Autumn Statement: Borrowing limits for councils to fund housebuilding to be increased, with £1bn also made available to unlock large housing schemes
George Osborne has announced plans to increase the borrowing limits for councils to help them boost the supply of housing.
The measure, announced as part of a package of housing measures in the chancellor’s autumn statement today, with see the government will increase local authority Housing Revenue Account (HRA) borrowing limits by £150m million in 2015-16 and £150m million in 2016-17.
Treasury said the move would support around 10,000 new affordable homes.
Osborne said the additional funding would be allocated on a competitive basis and would form part of a continuing £2bn Local Growth Fund, which will be distributed through local enterprise partnerships and maintained at the level of £2bn every year over the course of the next parliament.
Osborne also said the government would launch a review into the role local authorities play in supporting overall housing supply.
The Autumn Statement document said: “The government will prioritise bids on the basis of their value for money, and would expect partnership working with Housing Associations or through Joint Ventures.
“The government also expects bids to contribute public sector land, and disposal of high-value vacant stock to drive competitive bids. To support this, the government will ensure all councils are transparent in the value and size of their housing assets.”
Osborne also announced a £1bn six-year programme to finance infrastructure to unlock new large housing sites, which the Treasury said would support the development of around 250,000 homes.
The Treasury said £60m of finance would be allocated in 2014-15, with £255m then allocated from 2015-16 to 2018-19.
Treasury said the first year of the programme would see investment decisions on nine specific sites, capable of unlocking around 27,000 houses.
The new funding will be administered by the Homes and Communities Agency through the existing Local Infrastructure Fund (LIF), which has invested £327m to date.
The HCA said the LIF aims to speed up the delivery of large-scale housing schemes by investing in upfront works - such as installing utilities or linking to existing road networks - through commercial loans or equity investment.
HCA chief executive Andy Rose said: “An additional £1bn for large-scale housing developments demonstrates the government’s commitment to supporting housing throughout the next spending period.
“It is also recognition that the HCA’s current LIF programme is speeding up delivery, at sites such as Cranbrook near Exeter where £20m LIF funding has helped unlock one of the largest and most significant housing and employment developments in the country.
The nine sites identified for finance in the first year of the programme are:
- Berryfields in Aylesbury Vale
- Wellesley, Rushmoor
- London Paramount in Dartford
- Tadpole Farm in Swindon
- Newton Leys in Milton Keynes
- East Leeds Extension
- Newark Future
- North and East Manchester City Fringe and
- Lubbesthorpe in Blaby
The government also set a a series of measures to streamline the planning system in a bid to boost development.
Other housing measures in the Autumn Statement included:
- £70m of the New Homes Bonus to be pooled across London
- further support Right to Buy by introducing Right to Buy agents to help buyers complete their home purchase, and provide £100m to increase Right to Buy sales by improving applicants’ access to mortgage finance
- explore options for kick-starting the regeneration of some of the UK’s worst housing estates through repayable loans
- a Right to Move for working households in social housing and consult on options during the spring
- extend the availability of the Private Rented Sector Guarantee Scheme until December 2016
Reaction:
National Housing Federation chief executive David Orr said: “A number of measures he announced in the Autumn Statement are steps in the right direction.The next step will be to put housing at the heart of long-term government plans for economic recovery.”
On Right to Buy …
“Right to Buy already gives hundreds of thousands of people the rare opportunity to own their own home. But the homes sold through Right to Buy are not being properly replaced.
“While we support the aim to help more social housing tenants own their home, it is questionable whether providing mortgage finance, in addition to the currently available property discounts, is the most effective use of government funding.
“This risks increasing the number of affordable homes being sold, at a time when England faces a severe housing crisis and funding for affordable housing has been drastically cut.
“If the Government is serious about increasing the number of homes, it urgently needs a plan to replace homes sold through Right to Buy and deliver the commitment for one-to-one replacements.”
Local authority borrowing…
“Allowing local authorities to use their assets to raise additional finance will help provide much needed local investment in new homes.
“We also welcome the expectation that delivery will be achieved through closer partnerships between local authorities and housing associations.
“While £300 million is a modest step in the right direction and could provide a much needed short-term boost to housing supply, the 10,000 new affordable homes it aims to deliver must not undermined by the disposal of high-value stock and increased Right to Buy sales.
“We also need to see more detail on how the funding will be devolved and administered.
“Much more needs to be done in the long-term to realise the full potential of local authority housing finance reforms.”
Regeneration …
“The renewed focus on the regeneration of housing estates is a positive step. These economically stalled areas are in desperate need of investment and the loans proposed in the Autumn Statement could help kick-start regeneration, but details on the terms that these are available will be crucial.
“However, to really regenerate these communities and turn these neighbourhoods around, we need to think more strategically and creatively about the future role and impact of housing in these areas.”
RIBA President Stephen Hodder said: “I’m concerned the package of announcements on housing in today’s Autumn Statement don’t go far enough. Radical action is needed if we are going to address the housing crisis.
“So instead of merely raising the amount councils can borrow to invest in new housing, the chancellor should have scrapped the borrowing cap on Housing Revenue Account proceeds.
“And we hope that as part of the Review of the role of local government in housing supply announced today, the government will further explore RIBA’s Future Homes Commission’s proposal for a new Local Housing Development Fund to kick-start major investment in private rented and shared ownership housing and work with Local Government Pension Funds and other institutions to remove the barriers that are currently limiting this investment.
“We would also like to see government provide greater incentives for councils to bring forward development forward themselves on public land and change rules on the disposal of public land to the private sector to ensure that developers increasingly bid for land based on quality rather than merely on cost.
“By fully exploiting the assets and powers government has at its disposal, we can ensure that we don’t just build more homes, but build the right type of homes.”
Richard Ford, head of planning at Pinsent Masons: “The announcement that the government will fund infrastructure to unlock large housing sites, increase local authority HRA borrowing limits for affordable homes, and encourage the sale of vacant high-value social housing is very welcome.
“LEPs will benefit from additional funds on infrastructure, particularly for Garden Cities, and the push for local authorities to deliver more of its own affordable housing is gathering further pace. The Government is going in the right direction in this area.”
Rob Beiley, housing and regeneration partner at law firm Trowers & Hamlins said: “Local authorities will broadly welcome the additional £300m of borrowing capacity to build new homes.
“The current housing debt cap is a real barrier to more significant investment in affordable housing - it is reckoned that a complete removal of the debt cap would facilitate borrowing to enable the development of 60,000 affordable homes in a five-year period. Today’s announcement will go some way to meeting that ambition.”
Peter Hindley, managing director of Keepmoat Homes, said: “We welcome the £1bn of loans to unblock large housing developments and the plan to lift council borrowing caps by £300m.
“While private sector house building has started to pick up, the number of affordable homes built in 2012-13 dropped by 26 per cent and the number of homes delivered in the social rented sector fell by more than a third.
“Working in partnership with local authorities, housing associations and funders such as the HCA (Homes and Communities Agency) we know affordable, high-quality housing can be achieved on a large scale.”
No comments yet