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How Homes England can hit its 300,000 target

Many in the housing sector are bemoaning the fact that England is now on its fifth housing minister under Theresa May and eighth since 2010. But positive continuity and long-term change have been in evidence over the past 18 months, writes Savills’ Helen Collins.

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Given the persistent and long-term nature of the housing affordability crisis experienced in many communities, and the fact that, according to Savills estimates, only around 215,000 homes are currently being built each year in England, hitting the 300,000 target will be no straightforward task.

However, Nick Walkley and his team at Homes England have acted quickly on a number of fronts and, by any measure, have made an excellent start.

They have intervened in the private sector and provided bridging funding where needed – such as with the recent £22.4m deal to accelerate the construction of 1,800 homes in Cambridge.

Then there is clear progress with housing associations, as evidenced by the £590m deal (in which Savills was involved as an adviser) with eight strategic partners to build 23,500 additional homes (14,280 affordable and social rented) by March 2022.

Work is about to start to identify a second wave of strategic partnerships with ambitious organisations.

Engagement with local authorities has also been encouraging – especially on larger sites such as at Burgess Hill in West Sussex, and also in Plymouth, Shepway, Somerset and Hemel Hempstead.

There has been some debate among planners around the extent to which these interventions are all aiding stalled sites, but Homes England’s focus will undoubtedly expedite getting spades in the ground.

So, as Homes England finds its stride, how can it continue progress towards its target of 300,000 homes a year?

To help answer that, it is useful to cast our eyes back to November 2016, when Savills published research examining the financial capacity of England’s largest 175 housing associations.

That two-part report concluded there was £7.4bn of financial capacity that associations could access and that, with some support from the government in the form of around £1.5bn of land or subsidy, 44,000 additional homes could be built each year by 2029. That would take the total number of homes built by housing associations to 84,000 a year.

Fast-forward to this year, and the Savills Housing Sector Survey 2018 that was conducted in partnership with Social Housing magazine and recently published at the Chartered Institute of Housing’s annual Housing 2018 event in Manchester.

This report highlighted a number of areas that present opportunities to Homes England to collaborate with housing associations to build more much-needed homes.

First, and most obviously, Homes England can continue to do more to support housing associations with greater access to residential land – 86 per cent of survey respondents said this was a significant barrier.

As already mentioned, Homes England has been very active in buying large sites capable of yielding substantial numbers of homes.

The Savills Housing Sector Survey found that many housing associations were discouraged or simply unable to bid on larger development sites.

This is despite the fact that around 40 per cent of these respondents said they were keen to invest in strategic land in the next five years. However, this would change were these large sites to be packaged up into smaller schemes.

Homes England has already begun doing precisely this, and has the opportunity to continue to do so through its Land Development and Disposal Plan pipeline of 1,250 acres.

Another reason to continue with this approach is that greater availability of land on which housing associations can build lessens the need to pursue Section 106 deals. This reduces instances of housing associations bidding against each other and pushing up prices.

Second, evidence from the first eight Homes England strategic housing association partners suggests the increased certainty and flexibility of the grant support will allow associations to use the tenure mix to increase the build-out rate.

This was a key point identified in the recent review of build-out rates by Sir Oliver Letwin.

Third, the strategic housing association partners also suggest that their relationship with Homes England will allow them to make greater use of modern methods of construction.

In the words of David Montague, chief executive of L&Q, being a strategic partner allows L&Q to “explore modern methods of construction that will allow us to achieve a step-change in production without compromising on quality”.

Despite the continued political uncertainty, the more proactive, pragmatic approach taken by Homes England and the positive response to strategic partnerships by housing associations, offer positive evidence that the target of 300,000 homes each year by the mid-2020s is within reach.

Helen Collins is head of Savills Housing Consultancy

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