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Theresa’s £2bn announcement – in figures

To the critical acclaim of the construction industry, the government confirmed plans for a new generation of council and housing association homes yesterday. Funding for affordable homes will be increased by a further £2 billion to more than £9 billion. But how exactly will this money be used to boost housing? Buildingspecifier investigates:

The numbers of homes will be determined on type and location of housing, and bids received for funding. With a typical £80,000 subsidy, this £2 billion investment can supply around 25,000 more homes at rents affordable for local people.

Ministers also confirmed plans to create a stable financial environment by setting a long term rent deal for councils and housing associations in England from 2020.

The funding will further support councils and housing associations in areas of acute affordability pressure, and where working families are struggling with the costs of rent and some are at risk of homelessness.

This complements recent announcements on supporting tenants in the private rented sector and on extending Help to Buy.

The government’s Affordable Homes Programme will increase from £7.1 billion of public funding to £9.1 billion, and the £2 billion additional funding for affordable housing could lever in total investment by housing associations and councils of up to £5 billion.

Since April 2010, around 333,000 affordable homes have been delivered, including 240,000 for rent. More than twice as much council housing has been built since 2010 than in the previous 13 years.

As set out in the Housing White Paper, to help encourage more investment in social housing, government will create a stable financial environment by setting a long term rent deal for councils and housing associations in England.

Under the proposal set out this week, increases to social housing rents will be limited to the Consumer Price Index (CPI) plus 1% for 5 years from 2020. This will give social tenants, councils and housing associations the security and certainty they need.

Previously, the government’s affordable housing policy primarily supported ‘affordable rent’ – rents of up to 80% of local market level – and low-cost home ownership. This announcement now extends support for ‘social rent’ – which are lower rents, set according to national guidelines.

These latest measures reinforce this government’s approach to back housing of all tenures – with more social housing; extra security for those in the private rented sector; and helping people get onto the housing ladder.

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Theresa May speech – the view from construction

At an eventful Conservative Conference today PM Theresa May has announced an extra £2bn will be allocated to aid delivery of affordable housing in areas “where need is greatest.” She also confirmed an energy cap in a bid to alleviate fuel poverty. Buildingspecifier reports:

Affordable housing

At an eventful Conservative Conference today PM Theresa May has announced an extra £2bn will be allocated to aid delivery of affordable housing in areas “where need is greatest.”

“We simply haven’t built enough homes,” admitted May said, although she reassures that “help is on the way.”

“It won’t be quick or easy – but as Prime Minister’s I’m going to make this my mission.”

The Prime Minister highlighted that there will now be “almost £9bn” available for affordable housing which both councils and housing associations can bid for.

“We will invest an additional £2bn in affordable housing, taking the government’s affordable housing budget to £9bn. We will encourage councils as well as housing associations and provide certainty over future rent levels.

“In those parts of the country where need is greatest we will allow social rented housing to be built, at well below market levels, getting the government back into the business of building houses.”

Energy cap

The Prime Minister also revealed that caps on energy prices would be imposed under planned legislation. She gave a stark warning to energy firms that they faced a price cap on their “rip-off” bills under her new plans.

Draft legislation for the measure will be published next week, Mrs May revealed, as she accused firms of punishing loyal customers.

May commented “While we are in favour of free markets we will always take action to fix them when they are broken. We will always take on monopolies and vested interests when they are holding people back. One of the greatest examples in Britain today is the broken energy market. The energy market punishes loyalty with higher prices and the most loyal customers are often those with lower incomes, the elderly, people with lower qualifications and people who rent their homes.”

Industry reaction

Chief Executive of the National Housing Federation, David Orr said “In the aftermath of the tragic fire at Grenfell Tower, the prime minister said that we as a nation have not paid enough attention to social housing. Today, she is right to make a bold break with the past and commit to building the homes we need most – genuinely affordable homes for those on the lowest incomes.

“The additional £2bn will make a real difference to those let down by a broken housing market. Building homes for social rent will make work pay and help bring down the housing benefit bill in the long run by moving people out of costly private lets.”

Brian Berry, Chief Executive of the FMB, said “Despite the Prime Minister’s precarious political position since the General Election, Theresa May has today managed to take a braver and bolder stance on house building than any Prime Minister of recent years. The private sector will continue to expand the number of new homes it builds, particularly so if the Government succeeds in its aim of removing barriers that hold back small scale house builders. However, in the house building heyday of the 1950/60s, a healthy private sector was always complemented by significant levels of social house building. Indeed, we have only ever built at the level we need to keep pace with demand when both the private and public house building sectors have been firing on all fronts. In the 1960s, for example, we were building around 400,000 homes per year and half of those were social housing.”

“The Prime Minister’s plan is also an opportunity to help shape a stronger local house building industry. If councils can start to engage with smaller, local builders to deliver this new generation of council housing, it could further help to diversify the industry. This would also boost the capacity of the private sector through the provision of more public sector work. Indeed, the increased use of small and medium-sized building firms will limit the problem of land banking, as this is something small builders simply don’t do.

