The British Government’s extra funding for a new generation of council and housing association homes in England has been generally welcomed but there are concerns that it is too little, too late.
More details of the plans have now been revealed with the extra £2 billion taking the amount of funding for building affordable homes to rent to £9 billion.
The extra funding will realise around 25,000 more homes at rents for local people with the numbers of properties determined on type and location of housing, and bids received for funding.
Ministers also confirmed plans to create a stable financial environment by setting a long term rent deal for councils and housing associations in England from 2020.
‘The funding will further support councils and housing associations in areas of acute affordability pressure, and where working families are struggling with the costs of rent and some are at risk of homelessness,’ said the Department for Communities and Local Government.
It said that since April 2010, around 333,000 affordable homes have been delivered, including 240,000 for rent. More than twice as much council housing has been built since 2010 than in the previous 13 years.
Under the proposals any increases to social housing rents will be limited to the Consumer Price Index (CPI) plus 1% for five years from 2020. ‘This will give social tenants, councils and housing associations the security and certainty they need,’ the spokesman added.
Previously, the Government’s affordable housing policy primarily supported ‘affordable rent’, that is rents of up to 80% of local market level, and low cost home ownership. This announcement now extends support for ‘social rent’, which are lower rents, set according to national guidelines.
Brian Berry, chief executive of the Federation of Master Builders (FMB) called the announcement brave and bold. ‘The private sector will continue to expand the number of new homes it builds, particularly so if the Government succeeds in its aim of removing barriers that hold back small scale house builders,’ he said.
‘However, in the house building heyday of the 1950s and 1960s, a healthy private sector was always complemented by significant levels of social house building. Indeed, we have only ever built at the level we need to keep pace with demand when both the private and public house building sectors have been firing on all fronts. In the 1960s, for example, we were building around 400,000 homes per year and half of those were social housing,’ he pointed out.
He said the plan is also an opportunity to help shape a stronger local house building industry. ‘If councils can start to engage with smaller, local builders to deliver this new generation of council housing, it could further help to diversify the industry. This would also boost the capacity of the private sector through the provision of more public sector work. Indeed, the increased use of small and medium-sized building firms will limit the problem of land banking, as this is something small builders simply don’t do,’ he explained.
‘There do remain however, some significant roadblocks to the Prime Minister’s vision. Following Brexit, the serious shortage of skilled labour the construction industry is already dealing with will be exacerbated if it becomes much more difficult for European Union tradespeople, who have come to play a crucial part in plugging the industry’s chronic skills gap, to move to and work in the UK,’ he said.
‘Although the industry must seek to overcome this crisis by recruiting and training many more young people than we currently do, the Government must also be mindful and realistic about the continuing need there will be for skilled EU workers as it puts in place its post-Brexit immigration policy. Otherwise it will risk jeopardising the delivery of the bold new house building ambitions the Prime Minister outlined,’ he added.
According to Steve Mansour, chief executive officer of CEO of construction insurance specialists CRL, there are a number of other factors that can prevent homes from being built as quickly as policy makers might like.
‘The industry must look at the requirements of the modern home owner, and potentially consider alternative methods to create the necessary amount of homes, for example, prefabricated and multigenerational homes. It is also important to take into account that basic, affordable family homes do not offer the highest return on investment, and ultimately, these are the types of houses that need to be built to address the shortfall,’ he said.
‘In addition, the Government must support the industry and reassess current processes by cutting red tape and updating overcomplicated planning regulations. Whilst this has partly been implemented by the Neighbourhood Planning Act 2017, more can be done to make the overall process simpler for developers to gain the necessary permissions. This will enable a faster planning application process and help to ease the current complex and time consuming procedures,’ he added.
Robert Desbruslais, director of Desbruslais Chartered Surveyors voiced a concern that there is a lot of homes needing to be built to make up for all those that have been sold off under a previous Conservative Government’s Right to Buy scheme.
‘The Conservatives have twigged that help to buy and private developers can never solve the real housing crisis, the lack of affordable rented housing. Developers are hamstrung by profit margin and can only build a small percentage of affordable homes in any given scheme,’ he said.
‘Help to Buy merely assists the minority with sufficient income to get a mortgage, and could also be described as help the developers’ profit. It is also questionable if first time buyers get value by being encouraged to buy new build which loses value the moment it is sold, a dangerous scenario when house prices are not rising,’ he explained.
‘So, we return to Council Housing Development with a £2 billion investment pledge; a good start, but still a drop in the ocean. It is such a shame all those lovely council houses built in the 1950s were sold off cheaply during the Right to Buy push in the Thatcher era. At least this time around there will be no repeat of the 1960’s high rise damp ridden concrete monoliths. Let’s hope a future Government avoids the temptation to sell them all off again,’ he added.
According to Richard Lambert, chief executive officer of the National Landlords Association (NLA), believes that the Government, society and taxpayers will get better long term value from investing in building than in subsidising rents.
‘The announcement should not only provide more available housing for those most in need at rents they can afford, it should also relieve the pressure on the private sector, and choke off the breeding ground for the minority of rogues and criminals who get away with providing substandard housing and neglecting their tenants,’ he said.
