Government announces £5bn boost to speed up house building
The government recently announced lending schemes totalling £5bn designed to speed up the construction of tens of thousands of homes, after a call for an end to the UK’s homes deficit.
At the Conservative Party Conference in Birmingham in October 2016, Chancellor Philip Hammond and Communities Secretary Sajid Javid outlined the details, which comprise a £2bn Accelerated Construction Scheme and a £3bn Home Builders Fund.
Mr Hammond said “There has been a housing shortage in this country for decades and this Government is determined to take action to tackle it”.
Under the Accelerated Construction Scheme ministers have pledged to set aside £2bn of new public borrowing to fund the programme. Local planning authorities will be able to grant planning permission in principle on sites identified in brownfield registers which will take the risk out of developing a potential 140,000 homes a year. Simply, it will make publicly owned land with outline planning permission available to builders, including small new companies.
Details released by the Homes and Communities Agency (HCA), suggest that the fund could be used to underwrite developments on public land, meaning the government taking the responsibility of selling unsold properties on the open market or to private or social landlords. The price would be set before government decided which schemes to back. This takes the risk of being left with unsold homes away from the builder who would enter into a contract with HCA at the start of the building process.
Stuart Stead, Partner at Cowgill Holloway speaking about the scheme said: “This scheme could allow smaller house builders to return to the market, or even reduce the barriers to entry for new firms. Due to the risks associated with building homes – including where builders are left with properties they are unable to sell – many have been put off, therefore this scheme could allow them to potentially de-risk the process and return.”
The £3bn Home Builders Fund will also be administered by the HCA, to stimulate new building projects where finances are tight. It will provide £1bn of loan funding to small builders, custom builders and innovative developers who are anticipated to deliver 25,500 homes by 2020, with the remaining £2bn pledged to provide long term funding for infrastructure which the government said would “unlock a pipeline of up to 200,000 homes over the longer term”.
David Rainford, Property Finance Director at Cowgill Holloway spoke positively of the fund: “The HCA have been aware of the issue of long-term funding for a while – with lots of house builders leaving the industry over the last several years – so it’s great to see that they’ve put something in place to support them. Development funding is becoming more accessible across a variety of funders but this in itself provides its own challenges in finding a quick way through the many options which to many remains very much like a maze.”
Stuart and his dedicated team have specialist knowledge in the sector, and have been advising clients for over 20 years. To find out more about this fund, or to discuss other related matters contact Stuart Stead, Partner.
The information was correct at time of publishing but may now be out of date.