The government’s plan to tackle the housing shortage by building 25,000 new homes using a £3bn Home Building Fund has been broadly welcomed by property industry.
The fund, made up of money already set aside for housing, will provide short-term loans to businesses in an effort to encourage new housebuilders into the market and boost the supply of much needed new homes.
The plans include spending a further £2bn on an accelerated construction scheme to make publicly owned brownfield land available for development, along with encourage greater development on derelict land and abandoned shopping centres as well as convert unused office buildings into homes.
The stimulus fund, announced by chancellor Philip Hammond and communities secretary Sajid Javid at the Conservative Party’s annual conference yesterday, will help build 25,000 new homes by 2020 and up to 225,000 units in the longer term.
Hammond said: “There has been a housing shortage in this country for decades, and the Government is determined to take action to tackle it.
“We'll use all the tools at our disposal to accelerate house building and ensure that over time, housing becomes more affordable.”
Although the housing market has slowed since the vote to leave the EU, a severe shortage of homes on the market has continued to push prices higher across parts of the country.
Javid commented: “We want to ensure everyone has a safe and secure place to live. That means we've got to build more homes.
“It is only by building more houses that we will alleviate the financial burden on those who are struggling to manage.”
Reflecting on the government’s latest strategy to boost new housing supply, Paula Higgins, chief executive of HomeOwners Alliance, is delighted to see the government recognising the need for more new homes, which in turn will help to create a sustainable economy.
Higgins said: “It’s not just their moral duty to build these homes. We would remind ministers and home builders that it is also their moral duty to build homes that are fit for purpose; so high quality homes that meet the requirements of not only first time buyers but of last time buyers as well. We must build homes people would be proud to live in, not that make the most profit for the builder.
“More homes will not be enough to tackle the ever widening gap between wages and house prices and needs to look at ways to help the current generation that is priced out.”
Stewart Baseley, executive chairman of the Home Builders Federation, was quick to point out that the housebuilding industry has increased housing supply significantly in recent years but that “innovative thinking” is required if developers are to deliver the number of homes the country needs.
“Moves to speed up how quickly builders can get onto sites, to bring more land forward more quickly and to incentivise new entrants will undoubtedly help increase output further,” he said.
If the government was planning to solely rely on large housebuilders to deliver the new homes needed to meet high demand for property in this country, the strategy would have been “doomed to failure”, according to Christian Faes, co-founder and CEO of online mortgage lender LendInvest.
Faes, who is attending the Conservative Party conference this week, is pleased to see more funds being made available for small residential property developers too.
He said: “Relying on large housebuilders to deliver the homes we need is doomed to failure. It is absolutely right that this fund should be targeted at small builders. For too long, accessing funding for their projects has been simply too difficult, with the big banks not interested or too constrained to help.
“According to the NHBC Foundation, 22% of small developers describe obtaining finance as a major challenge. This fund is a terrific step towards addressing that funding gap and ensuring we improve the number of homes built in the UK.
“However, helping them to pick up the housebuilding slack will take more than money alone - the government must act immediately to make land more accessible to them, as well as supporting measures which will ensure they develop the skill set they need to make a success of their projects.”
The National Association of Estate Agents (NAEA) has also expressed its support for the plans to build significant more residential properties, but is concerned that when it comes to delivery of more new homes, and wonder whether the plans will actually be feasible.
Mark Hayward, managing director at the NAEA, said: “It’s all very well releasing land and providing the finance to build new homes, but if the infrastructure and labour isn’t there to turn bricks and mortar into homes, it simply won’t be do-able. We now need the detail and clearer plans on how this will work in practice.”