“There do remain however, some significant roadblocks to the Prime Minister’s vision. Following Brexit, the serious shortage of skilled labour the construction industry is already dealing with will be exacerbated if it becomes much more difficult for EU tradespeople, who have come to play a crucial part in plugging the industry’s chronic skills gap, to move to and work in the UK. Although the industry must seek to overcome this crisis by recruiting and training many more young people than we currently do, the Government must also be mindful and realistic about the continuing need there will be for skilled EU workers as it puts in place its post-Brexit immigration policy. Otherwise it will risk jeopardising the delivery of the bold new house building ambitions the Prime Minister outline today.”

Andy Sommerville, Director of Search Acumen, commented “Our country needs to embark on the greatest housing boom the UK has witnessed in a century. For decades, UK governments have neglected the critical issue of our nation’s housing shortfall and as a result we estimate by 2022 the UK will be short of a million homes.

“Theresa May’s pledge to invest an extra £2bn in affordable housing is the first building block to making up for years of under supply and we can only hope that this is not simply another empty promise to fix our broken housing market. Now that our leaders share the industry’s sense of urgency, we must act to build more homes and we must act quickly. The gulf between supply and demand is widening each day. For the property and construction industry, this is the cue for Britain to start building.”

Chartered Institute of Housing chief executive Terrie Alafat CBE said “We have been calling on the government to invest more in genuinely affordable homes for rent so the Prime Minister’s announcement of an extra £2 billion for affordable housing is very welcome.

“As we have been saying for some time, social rents, which are significantly cheaper than market rents, are the only truly affordable option for many people on lower incomes, so the recognition that we need more of these homes is a vital step forward.

“It’s also encouraging to hear that Theresa May agrees councils have a central role to play in building the homes we need at prices people can afford.

“The details of exactly how these new homes will be funded and just how many will be for the lowest social rents will be crucial. The number of homes for social rent funded by the government collapsed from 36,000 to just over 1,000 between 2010/11 and 2016/17. Reversing this trend will be a significant task – how much of this new funding will be dedicated to building these kinds of homes?

“There is much to welcome in these announcements and they are certainly an important step in the right direction, but we still need to do more if we are to finally build the number of truly affordable homes we need.”

 

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Rumours circulate that Theresa May will build substantial number of council houses

The Conservative Conference 2017 and rumours are rife across the industry this morning that Theresa May will unveil plans for a major council housebuilding programme. If correct, this is a very exciting time for house builders and anybody with a professional interest in the housing sector.

Both The Sun and the BBC have made this a headline story, adding more weight to the argument.

If sources are to be believed, it would be the first time in decades that a prime minister has announced a major council housing boom. Could this be the beginning of the end of the housing crisis?

Buildingspecifier will be reporting. Don’t miss out!

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Green Belt and the West Midlands Mayoral Election: what you need to know

The inaugural West Midlands mayoral election will be held Tomorrow to elect the Mayor of the West Midlands. All candidates have discussed building on green belt and brownfield sites in varying levels of detail, so it’s safe to say that Thursday’s result will be of keen interest to industry professionals. Buildingspecifier Editor Joe Bradbury investigates:

Thursday’s election will be the first election for a governing body covering the entire West Midlands since the 1981 West Midlands County Council election (subsequent elections will be held May 2020 and then every four years after that). Following a devolution deal between the UK government and the West Midlands Combined Authority (WMCA), it was agreed to introduce a directly-elected mayor for the combined authority, who would act as chair of the combined authority as well exercise additional powers and functions devolved from central government relating to transport and housing and planning.

Devolving such powers from central government relating to housing and infrastructure in particular naturally raises the ethical dilemma of building on land that is currently protected by Green Belt. This is understandably a strongly debated and highly controversial topic. Many campaign groups urge governments to develop brownfield sites instead, in order to protect England’s characteristic and environmentally significant countryside. However, there is also a very genuine argument that the green belt is an archaic obstacle hindering UK housing and construction in general. Let’s explore the topic:

The argument for…

The British countryside is world renowned and entrenched in our national sense of identity. It is undeniably vital that we continue to protect green space in a country known affectionately as “a green and pleasant land,” however, one cannot ignore the sad fact that the benefits of the Green Belt often accrue to a small group of people at the expense of many more in denser areas.

Studies suggest that access to the Green Belt correlates closely with household income: Green Belt policy preserves large amounts of plentiful green space around the well-off at the expense of rarer green space near the low-income areas of British cities. By limiting supply the policy inflates house prices and rents and acts as a de facto wealth transfer from poorer non-homeowners to middle- and upper-income homeowners.

Only 10% of land in England is developed, just over half of this, 5% of total land, is for homes and gardens, with only 1% of all land actually used for housing. If we were to increase our housing stock by 1.3% per year this would make a massive difference in tackling the housing shortage and would involve building on a mere 0.01% of land each year; a small loss to solve the housing crisis, many argue.

The argument against…

When looking at the argument against developing on Green Belt land, concerns seem to gather around the potential of opening a floodgate whereby once permission is granted, England’s green and pleasant land will descend into a concrete carbuncle.

The Green Belt became government policy 62 years ago this year. On its 60th anniversary, a poll commissioned by the Campaign to Protect Rural England (CPRE) found that nearly two-thirds of people surveyed believed that Green Belt land should not be built on.

