Tepilo analyses what the government’s announcement of significant investment in local housing projects will mean for the country’s housing market.
The government has long promised to take decisive action when it comes to upping the number of new homes built in the UK. Theresa May, in fact, has made getting Britain building one of the main ambitions of her premiership.
To that end, a recent pledge made by Housing Secretary Sajid Javid and Chancellor Philip Hammond may start to silence some of the more vociferous opponents of the government’s housing policy.
The pair announced an £866 million investment in local housing projects which could see up to 200,000 new homes get off the ground.
Given the government has previously pledged to build one million new homes by 2020, and Hammond himself has said 300,000 new homes a year will be provided by the mid-2020s, this latest announcement is certainly a step in the right direction.
Some 133 council-led projects across the UK will receive funding to support local work that will make ‘housing developments viable and get much-needed homes built quicker’.
As part of the government’s commitment to build 300,000 new homes a year by the middle of the next decade, a £5 billion Housing Infrastructure Fund has been set up. The first wave of funding mentioned above forms part of a comprehensive programme to fix what May has called ‘the broken housing market’.
However, looking a little bit deeper, it becomes clear that this initial investment from the government won’t actually produce any new homes, it will simply lay the foundations to ensure building these homes in the future is less of a bind. Key local infrastructure projects - including new roads, cycle paths, flood defences and land remediation work, all essential ahead of building new homes – will receive the funding.
The government insists that without extra funding such projects would struggle to go ahead or take years for work to begin, in turn delaying the new homes that many communities across the country are in need of.
“Today marks the first step of the multi-billion pound investment we announced at the Budget to help build the homes our country needs,” Hammond said.
“This fund finances vital infrastructure such as roads, schools and bridges, which will kick-start housing development in some of Britain’s highest-demand areas. This support will help us meet our ambitious plan of building 300,000 new homes each year and ensure we have enough housing in areas which need it most.”
Who will receive the funding?
A number of projects across the UK, from Cornwall to County Durham, will benefit from increased funding. This includes:
- Some £10 million for construction of a bypass in Botley, Hampshire. A ‘critical strategic road infrastructure project’, it is set to unlock the delivery of 1,000 new homes.
- £3.6 million for drainage works, new roads and footpaths at the Manor Cluster, south-east Sheffield, helping to unlock over 400 homes by 2025.
- £6.5 million for the building of a new primary school, part of the Ilfracombe Southern Extension in North Devon. In time, this will help to unlock 750 new homes.
- £10 million for highway infrastructure to unlock further development at the Ashton Green housing site in Leicester. This, in turn, will help to unlock 3,300 homes.
What is the Housing Infrastructure Fund?
The £5 billion fund is described as ‘a government capital grant programme to help unlock new homes in areas with the greatest housing demand’, with funding awarded to local authorities on a highly competitive basis.
The fund is divided into two, with a Marginal Viability Fund and a Forward Fund. The former is available to all single and lower tier local authorities in England, there to enable them to provide a piece of infrastructure funding to get additional sites allocated or existing sites unblocked quickly, with bids of up to £10 million accepted. The latter, available to the uppermost tier of local authorities in England, is for a small amount of strategic and high-impact infrastructure projects, with bids up to £250 million.
The bidding window for both parts of the fund closed on 28 September 2017, with the government now doling out investment as it sees fit. It worked closely with Homes England to assess each bid for ‘their strategic ambition, benefits costs ratio and their deliverability’. The government will now collaborate with local authorities in the coming months to guide schemes through what it labels ‘detailed funding clarification’.
What does this mean for housing?
While the headline figures at play might sound impressive, the government is only investing to unlock potential new homes rather than actually investing more in building the homes that are needed now. If it wants to meets its one million target by 2020, and the even more ambitious target of 300,000 new homes a year by the mid-2020s, plenty more will still need to be done.