Chancellor Philip Hammond has used his Spring Statement to announce a new £3bn Affordable Homes Guarantee scheme.
Hammond told the Commons the scheme would support delivery of around 30,000 affordable homes
And some £717m from the Housing Infrastructure Fund will unlock up to 37,000 new homes on sites in West London, Cheshire, Didcot, and Cambridge, Hammond said.
Also announced were measures to help developers future-proof new build homes to meet low carbon heating and a Call for Evidence on an SME energy efficiency scheme.
A Future Homes Standard will be introduced mandating the end of fossil-fuel heating systems in all new houses from 2025.
James Prestwich, NHF head of policy, welcomed the Guarantee scheme as a measure NHF called for in the Autumn as a help for housing associations to borrow more cheaply to build new homes.
“However, whilst this is an important contribution, we desperately need new money in the next spending review to build more social housing.
This is more crucial than ever in the midst of Brexit uncertainty – the lack of affordable housing is now pushing hundreds of thousands of working families to the brink – the number is rising year on year, many are living in debt, at threat of eviction or homeless,” said Prestwich.
“We need to build 145,000 affordable homes every year to house these people – this is not a one off investment, the government must commit billions of pound every year into building more social housing.
“We hope, as the Comprehensive Spending Review approaches, the government will see sense and commit the significant investment needed into social housing,” he said.
CIH chief executive Terrie Alafat said the Scheme as outlined in Statement needed to be qualified by more detail – but at face value was welcome.
“A previous scheme that allowed the government to underwrite borrowing by housing associations to fund affordable housing delivery worked well, so it’s good news that it is coming back,” said Alafat.
“We have always said this would be a sensible and positive move.
“We need to see the details of the scheme – but the key question is whether the homes being funded are genuinely affordable, especially considering that we need 90,000 new homes per year at the lowest social rent,” she said.
David Montague, Chief Executive of L&Q, also wanted detail.
“At face value, the guarantee scheme announced in the Chancellor’s Spring Statement today is a positive step and will help with the delivery of affordable homes.
However, we also need to see the detail and this cannot be a one-off investment – delivering homes on the scale needed requires continued investment especially through the uncertainty of Brexit,” he said.
At Autumn Budget 2017, the government set out a comprehensive package of new policies to raise housing supply by the end of this Parliament to its highest level since 1970, on track to reach 300,000 a year on average.
Today’s Spring Statement set out further steps toward this ambition including:
- £717m from the £5.5bn Housing Infrastructure Fund to unlock up to 37,000 homes at sites including Old Oak Common in London, the Oxford-Cambridge Arc and Cheshire.
- The affordable Homes Guarantee Scheme for up to £3bn of borrowing by housing associations in England to support delivery of around 30,000 affordable homes
- Further progress on delivering growth in the Oxford-Cambridge Arc including £445m from the Housing Infrastructure Fund to unlock over 22,000 homes
As overall support the Statement offered:
- Consultation on Infrastructure Finance, seeking views on how the government can best support private infrastructure investment in the context of the UK’s changing relationship with the European Investment Bank
- A reiteration of government’s commitment to publishing a comprehensive National Infrastructure Strategy setting out priorities for economic infrastructure and responding to recommendations in the National Infrastructure Commission’s National Infrastructure Assessment
- Up to £260m for the Borderlands Growth Deal, which on top of the £102 million announced recently for Carlisle from the Housing Infrastructure Fund means up to £362m UK Government for the Borderlands area
Paul Hackett, chair of the G15 and chief executive of Optivo housing association, said that while the new funding through the Guarantee was welcome, the sector’s cross-subsidy model of delivering affordable housing remained “broken”.
“A new funding deal is imperative if the Government wants to hit its target of 300,000 new homes a year.
“The Government must invest in this essential infrastructure to give the country the high-quality, genuinely affordable homes it needs,” Hackett said.
Paul O’Brien, chief executive of the Association of Public Service Excellence (APSE) said that to develop the scale and quality of homes fit for the future, a mass council house building programme was needed which ensures ‘lifetime’ future homes address fuel poverty.
“We cannot achieve these aims if we are reliant upon the current developer led systems of delivery.
“Putting local councils at the heart of delivery, and as standard setters, as they have historically been, will create the golden thread between renewable energy, sustainable housing delivery and local economic growth,” he said.
Audley Group CEO Nick Sanderson said a focus on building new homes was wrong with the Statement spouting “the same old promises”.
“After years and years of incentives to support younger buyers it should be clear by now that the housing market is still broken – the incentives and endless building promises, have not worked.
“Commitment to house building is not the only solution, we need to know what houses to build, and how to incentivise those living in unsuitable housing to move – it’s specialist properties, particularly for our growing older population, that we need.
“If we truly want to kick-start movement in the market and create a ‘property-owning democracy’, freeing up those larger family homes is a strategy that cannot keep being ignored,” he said.
Paresh Raja, CEO of Market Financial Solutions also said more needed to be done.
“What the market currently needs is creative reforms to ensure more homes are added to the real estate market, be it through a reduction in stamp duty, incentives for renovating derelict homes or making it easier for buyers to access finance,” said Raja.
“Weakening the Spring Statement to a fiscal non-event might suit the Chancellor but does not help the country as a whole.
Moreover, overlooking important issues will not suffice, and it is once again up to industry leaders to step up and demonstrate the leadership the property market is clearly calling for by pushing for necessary changes to improve the industry,” he said.
Jerald Solis, Business Development and Acquisitions Director, Experience Invest acknowledged expectations weren’t high in the lead-up to the Spring Statement.
“Unfortunately, the property market was only briefly mentioned in Chancellor’s speech, which means that any meaningful policy reform will have to wait until the 2019 Autumn Budget.
