Strategic Plan 2018/19 2022/23 - Making homes happen - Gov.uk
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Making homes happen Strategic Plan 2018/19 – 2022/23
How to read this plan To find out about what we do and why To find out about how we will measure we exist we recommend that you read our success we recommend that you Who we are and Why we are needed. read about Our impact. To find out about how we work with To find about our organisation, how it partners to deliver the homes that is changing and what we will be like to England needs we recommend that you work with we recommend that you read read Our offer. Achieving our plan. To find out about our activities over the next five years we recommend that you read about Our mission and Our objectives.
S T R AT EG IC P L A N 2018 /19 – 2022 / 23
2 Foreword
Who we are
6 Who we are
8 Our offer
10 Our mission and objectives
11 Why we are needed
15 Our impact
Our objectives
18 Unlocking land
20 Unlocking investment
22 Increasing productivity
24 Driving market resilience
26 Supporting local areas
28 Delivering home ownership products
Achieving our plan
32 Financial plan
34 Right people, right culture
36 Managing risk
38 Our values
1
HOMES ENGL AND
Foreword
Housing is one of the defining issues of our time. The
affordability pressures we are experiencing today have
been decades in the making.
At the most basic level, we have That is why government has
not been building enough homes. established Homes England and
This has led to soaring house prices we are already striking bold
and rising rents. deals and forming new types of
innovative partnerships to shake
Nationally, the average house
up housing delivery.
Sir Edward Lister now costs eight times the average
Chairman income. In some places that It is just the start. This five-year
number rises well into double strategic plan sets out our
digits. As a result, a whole ambitious new mission and the
generation can no longer afford steps we will take with industry to
to get on the housing ladder. respond to the long-term housing
challenges facing this country.
We desperately need more homes
in the right places, where people We plan to be bold, creative and
want to live. think big. We hope the whole of the
housing sector – big and small, up
The government has a clear
and down the country – will join us
ambition to increase the levels of
for the next five years and beyond.
housebuilding. The aim is to be
delivering 300,000 new homes a
year on average.
We have made real progress in the
last five years but we now need
to go much further. In the next
five years we will need to make
significant changes to the way we
deliver homes.
Ultimately, we need to disrupt the
housing market.
2
S T R AT EG IC P L A N 2018 /19 – 2022 / 23
Our ambition is to create a new type of delivery agency
that will play a far more active role in the housing
market. We will also show leadership on design,
diversity and modernisation.
We will be a national agency Plymouth; a £1bn lending alliance
committed to a place-based with Barclays to support smaller
approach, working alongside civic builders; a new joint venture with
and business leaders, combined Kier’s residential arm; two waves
authorities, county, borough of strategic partnerships with
Nick Walkley
and district councils and local housing associations; and
Chief Executive
enterprise partnerships. significant progress on major
developments at Daedalus,
We will use our land, money,
Ebbsfleet and Northstowe.
powers and influence to increase
the pace, scale and quality of Converting this momentum into
delivery. This will accelerate the sustained delivery requires a more
delivery of new homes in areas strategic and assertive approach to
of greatest demand and help to getting homes built. This five-year
create great places. strategic plan sets out our thinking.
That doesn’t mean we will build the Internally, we are transforming
homes ourselves. It means we will our organisation by recruiting new
intervene in the right places at the expertise, increasing collaboration
right time to change the market, across teams and regions and
by working with ambitious partners modernising our digital operations.
and being more intelligence-led in
However, we cannot deliver our
our decision-making.
mission alone. Our job is to work
We are already making real in partnership with all players in
progress and showing how we the sector and beyond. This plan
intend to operate differently in is our invitation to you – across
future – unlocking important construction, design, development,
land, funding builders of all sizes housing associations, local
and creating new commercial government and other partners.
partnerships.
We welcome partners who
High-profile deals we have forged share our ambition to challenge
in recent months include: major traditional norms and build better
land acquisitions in Sussex and homes faster.
3
HOMES ENGL AND
1
4
S T R AT EG IC P L A N 2018 /19 – 2022 / 23
Who we are
5
HOMES ENGL AND
Who we are
We’re the government’s housing accelerator.
We have the appetite, influence, expertise
and resources to drive positive market change.
By releasing more land to developers who want
to make a difference, we’re making possible the
new homes England needs, helping to improve
neighbourhoods and grow communities.
We welcome partners who share our ambition We work in collaboration with partners who share
to challenge traditional norms and build better our ambition. These include local authorities, private
homes faster. Join us in breaking new ground to developers, housing associations, lenders and
make this happen. infrastructure providers. Our activities are always
in response to local needs and robust leadership
We are a new non-departmental public body,
ensures we deliver best value for money in all of our
sponsored by the Ministry of Housing, Communities
interventions, including those delivered with partners.
and Local Government. We exist to accelerate the
delivery of housing across England, except in London Within the next few years, we will have invested over
where much of this role is devolved. £27 billion across our programmes.
