Housing Corporation to dictate to developers what they build

The Housing Corporation is set to radically change its approach and start dictating to developers where and how they should build homes. The agency will from now on go to the market with pre-prepared development ideas and ask housing providers to bid for them.

Speaking exclusively to Regenerate, Steve Douglas, chief executive of the corporation, said new housing minister Caroline Flint will next month announce a set of housing priorities for the next three years – for example, the number of larger units or rural homes. The corporation’s job is to hit these highly specific targets by liaising with housing providers.

Douglas said: “We will be very clear on what we are after based on the ministerial statement. We will be saying, bring us the schemes we need to hit targets.”

Housebuilders have been aware that this new “regular market engagement” approach would be included in the upcoming 2008-11 spending round, but the details of how it would be applied have been kept under wraps.

Further changes in the new process include:

• Once the initial bid winners are announced in March as expected, the Housing Corporation will then go straight back to housing providers one month later in April, asking them to bid for additional schemes.
• After April, the corporation will go out to the market asking for bids for specific types of development on a quarterly basis, or as often as it thinks it is needed.
• There will be a new fast-track bidding system, in which housing providers are expected to have submissions in within four weeks of the corporation going to market. For its part, the agency has said it will process and announce the winners within four to six weeks of receipt.

This new authoritative approach has, for now, gone down well with most housebuilders. Peter Quinn, head of business development at Lovell, said it was a much needed change to the nonsensical old system. He said: “The Housing Corporation may say, for example, that we have not had enough bids for a certain pathfinder in the West Midlands, so submit something much more directional. But that is fine: public money should be allocated where it is most needed.”

Others have welcomed a more flexible approach in the face of adverse market conditions. Housing associations are starting to worry about their finances later on in the year, as they rely on work coming out of S106 agreements on major regeneration schemes. As these start to slow down because of the credit crunch, so too does the amount of work RSLs have.

The head of one major housing association said around half of his, and other large associations’ output came from planning gain agreements. He said: “Further down the track, the issue will be that developers do not develop out as fast as we want them to. With a good S106, where the affordable homes are integrated into the scheme, you go at the pace of a developer. We are already seeing a bit of a slowing down on schemes, which will affect how we bid later in the year.

“The housebuilders have been bank-rolled by buy-to-let and that is drying up. Where will they get the money from to bankroll long-term, expensive regeneration projects now? If major urban schemes are not forthcoming, affordable housing targets are affected.”

Colin Blakey, director of affordable housing at Bellway, said he supported the new system but pointed out that policy issues still needed to be cleared up if the units were to be delivered. He said: “Is the land available? At the moment there are a host of impediments such as the planning system. If the policies can’t deliver then, even with a new bidding system, we are still going to be in the same position.”

One volume housebuilder, however, said the new approach was overbearing. He said: “We don’t want to be dictated to all the time.”