“This is perhaps most frustrating for property developers and constructing companies, which are the firms responsible for delivering new-builds and generally improving infrastructure,” said Solis.
“To support new-build construction targets, the Government cannot be complacent – what the industry currently demands is spending commitments and policy reform that will both support property developers, as well as encouraging commercial and residential real estate investment,” he said.
FMB chief executive Brian Berry took Hammond on over “burdensome and poorly thought-through” biodiversity targets for developers as bringing “more costs and more delays” for builders.
“Just as the environment for SME house builders starts to improve, these measures could end up stalling our progress.
“The Government wants to make developers, large and small, increase the biodiversity on their sites by a whopping 110% and for an average site of ten units, the additional cost could be in excess of £2,000.
“Needless to say, this would also create delays to projects by adding additional hurdles for builders to negotiate during the already bureaucratic planning process,” said Berry.
“Rather than hampering the building of new homes, if the Government wants to be ‘more green’, it should focus instead on retrofitting the more than 24 million homes that have already been built and which account for around one fifth of the UK’s greenhouse gas emissions.
“This will not only help reduce the UK’s carbon footprint but will also tackle the scourge of fuel poverty,” he said.
Simon Gooderham, joint managing partner, Cheffins, said moves to help developers future-proof new build homes to meet low carbon heating and high standards of energy efficiency are “essential” to help purchasers “keep their money in the bank and not with the energy suppliers”, whilst also protecting the environment.
“There have been too many reports of below standard housebuilding over the past few months and anything to help improve the quality and build of the UK’s new homes to ensure they are still fit for future generations are essential for the sustainable growth of the industry.
“In addition, any measures introduced in order to speed up housing delivery will be met with open arms as shortages of stock have reached unprecedented levels in parts of the UK,” he said.
Julie Hirigoyen, chief executive at the UK Green Building Council (UKGBC) praised Hamond’s “impressive leadership” in focussing on the challenge of climate change and the importance of building sustainability into economic modelling.
“We welcome the commitment to a Future Homes Standard by 2025 and new requirements for low carbon heat in new homes, it is vital that this is accompanied by truly world-leading energy efficiency standards, in line with the CCC’s recent recommendations,” said Hirigoyen,.
“We also welcome the intention to mandate net gains for biodiversity on new developments in England in the upcoming Environment Bill.
“Our recent open letter to the Chancellor, signed by leading construction and property businesses, highlighted the importance of this issue and their call for legally binding environmental targets,” she said.
But, to Hirigoyen, there remains a “pressing need” for plans to address the shortcomings of existing building stock.
“Today’s Call for Evidence on an SME energy efficiency scheme is a small step towards this, but Government must go much further and make the energy efficiency of all our existing building a national infrastructure priority.
“Only then will we stand a fighting chance of tackling climate change,” she said.
Phil Hall, Head of Public Affairs & Public Policy for the Association of Accounting Technician (AAT) took on Hammond’s promotion during the Statement of First Time Buyers (FTB)relief as helping 240,000 FTBs.
“(It) has done so at a staggering cost of £600m to the taxpayer.
“As AAT has repeatedly highlighted, this scheme is costly and bureaucratic and should be scrapped in favour of simply switching Stamp Duty liability from the buyer to the seller,” said Hall.
“Switching liability is a cost free alternative that would save the taxpayer hundreds of millions of pounds; protect existing revenue streams; ensuring every FTB was free from Stamp Duty whilst helping tens of thousands of other home owners who are moving up the property ladder – by ensuring they pay a lower sum on the house they are selling and not the house they are buying,” he said.
Caroline Russell AM, Chair of the London Assembly Environment Committee, said the eco-measures “don’t go nearly far enough“ when there was a need to confront homes in the capital that do not meet even the most basic energy efficiency requirements – as well as those which are failing to keep pace with modern ways of living.
“Our latest report Keeping Out The Chill calls for a widespread campaign of smart retrofitting that will save money, keep homes warm and dry and cut the amount of carbon-fuelled energy that is simply wasted,” she said.
Lisa Simon, Head of Residential, Carter Jonas, said that In failing to address demographics beyond just first-time buyers, the Statement saw second steppers continuing to struggle to move further up the housing ladder.
“Many out there have outgrown their property and need to buy a family home.
“We aren’t talking about upgrading a home – we are simply talking about being able to afford a home that has enough space for a family,” said Simon.
“The Chancellor was proud in announcing the government’s restoration of the proportion of first-time buyers to above 50 per cent for the first time in a generation – and the additional funding for the Affordable Homes Guarantee scheme and from the Housing Infrastructure Fund will only aid this further.
“That said, this will only leave the market more congested in the middle. While more first-time buyers can take their first step onto the ladder, the challenge remains as to how far they can climb it and how quickly,” she said.
Jasmine Whitbread, CEO of London First, said the Guarantee Scheme and £717m from the Housing Infrastructure Fund were a “step in the right direction” as the Government got to grips with the shortfall in spending needed to meet housing targets.
“The housing crisis can only be solved by a combination of more money, more land and better ways of building, which means the Government, the Mayor and industry must now come together to crack this complex puzzle,” she said.
Bjorn Howard, group CEO of Aster Group, said the new £3bn fund is a “vitally needed” sign of support for affordable housing and having the “right mix” of homes in the market is crucial to meeting the needs of those people who are most acutely affected by the housing crisis.
“The government has acknowledged that and the investment announced in the Spring Statement should help fuel affordable alternatives to expensive private rent and traditional ownership.
“It was also positive to see the government recognise the need to unlock land in areas of the south of England like Didcot through the £717m housing infrastructure fund.
“Housing associations will continue to play an important role in building more homes and we look forward to hearing more detail on how this affordable housing fund will be delivered,” he added.