Successful places

with homes and jobs

A NATIONAL

AGENCY

WORKING

LOCALLY

Development &

Growth

CIH – 13 November 2013

Naisha Polaine

Homes & Communities Agency

13 November 2013

Contents

Current delivery context

CSR landscape

Development & growth

Case Studies

Discussion

Current delivery context –the market March

2013

Number of loans in Q3 2012 down

2% on same time 2011

Housing starts down 2% &

completions down 5% on same

time 2011

Constrained mortgage lending

Falling housing starts across all

sectors

Projections of medium-term

stagnant or slow growth

-

50,000

100,000

150,000

200,000

250,000

300,000

0

10,000

20,000

30,000

40,000

50,000

60,000

No

. o

f lo

an

s

No

. o

f u

nit

s

Starts

• Policy focus on stimulating growth

• Risk – diversification and complex

environment for private and public sector

4

Current delivery context –factors holding back

greater housing investment

Demand-side barriers

• Lending – banks are less willing to lend as the

perceived risk of house prices falling is higher

• To reduce banks exposure to this risk, higher

deposits have been demanded

• The cost of borrowing for banks has increased due

to uncertainty in the economy, and higher risk

aversion in the financial sector

Supply-side barriers

• The fall in house prices has reduced the financial

viability of building, leading to stalled sites

• Reduced access to investment finance, particularly

for smaller suppliers

5

Government policies to support the housing

market in the short term

• Demand-side

• The Help to Buy scheme, enabling households to access 20% equity for

mortgages for new build homes

• Creating a debt guarantee scheme for up to £10 billion to support affordable

housing and private rental homes

• Supply-side

• Get Britain Building fund to unlock building on sites with planning permission

• Supporting the release of public sector land and reducing planning delays to

accelerate major housing projects

• Affordable homes programme with new affordable rents

• Increasing the maximum discount available for Right to Buy – for the first time,

all the additional sale receipts will be recycled back into new affordable rented

homes

Current delivery context – the market Nov 2013

Average house price in the East

£209,000 compared to England average

of £253,000

Following 2008-09 national average

price has increased by 12.5%. The

average East SSR price by 8.7%

total number & value of house

mortgages sold have gone up since

summer 2012

Expectation that prices will rise 20% over

2013 - 17

We help drive local economic growth by supporting communities to realise their aspirations for

prosperity, creating successful places with homes and jobs.

Current market delivery – changes in supply

Housing Starts rose by 36% in the three

months to June 13 – 23,000 homes (on

same quarter last year)

On an annual basis, construction work

started on 110,530 new homes, a 7%

increase on previous year. (But half

needed to meet annual household

formation)

annual housing completions in England

totalled, 9% lower compared to the

previous 12 months

Recovery underway before Help-to-Buy

introduced

Help-to-buy encouraged 15,410

reservations in first 6 months

Development & Growth going forward – CSR 2013

Affordable Housing

Extending AHP by £957m pa , for 3 years up to 2017/18

Affordable Rent to Buy scheme with £250m 2015/16 &

£150m in 2016/17

Social sector rents CPI + 1%, for 10 yrs, from 2015/16

DOH

Public Land

HCA to be disposal agency for surplus public sector

land.

Govt to deliver c. £15 bn of asset sales 2015 - 20 inc at

least £5bn of land/ property.

Strategic Land Review to identify surplus or redundant

public sector land

Right to Contest for local communities to release land

where it is potentially surplus or redundant and can be

put to better use.

Development & Growth going forward – CSR 2013

Local Growth

Local Infrastructure Fund of £50m for EZ’s, plus £100m in 2014-15

£102m in 2015/16 for large scale housing schemes via LIF

Private Rented Sector

£1bn Build to Rent programme underway

PRS increased by 2m people 2001 – 11 & to increase by 1m in next 5 years

HRA Reform/self- financing

• 140 authorities had headroom for additional borrowing on Day 1

• total value of £2.8bn and 75% will have a positive cash flow

• Relative certainty over income from rents [and disposals]:

• to support a 30 year asset management plan;

• ability to appraise the financial viability of new build developments on the

same basis as a housing association

Development & Growth going forward – business

model responses

Private Sector

Trader model re-emerges; appetite for strategic/brownfield land returns –

more marginal viability areas developing out

Move into private rented & equity products – tenure diversification

Registered Providers

Focus on creating surplus from asset portfolio & financial headroom;

cross –subsidising affordable from private sales

Move intio private rented & equity products – tenure diversification

Local Authorities

Increasing numbers bidding for grant

New business planning environment

Housing Company models emerging max HRA headroom & flexibility

Central Government

Maximising release of public sector assets & recoverable investment

Delivery

Leadership & Governance

– Looking beyond administrative boundaries

– Bold Visions

Infrastructure

– Realism about who can deliver what

– Infrastructure funds & tariffs

Finance

– Risk & risk-sharing

Community Engagement

– the silent majority

Conclusions

Public finance remains constrained; complex

and challenging operating environment

Housing, land and construction as key drivers

of local economic growth

Risks and opportunities – new approaches by

RP’s, LA’s & Govt

Robust regulation aids and underpins delivery

HCA investment, commercial expertise and

regulation remain key to delivering successful

places with homes and jobs

CASE STUDIES

Gloriana Thurrock Ltd

Barbara Brownlee

Director of Housing

13 November 2013

Thurrock Regeneration – Changing Landscape

Localism Act

Continued reductions in funding

Building half the homes we need &

planning reforms not taking hold

Overcrowding worsening & homelessness

increasing

Housing benefit bill rising & rents failing to

drop

Universal Credit is coming, welfare reform

Falling household incomes & UK

household debt levels

Unfinished new build properties in Chafford

Hundred

Build 1000 council homes a year, deliver estate regeneration

The intention is not to compete with the private sector but rather to

provide a catalyst for regeneration and to maintain the momentum of

change.

Deliver the good quality affordable housing required in the borough

– 26,000 in 25 years to support the new industry

A place of opportunity, enterprise and

excellence, where individuals, communities and

businesses flourish

Nethermayne Basildon

Land owned by the HCA, South Essex College and Basildon

Borough Council

Working in Partnership to undertake a joint disposal of the land

which will facilitate the relocation of the existing South Essex

College to Basildon Town Centre

Tri-partite legal agreement to cover project finance and disposal

of land

Project Concept

Minimum of 850 new homes of which approximately 30% will be affordable

Council acquire the town centre site

College construct 7,000 - 8,500m2 (GIA) “New Campus Basildon”

Scheme funded through disposal of college site, borrowing and HCA

Town centre benefits from regeneration, community facilities and student income / activity

Education and skills development achieved in Basildon, in partnership, to reduce NEET, increase 16-18 participation and apprenticeships

Potential for integrated library facilities and Adult Community college relocated

How and what will be a achieved

Successful places

with homes and jobs

A NATIONAL

AGENCY

WORKING

LOCALLY

Questions &

Discussion