The Homes and Communities Agency (HCA) Director Terry Fuller, responsible for the east and south east of England, has said that builders will be offered a buy now, pay later scheme on all public land released by the agency in the south east.
Under this scheme, developers are given public land at no up front cost, reducing the financial burden and risk of starting a project. In most cases, payment for the land will be made after the houses are complete and the hope is that many more projects will get up and running because of the scheme.
The target, through collaboration between the HCA and local government departments, is the release of enough land to build 100,000 new homes by 2015.
At a seminar in the first week of July organised by East 7 (a group of developing housing associations based in eastern England), Mr Fuller said of property developers:
“They don’t have enough money to buy all the land they want,’ he said. ‘This is a mechanism to stretch their finances a lot further. I’m not so much hung up on disposal of land as delivery of homes.”
He reputedly reinforced this comment by saying that the money developers have to spend on developing homes has halved in the four years between him leaving Taylor Wimpey and joining the HCA.
As a result, he stated that he was keen to also explore equity share on all sites under his control to get more homes built and improve affordability for buyers struggling to get mortgages. This would allow buyers who would struggle to get a mortgage on the full value of the property, to buy only a more affordable share in its tenure, whilst the rest is held by the developer and paid for through a rent.
‘Most of these sites probably haven’t been developed for a reason; HCA will work with you to ensure these sites are delivered.’ He commented.
The HCA have since supported the statement of its Director in certain locations. They have not, however, supported it as an option across all sites. They stated:
“We will support the deferred receipts model where it is good value for money. For some places it isn’t going to work, but it is one of the preferred models.”
For more information on the build now, pay later scheme, and to read the Communities and Local Government’s useful pdf guide, visit the HCA’s own website here.