The Chancellor has announced a new tranche of funding for housing in the Autumn Statement in a bid to boost the supply of homes across the country.
Detail is light on how the funding will be used and applied, although we expect more detail to emerge in the Housing White Paper which is due to be released ‘shortly’ – there had been some expectation that it would be published today.
All of the new funding announced by Mr Hammond is welcome – especially the additional funds for affordable homes. Affordable homes make up a proportion all new homes built on almost every residential housing scheme across the country. The injection of funding into this part of the market will help the development economics for the whole market, which in turn could further boost supply.
The Government’s recognition of the importance of the interplay between infrastructure and housing is also very welcome, and mirrors the recent move away from ‘reverse engineering’ housing onto large-scale infrastructure schemes, and instead moving housing to the centre of the planning and preparation of such projects.
In the Autumn Statement, Mr Hammond announced:
- Some £2.3 billion between now and April 2021 up for grabs for local authorities to help provide infrastructure to ‘unlock’ development by housebuilders and developers. The money will come out of the £23 billion which has been allocated to a new National Productivity Investment Fund (NPIF), but the majority of the investment in housing infrastructure has been allocated for 2019 onwards.
- An additional £1.4 billion in grant funding for Housing Associations, Registered Providers and other providers to deliver affordable homes – this is expected to fund an additional 40,000 homes over the next five years or so. These affordable homes can be one of three different options: Affordable Rent, Shared Ownership or Rent to Buy, and there will be more flexibility about the sums allocated to each form of housing. This money is a ‘bolt-on’ to the Affordable Homes Programme which George Osborne augmented in the Autumn Statement last year, doubling the grant funding to £2 billion a year for 2018/19 and 2019/20 – and taking the total to £4.7 billion. The grants will be administered by the HCA.
It is noticeable that there was no mention at all of Starter Homes in the Autumn Statement. This was a flagship announcement by the Conservatives in 2014, but there has been little discussion of the scheme, which would allow private homes to be sold at a 20% discount for five years and to be classed as affordable homes. One perhaps to watch out for in the White Paper.
Justin Gaze, joint head of Residential Development at Knight Frank, said of the Autumn Statement: “Today’s housing and infrastructure announcements made by the Chancellor show renewed support for the house building sector, legislation which will positively benefit the development of new homes in the long term. Not only will they deliver more much needed affordable housing in its own right, but also act as a stimulant in creating additional private homes on schemes where there is a significant affordable housing element. The fact that the Government is supporting affordable housing again must be seen as positive.
“Yet, the key to safeguarding the successful allocation of the pledged £2.3bn housing infrastructure fund is to ensure it is spent in sustainable locations, where there is a real need for improved connectivity and demand for housing.”
As Mr Hammond said in his speech, recent data shows that the overall delivery of homes across the UK has been rising, with net supply of homes in England rising to nearly 190,000 in the year to April 2016 – notably closer to the Government’s 200,000 a year target. However, there is still some way to go to match demand. The Government’s own figures show that some 220,000 additional households are created every year across the country, while some estimates say the annual delivery of new homes should be closer to 300,000 a year to make up for a long-term historical shortfall in homes.