The Ipsos MORI poll shows that 64% of people agreed the Green Belt should be protected, while just 17% disagreed. Such strong support for Green Belt is demonstrated across a range of different groups, including people with children aged 5 and under, those renting from a local authority, and those on low incomes. And more than six out of ten people (62%) who live in towns and cities support the protection of the Green Belt – a finding that casts doubt on the claims of critics that Green Belts do not benefit people who live in urban areas.

Mayoral candidate stances

Whatever your thoughts are on Green Belt, we are all in agreement that more homes are needed in Britain today. Perhaps what we really need is tangible, immoveable targets that won’t change the second permission to build in the countryside is given. Just how will your vote affect this? Let’s take a look at the stances taken by some of the candidates reliant on your vote:

Andy Street – Conservatives

Andy Street

From the conservatives, the message seems quite clear – always prioritise brownfield sites when planning where we need to build homes in the West Midlands. Andy’s manifesto promises to spend £200 million on preparation and decontamination of brownfield sites and lobby for more. It also highlights plans to work with all councils to compile registers of all brownfield sites that could be used for housing and business development in the West Midlands.

Andy speaks of pushing Government and councils to release public sector land in the West Midlands, to be used for housing.

Sion Simon – Labour

Sion Simon

Labour Mayoral candidate Sion Simon is more open to the potential to develop Green Belt land for the benefit of the West Midlands. Recently, he has criticised West Midlands borough Solihull for blocking green belt housing schemes and also pointed out that the town is one of the wealthiest parts of the West Midlands.

Last month, Sion called for housing on Solihull green belt during Wednesday’s mayoral hustings, saying “People want new housing but don’t want it on their Green Belt, they want it on someone else’s Green Belt.

“They want the land but don’t want the cost of cleaning up dirty land. We need to start those difficult conversations.

“And the most difficult conversation is with Solihull – which has the great bulk of the wealth and a huge pressure on land and has very expensive land.”

James Burn – Green Party

James Burn

James Burn of the Green Party seems to have a similar message to that of the conservatives, arguing for the prioritisation of building on brownfield land first.
He promises a drive on local authority house building funded by central government, in addition to other measures, including exploring the introduction of a Land Value Tax (which may discourage developers purposefully not building on valuable land and bring more land into use for housing more quickly) and raising the local authority borrowing cap so that councils can borrow more to build more houses.

The manifesto states that “We will need serious discussions about where the houses should be located, the cause and extent of the crisis, where higher density building is appropriate and much more.

“We also need to increase the supply of available land while doing all we can to protect valuable green spaces. We should in general build on brownfield land first wherever possible, and challenge the assumption that this is always more expensive than building on green belt sites.”

In summary

To the casual observer (and fellow Midlander!) it seems to me that all candidates are calling for an honest and open conversation about developing Green Belt land, yet none seem to want to commit entirely to one side of the argument – or at least discuss it on any level that may give too much away on the subject prior to the election tomorrow.

Green Belt divides opinion so drastically across all sectors of our industry. Concerns about it echo through our communities and create barriers as tangible as the physical border itself. Whether you campaign for it to be protected or petition to open it up for development, anybody who builds houses or needs houses should think carefully before entering the polling booth tomorrow, because your vote just might dictate their location.

Do you think we should consider building on Green Belt? Answer the poll on the right!
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May wrong to “cut green crap”, says FMB

Theresa May’s decision to scrap the Department of Energy and Climate Change (DECC) is alarming as it signals that improving the energy efficiency of our existing buildings has been pushed ever-further down the list of Government priorities, according to the Federation of Master Builders (FMB).

Brian Berry, Chief Executive of the FMB, said “Three years ago Cameron told his officials to “cut the green crap” and May has taken this further still by dissolving DECC. This means that there will be no Cabinet-level Minister championing climate change issues at the highest level of Government, which is bound to result in less emphasis and less action. Andrea Leadsom’s appointment as Secretary of State for Environment, Food and Rural Affairs provides little solace when you consider that she has regularly voted against measures to tackle climate change in the past. This matters because for May’s newly-formed Government to side-line its green policies, would be to sacrifice their numerous economic benefits.

“May should make improving our existing buildings an infrastructure investment priority as the knock-on benefits for jobs and growth are enormous. A programme to make British buildings more energy efficient would generate £8.7 billion of net benefits. This is comparable to the benefits delivered by the first phase of HS2, Crossrail, smart meter roll out, or investment in new roads. And unlike these large infrastructure projects, work to improve our existing buildings is not at the mercy of the lengthy and protracted planning process – work could start tomorrow.

“We welcome the appointment of Justine Greening as Secretary of State for Education with responsibility for skills and apprentices, which previously came under the Department for Business, Innovation and Skills. We hope that she continues the good work of Nick Boles in improving the quality of apprenticeships, which will in turn help elevate their status so that they are recognised by society as of equal worth to university degrees. Greening has a solid background in transport and treasury briefs which will no doubt help her understand the importance of having a properly skilled construction workforce. As we face the prospect of Brexit, combating the construction skills crisis has never been more important.”

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