Sajid Javid, secretary of state for communities & local government, told the Conservative Party annual conference in Birmingham this week about his three-pronged strategy to step up house-building, which he described as ‘a moral duty’.
He said: “First, today we are opening a massive £3bn Home Builders Fund. This major package will help us build more than 225,000 new homes and will create thousands of jobs up and down the country. It will help us get more SMEs building, encourage custom-builders, and allow developers to build the infrastructure needed to support new housing.
“Second, we will pilot a new initiative: Accelerated Construction on public land. We will take government-owned land and partner with contractors and investors to speed up housebuilding. We will create new supply chains using offsite construction. And we will encourage new models of building to make houses that people want, more cheaply and at pace. These measures will allow us to get started on 15,000 homes by 2020. We will get more homes built, more quickly.
“Third, we will bring forward a package of measures to encourage urban regeneration and to build on brownfield land. We want to radically increase brownfield development and bring life back to abandoned sites. That means delivering high quality housing for families, bringing new energy to our high streets and town centres, abandoned shopping centres being transformed into new communities, and increasing density of housing around stations to build homes that people want to live in.”
He continued: “These three initiatives are just the beginning. We will publish a Housing White Paper later this year, with further significant measures, all helping us towards our ambition for a million new homes by 2020.”
The Home Builders Fund will provide £1bn of short term loan funding. This will be used for small builders and custom builders to deliver 25,500 homes by 2020. This is an increase of £325m over the previous commitment of £525m through the Builders Finance fund and the £150m Build to Rent fund (both of which will now be incorporated within the new combined fund).
The fund will also provide £2bn of long-term funding for infrastructure. This will be used to unlock a pipeline of up to 200,000 homes over the longer term – with the emphasis on developments on brownfield land. This is effectively a re-announcement of the 2015 Large Sites Infrastructure Fund, but with the pot increased from £1.2bn to £2bn.
The Accelerated Construction project will be paid for through £2bn of new public sector net borrowing but is expected to deliver value uplift for the government in the long term, the Home Builders Federation (HBF) said.
Sites within the government’s land portfolio that can be built on by 2020 will be identified, and the government will work with local authorities to help them bring forward their own sites. Government will deliver outline planning permission and undertake the costs of some remediation work to reduce development risks on their sites, and offer support to local authorities to do the same on theirs.
The plans for urban regeneration are largely those have been previously consulted on or are contained within the Housing & Planning Act 2016. While there is a focus on bringing forward brownfield sites for redevelopment there is no return to a “brownfield first” strategy, either explicit or implied, said the HBF.
Industry reaction
The Home Builders Federation (HBF) said that the measures demonstrate that the government is listening to industry lobbyists.
“Moves to speed up the planning process, bring more land forward more quickly and assist small developers are exactly what the industry has been telling government is needed and should build on the increases of recent years,” the HBF said.
“Already output has been increased significantly. The number of new build completions has increased by around one-third in just two years following five years of general decline. 2014/15 saw a 19% year-on-year increase in the number of new build completions recorded in England. However, more is needed particularly to help smaller builders play a part.
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“The number of SME builders has collapsed over the course of a generation due to the complexities and cost of the planning and regulatory systems and a lack of available finance. The House Building Fund, and proposed improvements to the planning system that would in particular assist smaller builders, are welcome steps that should help stimulate a section of the industry that has been frustrated and constrained.
“Additional planning constraints and an influx of regulation has resulted in there being very few new entrants to the UK house building industry for decades. Moves to de-risk the system could help encourage new entrants to build homes, whilst also assisting existing builders increase their own supply still further.
“In May, HBF on behalf of its larger members, signed a joint statement of intent with government committing all parties to look at how further increases in supply could be delivered. Government has today demonstrated it is serious about its commitments and the industry will continue to work closely with ministers to develop proposals so it can continue to grow, and if implemented effectively they should encourage further increases in investment from home builders.
The Federation of Master Builders (FMB) was particularly pleased about the creation of a fund aimed at lending to SME house-builders. FMB chief executive Brian Berry said: "We welcome the government’s renewed focus on house building and its recognition that without a resurgent SME sector, there’s little prospect of the country tackling its chronic under-supply of new homes. The launch of a £3bn Home Builders Fund, a significant part of which will be specifically targeted at supporting small scale developers, will tackle one of the key barriers to SME house builders – a lack of access to finance. One in two local house builders cite difficulty accessing finance as a major barrier to their ability to build more homes, demonstrating the latent potential of a sector that can play a much larger role in tackling the gap between supply and demand of new homes.”
Mr Berry added: “This problem is particularly pronounced for the smallest firms and new entrants. It’s therefore critical that the new fund is made accessible to firms that will not want to engage with lengthy bureaucratic processes. Some government funding schemes have been previously available to smaller developers, but received relatively poor take up due to the perceived complexity of applying, and the challenging timescales for delivery and repayment. The government will need to work closely with industry to ensure that this policy is delivered in a way that is accessible and that enables both existing SMEs and new entrants to make maximum use of such a substantial fund. If the Government get the details of this fund right, we would hope that the anticipated building of 25,500 homes over the course of this Parliament could act as a real catalyst for a much wider revival of SME house builders.”
Melanie Leech, chief executive of the British Property Federation, said: “Plans to use surplus public land to build homes faster and changes to planning rules to help build on brownfield land are both very welcome news, particularly for the build-to-rent sector. Purpose-built rental development mostly takes place on brownfield land and therefore anything that helps with planning will be welcomed with open arms by our sector. We look forward to more details on use of public land and modern construction techniques, which are being embraced by the build to rent sector.”
Lord Porter, chairman of the Local Government Association, said the measures announced were an important step towards increasing the private sector's output.
“Housebuilding is well below the levels required to solve our housing crisis,” he said. “The private sector clearly has an important role to play but it cannot build the homes we need on its own and government measures announced today to create a resurgence of SME builders are an important step towards increasing the private sector's output.
“Councils also support moves to bring forward wider packages of public land that can boost development but must remain able to manage their assets locally as they are best-placed to secure the best deal for local taxpayers.”
Research published by the LGA earlier this year revealed there are a record 475,647 homes in England which have been given planning permission but have yet to be built.
Lord Porter said: “It is important for government to recognise that planning is not a barrier to housebuilding. Councils are approving nine in 10 planning applications yet our recent analysis also shows there are hundreds of thousands of homes with planning permission which are still waiting to be built.
“Tackling this growing housing backlog must be a priority and councils need more powers to encourage developers to build homes more quickly. Allowing councils to set planning fees locally would also allow them to cover costs and continue to develop a proactive planning approach for unlocking housing growth.
“A renaissance in house building by councils is ultimately needed if we are to stand any chance of solving our housing crisis. Councils must be able to replace sold homes and reinvest in building more of the genuine affordable homes our communities desperately need.”
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