H&DN response to spending review.

A week on from the #SpendingReview, the headlines have settled in and the initial surge of enthusiasm for a £39bn, decade-long investment commitment is ebbing, succeeded by more detailed analysis. At the Housing and Development Network, representing 43 council-owned development companies, the advisory panel’s response illustrates not just the complexity of the wider housing market but also the variety just within the council-owned company sector. 

“On the surface this sounds really positive,” said John Reid, managing director of Herts Living. “We know a lot of registered providers have been focusing on their stock improvements in recent years; it sounds like this will switch some focus back onto new homes programmes. I hope it translates into higher s106 bids, not just their ability to bid, as it is viability on our schemes that is challenging due to high build costs.” 

In Oxfordshire, however, Graven Hill chair Terry Fuller observed: “I would be delighted if some of this grant was directed at s106, but I fear Treasury will block that as they have done for over a decade. So the route is negotiating a lower s106 percentage, say 20% not 30%, with an agreement with the local planning authority that we will encourage an RP bid for grant funding for the additionality – at the same time as bidding for the non-grant s106.” 

“It’s just more cash, rather than higher grant rates,” added Graham Ward, managing director at Bexley Co Homes. “What we need in Bexley is higher grant for additionality. I have around 200 units across three sites which could be flipped from private to affordable, if the GLA put enough grant in to make it viable to do so. We are also finding RPs won’t take s106, and/or won’t take anything over three storeys.” 

H&DN partners have also responded. At Counties and Capital Consulting, managing director Neill Tickle welcomed the Spending Review as “incredibly positive”, predicting that RPs would “return to developing new supply” on the back of the long-term spending settlement and rent convergence ambitions as well as grant funding.  

At Metropolitan Thames Valley Housing, SO Resi director Kevin Sims noted his pleasure at the equal access granted to the Building Safety Fund for social housing, “ending the long-standing disparity between social providers and the private sector”. 

But head Of SO Resi partnerships Mark Porter added: “The devil is in the detail. The split on how the £39bn will be allocated is crucial to know, so businesses like ours can make the right strategic decisions. And as ever they need to get on with it, Time is ticking.” 

Tickle agreed. “It’s good for UK housing but will take time, particularly for the many who had reduced or disbanded development teams and don’t have a scheme pipeline any more. And it will certainly not replace the need for councils, and council-owned housing companies, to continue to build homes at an increasing rate.  

“What is important is that the £39bn grant is used to truly bridge viability gaps. We’re working for local authority company clients who are building affordable homes on sites with no land value and the schemes are still unviable with existing grant levels.” 

The group is also considering MHCLG’s current consultation, including proposed Delayed Homes Penalty, and will comment after the Leaders’ Meeting next month. If you’d like to join that group (council-owned company leaders), the advisory panel (council-owned company managers) or the wider network (public and private sector housing delivery), contact us via the website https://www.thehdn.co.uk/contact