Wider vision on housing finance essential to provide sufficient new homes say MPs

Published by Jon Land for 24dash.com in Housing and also in Local Government

The Government must employ a basket of measures, covering all tenures of housing, if sufficient finance is ever to be available to tackle the country’s housing crisis, says the Communities and Local Government Committee in a report examining the financing of new housing supply.

Launching the report, Clive Betts, Chair of CLG Committee said, “For decades, successive Governments have failed to deliver sufficient homes to meet demand. The country faces a significant housing shortfall, and the financial crisis has amplified the problem. 232,000 new households are forming each year in England, and yet last year fewer than 110,000 new homes were completed.

“There is no ‘silver bullet’. We have to muster all the resources we can. The Government’s housing strategy has made a useful start and we hope many of its measures will provide a stimulus over the short to medium term. But we need more action if we are to see significant long term improvement in housing supply”.

The Committee has set out four key areas for action:

• Large-scale investment from institutions and pension funds.

• Changes to the financing of housing associations, including a new role for the historic grant on their balance sheets.

• Greater financial freedoms for local authorities.

• New and innovative models, including a massive expansion of self build housing.

On the subject of new models, the committee saw an interesting potential in self-build, where people manage the construction of their own homes, and pointed to Almere in the Netherlands as a useful model.

Clive Betts added: “Self-build schemes could be a major new source of housing in England, but it will take substantial institutional change to realise this potential. Government, local authorities and lenders must work together to remove the barriers that currently restrict self-build and commit to getting pilot schemes underway very quickly.”

Housing Minister Grant Shapps said: “We welcome the committee’s report and will consider the recommendations it makes. Top down, regional targets pitted neighbours against developers and contributed to the lowest level of housebuilding since the 1920s so we've taken a range of measures to put power back into the hands of councils and communities.

“Our Housing Strategy is at the heart of our plans to get Britain building again, with £1.32billion to get new homes built and stalled developments back on track, a range of help and support to help double the size of the self-build industry in this country, and the innovative NewBuy Guarantee which gives thousands the opportunity to buy a home with a fraction of the deposit they currently require.

“But we’re also untying the hands of councils and housing associations, leaving them free to build more homes for an affordable rent.

"That’s why we’ve ended the tax on tenants by enabling councils to keep the rents they collect, and why a total £19.5billion is being invested by Government and the private sector in an Affordable Homes programme set to exceed expectations and deliver up to 170,000 new homes.”

Labour Shadow Housing Minister Jack Dromey MP, said: "This timely cross-party report underlines the growing housing crisis in Britain. One that the Tory-led Government’s policies are making worse, not better. House building is down 26% on the average under Labour, homelessness is rising, the mortgage market remains weak and private rents are increasingly unaffordable.

"With the economy sinking and unemployment rising it has never been more important to build badly needed homes, building Britain out Cameron and Osborne's recession. That’s why Ed Miliband is calling for an immediate tax on bankers’ bonuses to fund 25,000 affordable homes and create 100,000 new jobs for young people.

"It is critical that housing is put centre stage as Labour has argued. We therefore welcome the committee’s proposals, including increased investment from institutional lenders and pension funds, and proposals such as a housing investment bank to unify public and private funding.

"Labour will continue to lead the debate on housing. Our policy review includes not just ideas such as a housing investment bank, but incentives for investment into the private rented sector, greater financial freedoms for local authorities, and new and innovative models, including an expansion of self-build housing."