We’re a national agency with experts based in
offices across the country. With nearly 750 full-time
employees our ambition is to double in size over the
next 18 months, to broaden our skills base and drive
the delivery of more housing.
We’re governed by a Board, appointed by the
Secretary of State for Housing, Communities and
Local Government, and led by Sir Edward Lister. Our
Chief Executive, Nick Walkley, leads an executive team
that includes specialists in land, investment, finance
and risk management.
Our role is to ensure more people in England have
access to better homes in the right places. To make
this happen we intervene in the market to get more
homes built where they are needed. We accelerate
delivery, tackle market failure where it occurs and help
to shape a more resilient and diverse housing market.
6
S T R AT EG IC P L A N 2018 /19 – 2022 / 23
Over the next five years we’ll help
more people in England to access
better homes in the right places by:
Unlocking and Providing Supporting
enabling land investment products, the affordable
including for major housing market
Delivering home infrastructure
ownership products,
such as Help to Buy
Supporting
Modern Methods
of Construction
(MMC)
Addressing the
barriers facing
smaller builders
Providing expert
support to priority
locations
7
HOMES ENGL AND
Our offer
We have an ambitious vision to make the
housing market work. But we cannot deliver
this alone. That’s why it’s our job to work
with partners across the sector. We will make
the following commitments to our partners
and ask that you work with us to deliver the
homes England needs.
Local authorities and places Private developers
We know that there are local obstacles to delivery and We’ll seek to boost supply, productivity, innovation,
our activity will be guided by your plans, insight and quality, skills and the use of MMC in the housing
leadership. Our infrastructure investment can unlock market. We’ll also help to shape a more diverse and
new sites and we’ll support the most ambitious local resilient market. Our investment will help smaller
authorities in turning their visions into reality. For builders scale up, so that they can access funding
example, by sharing our expertise and professional privately in their next round of expansion. We’ll
skills, brigading our resources and through schemes also unlock and enable sites for the full spectrum
such as the Garden Towns and Villages programme. of housebuilders and directly deliver enabling
We’ll also make our procurement frameworks infrastructure where necessary. In return, we ask
available to help you access the specialist services home builders to commit to delivering the supply that
you need to accelerate the supply of new homes. local areas need at pace, and to building high quality
homes and developments. We also ask that home
In return, we ask that you make housing delivery a
builders invest in the next generation of the workforce
top priority, particularly in areas of England with the
through apprenticeships and skills training.
greatest need, by continually developing ambitious
plans. We also encourage you to work with one
another to share best practice and, where appropriate, Housing associations
partner for delivery.
We’ll continue to introduce greater flexibilities over
how and when we invest in affordable housing,
including through further Strategic Partnerships
with ambitious providers. In return, we ask housing
associations to be more ambitious in how they use
their own resources and capacity to significantly
increase housing delivery.
8S T R AT EG IC P L A N 2018 /19 – 2022 / 23
Lenders and institutional investors Buyers and renters
Our investment team will offer greater access to We’ll ensure that you have better access to decent and
projects which increase supply and/or regenerate affordable housing. By providing loans to buyers and
priority places. We’re also open to creative options for grant funding to Registered Providers, we’ll support
providing long-term, low-risk investment opportunities. ownership and rental options such as Help to Buy,
In return, we ask that you be more active in addressing Shared Ownership, Affordable Rent and Social Rent.
the housing crisis, leveraging your significant funds We will also continue to work with Ministry of Housing,
and expertise to deliver new high-quality homes. Communities and Local Government in its ambition
to tackle rough sleeping, by providing appropriate
accommodation for rough sleepers and those
Infrastructure providers
currently living in hostels or refuges.
We’ll collaborate with you to make sure that the
delivery of transport, utilities, and social and digital
infrastructure is aligned with delivery of housing.
We’ll work together to plan for and take advantage
of technological advances such as autonomous
vehicles and smart cities. In return, we ask that you
think about housing delivery when creating your plans,
and collaborate with us so that we can coordinate
delivery together.
9HOMES ENGL AND
Our mission is to intervene in the
market to ensure more homes
are built in areas of greatest
need, to improve affordability.
We will make this sustainable
by creating a more resilient and
diverse housing market.
We’ll unlock public and private We’ll ensure a range of investment We’ll improve construction
land where the market will not, products are available to support productivity.
to get more homes built where housebuilding and infrastructure,
they are needed. including more affordable housing
and homes for rent, where the
market is not acting.
