BUDGET LACKS CERTAINTY TO STIMULATE AFFORDABLE HOUSING

With the new Labour Government having delivered its first much-anticipated Budget since it took power in July, the residential land team at Harris Lamb have said that clarity is needed to deliver the volume of affordable homes required across the UK in the coming years.

Ken Phillips, Director of the business’ Residential Land team, said that while positive steps had been taken to support the house building industry, there was insufficient detail thus far to understand how and when funds would be distributed to drive the delivery of much needed affordable homes. 

The Government has pledged to deliver 1.5m homes over its five-year term, promising the ‘biggest boost to affordable housing in a generation’ with an emphasis on the delivery of more homes for Social Rent.

“When you hear that a pot of £3.1 billion is being committed to the Affordable Homes Programme, it sounds like a huge step in the right direction, and of course, it is. In fact, it’s a much higher figure than pre-Budget speculation suggested. However, the reality is that it will actually only deliver an additional 35,000-40,000 affordable homes, which is merely the tip of the iceberg if housing need is to be genuinely addressed,” said Ken.

“Developers are bursting to deliver grant-funded affordable housing schemes, but they cannot gear up without a long-term finance trajectory, and the Budget still does not deliver this. Meanwhile it is well documented that Registered Providers are losing appetite for affordable homes delivered through S106 Planning Agreements and it is becoming an increasing challenge for house-builders to place affordable homes to meet their commitments.”

Ken suggested that an urgent focus on addressing S106 delivery and funding certainty is key if the industry is to gear up. 

“We need to pull resources together to catch up, and quickly. At present, Registered Providers are beleaguered by regulatory requirements, and are diverting finance to existing stock, capped rents, and coping with inflationary pressures. The first casualty is the planned purchase of stock from house-builders. Developers, for their part, want to deliver upon their agreed terms but are increasingly having to renegotiate with Local Planning Authorities, which inevitably leads to an unwanted shift from tenures where housing is most needed. 

“It is very easy to criticise and complain while failing to offer realistic solutions, 

and it seems to me that other initiatives need to be considered to address S106 delivery.

“These could include alleviating Registered Providers’ financial positions via grant funding to support S106 bids that would generate increased social rent revenue, or the establishment of a fund to support S106 delivery utilising the unspent contributions toward such schemes that are currently being held by Local Authorities – the Home Builders Federation this year estimated that the value of these contributions is £817million, which has the potential to deliver 11,000 much-needed homes.

“The key obstacles to house building have been well reported, from shortages in labour and materials and land supply, to the lack of planning department resources. But making sustainable investments in business models to rejuvenate the industry requires not only a focus on policy but financial backing.

“However generous a £3.1 billion short term injection sounds, it does not provide the boost to the generational output promised. The new Affordable Homes Programme needs to be mapped out with detailed timescales and volumes as a matter of urgency so Registered Providers can plan accordingly.”