I see that the government has recently announced some more measures to help boost the supply of homes and make things easier for the nation’s developers in advance of next Wednesday’s (October 29th) Budget.
First mentioned by the Chancellor in last year’s Autumn Statement, the Land Assembly Fund and Small Sites Fund were finally launched in September by the Secretary of State for Housing, James Brokenshire, along with a new partnership with Barclays Bank, the Housing Delivery Fund.
Just how much of a boost are these going to be though?
Overview of the 3 new funds
The difficulties involved in assembling land to deliver housing (e.g. unifying multiple interests, remediating damaged land and sorting out infrastructure) have always been a disincentive for developers and are now seen as one of the key obstacles to increasing the housing supply.
The Land Assembly Fund is presented therefore as a £1.3 billion pot of cash that that will be used “to assemble fragmented pieces of land into ready-to-go sites for developers to build homes on.”
The £630 million Small Sites Fund will provide grants to help fund remediation and infrastructure work that will help local authorities and other public land owners speed up the delivery of homes on small and stalled sites in their areas.
The Housing Delivery Fund is a new £1 billion pot of loan finance that is described as aimed at small and medium sized developers looking to finance a residential development particularly those looking to finance affordable homes, social housing and retirement homes.
Funding of £5 – £100 million per project is potentially available and developers will be able to leverage their projects up to a maximum 80% of loan to cost (70% loan to gross value).
But how much of a difference are they going to make?
We need to build more homes if we are to sort out the current housing crisis. It’s great that the government understands this and appears keen to take steps to help.
However it is necessary to subject these new measures to careful scrutiny.
Let’s consider the Land Assembly Fund.
If I was a developer, at first glance I’d think that this looks a good idea. After all, isn’t it simply the government saying that in the interest of getting things done it is happy take on the assembly of sites where I’d normally be reluctant to become involved as the risks are just too high?
But hang on a second. Who is going to be doing this assembly work in practice? And more importantly, how will the cost of this work be passed on? Will it be in the price of the ‘ready-to-go sites’ which are the end product? How actually is it all going to work? More information required I’d suggest…
The Small Sites Fund appears to have similar objectives but is focussed on helping public bodies.
So, how about the Housing Delivery Fund?
Again, if I were a developer, I’d think this sounds a great idea.
However, a quick look at the fund fact sheet doesn’t suggest there is much new here. The monies appear basically to be available on normal commercial terms and are only targeted at small and medium sized developers in so far as the max per project is limited to £100m. So what’s the difference?
Maybe I’m being a little harsh. There are still only limited details currently available but these new initiatives will require more positive fleshing out before they can be judged as a great leap forward.
I am now very interested in this month’s budget to see whether it features further support for these new measures and perhaps other incentives for the housing market.
Categorised in: Consultancy