Government Spending Review Roundup – Substantial Investment could lead to 20 year building rate high

At the heart of the Government Spending Review announcement (made on 27th June 2013) is a £3.3 billion programme to deliver thousands of new affordable homes across the country. From 2015 the Homes and Communities Agency (HCA) and the Greater London Authority will work with housing providers to build 165,000 affordable homes over 3 years, potentially creating thousands of jobs. That would, they claim, be the fastest annual rate of building for at least 20 years.

The extra investment means that, including the HCA homes, the government will start construction of up to 200,000 new affordable homes in the 4 years from 2014-15. If all goes as planned, they would deliver more new build affordable homes than the previous government completed in any 4 year period – despite the marked contrast in economic environment.

The allotted money includes funding for an Affordable ‘Rent-to-Buy’ scheme, which will be launched with £250m in 2015/16 and £150m in 2016/17 aiming to support new affordable homes for rent and subsequent sale. The Homes and Communities Agency (HCA) will be allowed to charge fees for its regulation services, which the Treasury said would strengthen its capacity to regulate an “increasingly diverse” sector.

The tenants occupying the new homes will enjoy a period of low rents, allowing them to save for a deposit. At the end of this period, the sitting tenant will get first option to buy the home.

Eric Pickles said:

 “In stark contrast to the years of inactivity under the last government, today’s deal will continue our progress on delivering thousands of new affordable family homes across the country.

“We are determined to make the most of every single square inch of previously-used land available and accelerate the rate of housebuilding. Getting stalled sites up and running and speeding up the release of public land is crucial to this, and will ensure we build more homes where people need them.

“Our investment in new housing is the bold action that’s needed, and will go hand in hand with extra funding for local enterprise partnerships, so they can build on their success, create thousands of jobs and inject millions of pounds of investment into local economies.”

The news came alongside announcements of rent levels over the next ten years for Social landlords. The deal sees an increase of CPI + 1% a year every year from 2015. This provides the sector with the longest period of certainty it has ever had, which they hope will stimulate investment and long-term development.

Mr Pickles said the funding from government was a good deal for the sector, levering in private investment to construct the new homes and building on the highly successful Affordable Homes Programme, which is on track to deliver 170,000 homes by 2015.

Other measures in today’s Spending Review include:

–          £102 million to get stalled housing sites moving again.

–          Steps to speed up the release of formerly-used public sector land. Enough land to build up to 100,000 homes has already been identified, and to date land for up to 47,000 new homes has been sold.

–          A further £160 million investment in the Decent Homes programme, targeted at those councils with the biggest backlogs of repairs.

–          A £2 billion funding pot for local enterprise partnerships to drive forward job creation and investment in their areas, including £1 billion for transport and £500 million for skills and training.

–          £50 million for the Local Infrastructure Fund and a fund of £100 million in 2014-15 for enterprise zones.

More information is available via the links.

 

SRJ/LCB                                                                                                         03/07/2013

 

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