Chancellor Philip Hammond has announced agreement on a huge new housebuilding programme in the West Midlands.
In the Spring statement, Hammond said the agreement meant 215,000 homes for the region by 2031.
Another deal done – for £1.7bn – brought 26,000 new affordable homes in London.
The chancellor avoided any new policy announcements to focus instead on how present policy was being progressed
Hammond told the house the government was on track to raise housing supply to 300,000 by the mid-2020s through an investment programme so far totalling £44bn.
Government, he said, was working with “ambitious” councils across the country on future homebuilding.
The house also heard the Letwin review of the planning system and its impact on housing has reached its initial findings – staying on course to be published in full by the time of the next budget.
There will also be a doubling of funding to the Lloyd’s Housing Growth Partnership and an additional £80m funding to support SME firms looking to engage an apprentice.
Hammond said he and housing minister Dominic Raab were currently with 44 councils who had bid into the £4.1 billion Housing Infrastructure Fund, to unlock homes in areas of high demand.
“We are concluding housing deals with ambitious authorities who have agreed to deliver above their Local Housing Need.
“And I can announce today that we have just agreed a deal with the West Midlands to have committed to deliver 215,000 homes by 2030-31, facilitated by a £100 million grant from the Land Remediation Fund,” Hammond said.
Further announcements on the Housing Infrastructure Fund were due “over the next few days.”
Adam Morton, policy leader at the National Housing Federation said increased funding – however welcome – was only part of the solution.
“Housing associations are determined to deliver but the fact remains that if we want to build more affordable homes, we need access to more land at lower prices.
Melanie Rees, head of policy, CIH said the statement was “another missed opportunity” to get closer to building the homes needed.
“The chancellor said that the government’s focus on reducing the national debt is to give the next generation a chance.
“But unless we quickly start to build more of the right homes in the right places then the next generation will have absolutely no chance of getting access to a home that they can afford.
“There are measures that could be taken now to address this critical situation that would not require additional borrowing, including redressing the imbalance in the current housing budget.
“At present just 21% of funding earmarked for housing until 2021 will directly fund affordable housing.
“This simply does not reflect the balance of housing need across the country and the government must seriously address this imbalance if it is to meet its ambition to solve the housing crisis.”
London mayor Sadiq Khan cautiously welcomed an extra £1.67bn of investment in genuinely affordable homes in London.
But Khan criticised the 18-month delay in agreeing London’s share since some of the funding was first announced by the Government – warning annual funding levels were still less than half of the levels the Government inherited in 2010.
Khan says the additional funding announced today still does not go anywhere near far enough towards matching the scale of the capital’s challenge.
Current Government funding for affordable homes in London is still well less than half the amount spent in 2009-10, and approximately a quarter of the £2.7 billion a year that City Hall estimates would be actually needed to meet London’s housing need.
Khan has secured new investment in housing to deliver 26,000 new genuinely affordable homes.
Crucially he has won agreement from ministers that at least two-thirds of the additional homes will be for rent, and that these rents can be based on social rent levels.
Combined with the Mayor’s previous deal with Government, the new funding deal expects nearly 100,000 new affordable homes to be underway by 2021.
Khan has consistently said that London needs more homes for social rent, and far more investment in genuinely affordable homes.
Ben Rogers, Director at Centre for London acknowledged the announcement as a substantial increase in affordable home funding for he capital – albeit from a previously announced national grant.
“This injection of cash comes at a critical time.
“According to the Mayor, London needs to build 66,000 new homes each year to meet growing demand but the signs are that delivery in the private market will slow down, and with it, the supply of affordable homes delivered through agreements with developers.
“The funds announced today should enable boroughs and housing associations to drive ahead with developments which might not have been otherwise viable.
“But this is just one part of the jigsaw.
“We need to get better at addressing local opposition to new housing, building high quality high density development, developing effective partnerships between boroughs and equipping boroughs with the tools and capacity they need to drive development forward.”
Karl Edge, Midlands Regional Chairman at KPMG, said the £350m investment for a major housebuilding programme was a “real boon” for the region.
“It’s no secret that the housing shortage is a major issue in our local community, and in our recent productivity report, it was one of the top four priorities in need of addressing to help boost productivity.
“With the fractured economic landscape the UK is currently facing, this investment will not only help address the urgent housing need, but also boost the region’s confidence and attractiveness for investors.
“However, housing is just the start, and some questions remain – for example, how many of the 215,000 homes will support inclusive growth through initiatives like social housing?
