Friday, 28 April 2017

Majority of 'flexible' grant to support home ownership, says HCA

Bidding opens for £1.4bn of new grant with another £1.3bn of existing funding available outside London, but ‘majority of expenditure’ to support home ownership products.

Bidding has opened for the additional £1.4bn of government grant funding announced at the November 2016 autumn statement, supported by a loosening of rules so the money can support a wider rage of tenures, including affordable rent homes.

However, the UK government has made clear that the ‘majority of expenditure’ will support the development of homes for ownership, reiterating the message housing minister Gavin Barwell made to Social Housing magazine in late November 2016.

The change means funding can support affordable rent, shared ownership and rent to buy - where homes can be let with rents set at or below 80 per cent of the local market rent for a set time period, giving tenants the opportunity to save for a deposit and then the option to buy their current home.

The aim is to allow providers ‘the flexibility and agility to respond to local needs and markets’, and was widely welcomed by the sector and particularly the National Housing Federation, which had been lobbying for the change.

But the documents published by the Homes and Communities Agency (HCA) - which administers government funding in all parts of England apart from London - make clear that ‘the majority of expenditure allocated within the programme will support home ownership, through both shared ownership and rent to buy.’

The bidding information - which came in the form of an addendum to the existing £4.7bn Shared Ownership Affordable Homes Programme (SOAHP), first published in April 2016 - also puts affordable rent in the context of ‘mixed tenure sites’, which it says will ‘help underpin the swift build-out of those sites’. Of the original £4.7bn, the HCA administers £2.6bn, with the remainder allocated by the Greater London Authority (GLA), which handles allocations for the capital.

The new £1.4bn of funding will be shared between the HCA and the GLA.

On first inspection, the HCA message seems in contrast to the the mayor of London’s approach, who shortly after the autumn statement revealed increased grant rates for what he called a new ‘genuinely affordable’ housing product, with £2.2bn available from the £3.15bn announced at the autumn statement.

However, the bulk of that programme will also support London Living Rent - a rent to buy product - and London Shared Ownership homes.

The HCA also revealed today that £1.28bn of allocations have been made under the existing SOAHP.

Of the existing allocations, Sanctuary tops the list, with just under £90m to support 2,265 grant-funded homes. New Charter Group is taking £87m to support 2,758 homes, while Affinity Sutton is next in line with £60m to support 1,998 grant-funded homes. Kier Group has taken almost £42m for 1,478 homes.

The HCA has also called for expressions of interest from local authorities on its Accelerated Construction programme, aimed to create a ‘tailored package of support to ambitious local authorities who would like to develop out surplus land holdings at pace’.

£1.28bn SOAHP allocated to date - by housing product type

ProductGrant-funded homesNil-grant homesTotal homes
Shared Ownership23,3403,22726,567
Rent to Buy11,0635011,113
Specialist Rent5,000295,029
Nil-grant Rent03,8253,825
Total39,4037,13146,534

New and old

The £2.7bn of available funding set out today follows Chancellor Phillip Hammond’s announcements at the November 2016 Autumn Statement, including an extra £1.4bn to support 40,000 affordable homes.

There is no set closing date for applications for funding bids and the HCA will assess bids on an on-going basis in a process of continuous market engagement (CME).

The original prospectus retains its messages that this government ‘believes in home ownership’, and that the grant programme should support at least 135,000 homes for Help to Buy Shared Ownership; 10,000 homes for Rent to Buy; and 8,000 homes for supported and older people’s rental accommodation. This is despite Mr Barwell previously saying that these targets no longer stand.

The amended prospectus adds that ‘future rent policy will be announced in due course’. It is expected to be addressed in the government’s Housing White Paper.

Communities secretary Sajid Javid said this government ‘is committed to increasing housing supply and halting the decline in affordability’.

‘Our newly expanded affordable housing programme, turbo-charged by a multi-billion pound investment, will allow housing associations to build more homes in places where they are most needed, particularly for families who are just about managing.’

Mr Barwell said: ‘Up and down the country we are investing more in affordable housing to help make the dream of home ownership a reality for thousands more tenants.’

Sir Ed Lister, HCA chair, said: ‘The HCA is leading the government’s drive to increase the scale and pace of delivery of housebuilding. The expanded affordable housing programme will help us continue to work with both housing associations and developers new to this area of the housing market to increase the availability of affordable homes.’

Rent to buy has been introduced and expanded as part of the government’s Affordable Homes Programme 2016 to 2021.

David Orr, chief executive at the National Housing Federation, said it represents a ‘clear show of faith from the government in our sector’.

‘This funding and the relaxed restrictions for building affordable homes will enable housing associations to provide the right mix of houses,’ he said.

‘We are proud of the strong relationship that housing associations have with the new government and will be working closely to ensure that we can deliver the homes people in this country need.’

Accelerated construction

The government’s accelerated construction programme aims to deliver up to 15,000 homes (housing starts) on central and local surplus public sector land in this parliament through £1.7bn of investment.

It aims to support non-major builders and help tackle the construction skills gap, including through greater use of Modern Methods of Construction (MMC).

The HCA is calling for councils to show ‘a clear pipeline of surplus land owned or to be acquired by the local authority which can be brought forward for housing’, along with the expertise and support required.

As reported by Social Housing, the number of homes completed for social and affordable rent and low cost ownership supported by government funding programmes in England fell by 63 per cent in 2015/16 compared to the year before.

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