Home Group calls for Housing Enterprise Zones to kickstart UK economy

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

One of the UK’s biggest housing providers has called for innovative use of public lending to stimulate the UK economy.

Home Group is urging the Bank of England to take Quantitative Easing (QE) to the next level and target it at a major driver of economic activity - housebuilding.

The social housing developer, which has 55,000 properties across England, Wales and Scotland, believes that coupling QE with stand-alone Housing Enterprise Zones would boost economic growth while tackling the "chronic undersupply" of new homes.

New zones could feature a raft of development incentives including accelerated planning, enhanced tax benefits such as extended VAT exemption, and safeguarded future revenue streams by linking rent increases to RPI +0.5% to 2020.

Home Group’s calculations show that 16,000 new homes and 12,000 jobs could be delivered if £1bn of QE – a fraction of the £375bn QE invested thus far in the UK economy - was invested to create Housing Enterprise Zones.

Mark Henderson, Home Group chief executive, said: “Housebuilding is one of the great unheralded drivers of the UK economy. It is one of the best stimuli for economic growth and for job creation.

"At a time when economic and social factors in the UK are colliding with potentially catastrophic consequences, we cannot afford to overlook its role any longer.

"The latest estimates from the Office for National Statistics show our economy contracting markedly at a time when there is crushing pressure on the social housing system. If we cannot find radical solutions, the burden on the State will become ever more intense.

“There are no silver bullets out there for solving this problem but we can look at taking successful initiatives currently in place and focusing them on the social housing sector.

"Enterprise Zones are a proven stimulus in targeted areas and the Bank of England’s use of Quantitative Easing has injected much needed capital into the financial system. Home Group has demonstrated that by blending the two initiatives we can get more developments moving which will create more homes and provide significant growth to the economy.

“Quantitative Easing to date has been focused solely on buying Government bonds which has bolstered the banks. By using this mechanism with social housing it will mobilise private investors and be put to productive use.

"Furthermore, the social housing sector is one of the most financially secure investments the Bank of England could make with the likes of Home Group enjoying better credit ratings than high street retail giants such as Tesco.”