“We’ll need to take a closer look as further details emerge over the coming days. Nevertheless, this is a positive step forward for the West Midlands – our time really is now.”
Matt Tooth, chief commercial officer, LendInvest, said the absence of a major policy shakeup was precisely what the sector needed.
“Rather than wasting time adapting to the step changes we’ve become used to seeing, lenders and developers alike can get on with what they do best, getting more homes built across the UK.
“This is a clear opportunity for industry and government to get the funding mechanisms that are already in place, such as the Home Building Fund and British Business Bank, working harder to increase the supply of much needed capital to SME homebuilders around the country.”
Russell Pedley, co-founder and director of Assael Architecture, said the statement showed housing is still at the top of the political agenda after the prime minister’s speech last week.
“Yet, today’s Spring Statement lacked the substance that much of the industry would have hoped for.
“We still remain in the depths of a housing crisis, which requires a marked change in housing policy and further government intervention into the market.
“Some progress has been made such as with the publication of the draft NPPF last week and a further boost for Build to Rent in the Planning Practice Guidance, but the government must follow through on the promises made in both the Housing White Paper and the Industrial Strategy to deliver the homes we desperately need throughout the country – if not, the current situation is only set to worsen.”
Grant Lipton, co-founder of Great Marlborough Estates, warned the government not rest on its laurels in the face of an upbeat picture: “They must deliver on the promises made in the housing white paper and the industrial strategy.
“Development needs to be encouraged and incentivised at both a national and local level of government in order to get the homes we need built across the capital and beyond.”
Paresh Raja, CEO of MFS said the “modest if not lacklustre” speech offered few meaningful solutions to the long-term challenges facing the property market.
“While the announcement of higher growth in the economy is welcomed, the decision to water down the Spring Statement so much is not. After all, underlying problems such as housing supply won’t wait until the Budget in the Autumn.
“Yes the Chancellor reiterated that £44 billion was available to help hit new-build targets, but following Theresa May’s housing speech last week, today’s announcement could have taken further steps towards developing a successful plan for helping more people get on or move up the property ladder. I
“Instead this job has been left to the housing secretary – who will purportedly be making further announcements in the coming days.”
Leon Ifayemi, CEO and co-founder of SPCE said the statement was “somewhat disappointing” with the lack of new spending commitments was still troubling.
“As the property and rental markets face fundamental issues such as housing supply, lack of affordability and rising rental prices, the Government is still not doing enough to directly address these problems; instead the Chancellor continues to set targets for new-build properties, and only time will tell if these are met.
“It is a shame for renters in particular, because this was a great chance to build on previous reforms, such as banning lettings agent fees and cutting stamp duty for first-time buyers – let’s hope the Autumn Budget can reverse this oversight.”
Sarah Fitzpatrick, partner at law firm Berwin Leighton Paisner said the tentative statement suggests government still “fumbling in the dark” over housing.
“On the back of the Government’s heightened focus on housing and publication of the long awaited planning reforms last week which seek to resolve the housing crisis, there was a nod from the Chancellor in today’s Spring Statement to the interim Letwin review on so called land banking.
“This review is work in progress but the initial indications from Letwin are that he is focusing his review on large scale housing sites and that he considers “absorption rates” (rates at which homes can be released onto the market without unsettling the market price) are a key challenge which slows down housing delivery on larger developments.
“Letwin questions whether such large scale sites are the best mechanism for delivery.
“He also questions whether the need for market housing to cross subsidise affordable housing on large sites is slowing down housing delivery.
“It’s surprising that this is news to the Government.
“Interestingly Letwin has ignored for the moment the contribution made to housing delivery by small and medium sized housebuilders and the absorption rates of smaller sites.
“Casting developers as pantomime villains makes good headlines but the issues with housing delivery are far more complex and the Chancellor’s tentative message today suggests the government is still fumbling around in the dark over what it can actually do to increase housing delivery.
“Letwin’s further work and conclusions on so called land banking in June will be eagerly awaited by house-builders.”
Brian Berry Chief Executive of the FMB said the doubling of funding to the Lloyd’s Housing Growth Partnership and an additional £80m funding to support SME firms looking to engage an apprentice was particularly welcome.
“With Brexit looming large on the horizon and the construction industry facing a chronic skills crisis, it’s of the utmost importance that more skilled workers begin to join the sector – an additional £50m to support T level training will further aid this aim.”