every time a General Election is on the horizon.”
GSHPA welcomes move to end fossil fuel heating in new homes
Bean Beanland, Chairman of the Ground Source Heat Pump Association said: “The GSHPA welcomes the Chancellor’s announcement in his Spring Statement to end fossil fuel heating in all new homes from 2025. The ground source heat pump industry is ready to meet the challenge with a proven and efficient technology that can deliver to homeowners and tenants the lowest operating cost and carbon solution.
“We look forward to working with the Government and others to make this a reality by contributing to the training and standards that will be required to ensure the strongest possible consumer confidence and protection in this growing market.”
Spring statement offers little optimism as Brexit uncertainty reigns — comment from BLP Insurance
Kim Vernau, CEO of BLP Insurance, comments on the Spring Statement: “It is positive that the Ministry of Housing, Communities and Local Government and Homes England are focussing on land resource and release through much needed planning reform. However, there remain critical issues to be addressed, none more so than the Mayor of London’s 50% social housing requirement. This ill-conceived plan has resulted in a crisis in housing development in the capital and is squeezing developers’ profit margins in an already stagnant market. Its actual impact is that we will not reach any housing targets, be they affordable, social or market value numbers in the medium-term.
“While the measures announced may bring some short-term optimism, the medium-term outlook is far from rosy. Concerns persist in respect to contractors, the sustainability of their margins and of course the spectre of a no-deal Brexit. All this contributes to the current feeling of unease among investors in an industry that craves an end to uncertainty and a clear course of action.”