Osborne's autumn statement - what it means for housing
Published by Jon Land for 24dash.com in Central Government and also in Housing
Osborne's autumn statement - what it means for housing
The government is to issue £1 billion in loans to unblock large housing developments and give local authorities additional flexibility to build new affordable housing, Chancellor George Osborne announced today.
Outlining plans for growth in his autumn statement, the chancellor said councils would be given an additional £300 million of borrowing capacity through the Housing Revenue Account.
In the section on housing, the autumn statement reads: "Building on the long-term capital settlements set out at Spending Round 2013, the government will create a £1 billion, six-year programme to fund infrastructure to unlock new large housing sites. This will support the delivery of around 250,000 homes.
"The programme will begin in 2014-15, with investment decisions on nine specific sites, capable of unlocking around 27,000 houses. 50 million of this will be earmarked for Local Enterprise Partnership supported bids, to deliver on their ambitions for housing growth.
"The government will increase the funding available for new affordable homes, by increasing local authority Housing Revenue Account borrowing limits by £150 million in 2015-16 and £150 million in 2016-17, allocated on a competitive basis, and from the sale of vacant high-value social housing. This funding will support around 10,000 new affordable homes and will form part of the Local Growth Fund, available to local authorities who have a proposal agreed by their Local Enterprise Partnership (LEP).
"This will strengthen the role of the Local Growth Fund in transforming local economies, by providing much-needed housing to support growth. 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, government will ensure all councils are transparent in the value and size of their housing assets."
In addition, the government said it would launch a review into the role local authorities can play in supporting overall housing supply.
Commenting on the housing elements of the autumn statement, 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."
Marnix Elsenaar, head of planning at Addleshaw Goddard, added: “Housebuilding has had significant support this year in the form of mortgage guarantees and equity loans and this will be more welcome support for a truly vital sector. But without a greater focus on driving new supply, the structural issues we face will only deepen.
“There remain two fundamental issues. First, the inconsistent and often nonsensical approach to planning combined with an inefficient use of public land is restricting housing supply in many key areas. In places where it isn’t immediately profitable to build, there simply have to be decisions taken where councils can partner with developers to contribute buildings or land through joint ventures agreements.
“Secondly, society needs to unveil itself from the stigma of renting and embrace it like the Americans and mainland Europeans do. We’re already seeing the emergence of hotel-style rental blocks paid for by pension funds and this will doubtlessly form a major element of housing supply over the next decade.
“Manchester and London are leading the way with this and we believe every major city could benefit by unlocking new finance for a different form of housing that provides professional service and gets around many of the issues of poor quality associated with the buy-to-let market.”
Alan Aisbett, housing and regional and local government partner at Pinsent Masons Alan, said: “Increasing the Housing Revenue Account (HRA) borrowing ceiling is good news for affordable housing as local housing authorities will be able to use revenues to improve estates and build more new homes.
"However, with the restriction to £300m over two years and incentives promised for right to buy this will be offset by the potential loss of stock. To keep up it is likely that local authorities are going to have to continue to find other models for housing estate redevelopment primarily outside of the HRA through self build or joint ventures.
"The Government’s continued commitment to housing as part of national infrastructure can be clearly seen with LEPs set to determine a significant part of affordable housing spending priorities in their areas in much the same way as they will determine expenditure for retained business rates from Enterprises Zones and the and the priorities for the Single Local Growth Fund. This is the first time that major housing expenditure decisions have been allocated to LEPs.”
Liz Peace, chief Executive of the British Property Federation, said: “We are delighted that the Chancellor appears to have heeded our calls – and those other business groups – of to commit to a review of business rates, as well as taking short-term action to mitigate the harm that continues to be caused by this archaic property tax.
"However, simply tinkering around the edges of the system will not be enough – the business rates regime remains one of the greatest barriers to investment in the built environment, and is fundamentally unfit for the 21st century.
“Action to support the re-use of empty shops is particularly welcome. Empty properties blight our high streets and town centres, and we would urge government to think further about reforms to the business rates regime that would allow property owners to invest further in these properties.”