We’ll create a more resilient and We’ll offer expert support for We’ll effectively deliver home
competitive market by supporting priority locations, helping to create ownership products, providing
smaller builders and new entrants, and deliver more ambitious plans an industry standard service
and promoting better design and to get more homes built. to consumers.
higher quality homes.
10S T R AT EG IC P L A N 2018 /19 – 2022 / 23
Why we are needed
England does not have enough homes in
the right places. This means that housing is
unaffordable in some places and unsuitable in
others. The reasons for this include a shortage
of land available for development, a lack of
finance available for major infrastructure,
low productivity growth in the construction
sector and insufficient market diversity.
Through each of our six strategic objectives we are There is a shortage of land available for housing,
committed to tackling the underlying causes of particularly in the least affordable areas.
England’s housing crisis, ensuring that more people
Over many years there has been a lack of viable and
have access to a home they can afford.
developable land available for housing. This is one
of the key reasons for the undersupply of homes. Yet
only around 11% of England is developed and only
a fraction of developable land would be needed to
significantly increase supply. For example, there are
11%
26,000 hectares of brownfield land available, with
capacity for one million homes. In addition, central
and local government owns surplus land with capacity
for over 160,000 homes.
However, a combination of fragmented land ownership,
of England is developed planning uncertainty, remediation and servicing costs,
and only a fraction of and a lack of strategic infrastructure mean that land is
developable land would still a barrier to increasing home building.
be needed to significantly
increase supply This is why we’ll unlock public and private land
where the market will not, to get more homes built
where they are needed.
11HOMES ENGL AND
Investment, including in major infrastructure, Productivity growth in the construction industry has
is often required to unlock and support the been low, constraining the capacity of the sector to
development of new and affordable homes. deliver more and better homes.
Too often the availability and terms of finance, For too long, the construction industry has broadly
especially for parts of the construction sector that are followed a business-as-usual model.
considered higher risk and less commercially viable,
Productivity and innovation growth has been low for
constrains housing delivery.
the past 25 years and continues to lag behind the
Since the global financial crisis many of our partners UK economy as a whole. Based on current entrant
have reported difficulties accessing capital. In levels the construction sector could see a 20-25%
particular, there has been little commercial lending decline in the workforce by 2026, with skills shortages
to smaller house builders, and where it does take particularly acute in traditional areas of construction
place it is often on highly restrictive terms. Equally, such as brick-laying and plastering.
a lack of coordination and commercial appetite for
Potential decline in the construction sector workforce
investing in strategic infrastructure can constrain
2018
25%
housing development.
Despite the continued growth of the private rented
sector, attracting institutional investment will remain 2026
difficult until confidence in the sector grows. Housing
associations also need funding stability to continue to The increase in housing completions in recent years
leverage private finance and increase the delivery of has magnified this problem, with a shortage of
new affordable homes. construction and professional skills alongside supply
This is why, where the market is not acting, we’ll limits on traditional building materials. At the same
ensure a range of investment products are available time, while there is increased interest in Modern
to support housebuilding and infrastructure, Methods of Construction (MMC), take up is being held
including more affordable housing and homes back. This is due to a number of challenges, including
for rent. limited production and skills capacity.
This is why we’ll improve construction productivity.
Change in output per hour in the construction industry compared to the UK economy as a whole
Source: Office for National Statistics, July 2018 | Index: 1994 = 100
140
120
100 Construction
80
60
40
20
0 UK Whole Economy
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
12S T R AT EG IC P L A N 2018 /19 – 2022 / 23
The housebuilding market is increasingly made up Ratio of average house prices
of a small number of builders, meaning there is to workplace-based average
12.4
insufficient diversity, competition and capacity. earnings by region, 2017
Source: Office for National Statistics, April 2018
A study by the Home Builders Federation found
10.3
London
that in 1988 more than 12,000 SMEs were responsible
9.7
for nearly 40% of all new homes. In 2017, there
8.8
were only around 2,500 SMEs active in the sector,
South East
East
responsible for just 12% of new homes. The financial
South West
crisis exacerbated this trend, meaning England is
6.8
6.6
now increasingly dependent on a small number of
5.9
5.8
5.2
big house builders.
East Midlands
West Midlands
Yorkshire and The Humber
We’ll continue to work with big house builders,
North West
North East
who play an important role on large and complex
sites and who can support industry innovation with
their greater resources and influence. However, the
big house builders alone will not be able to deliver
the homes that England needs and their dominant
position can result in less consumer choice in design
and the slower build out of sites. Region
There are a number of barriers preventing smaller Housing is particularly unaffordable in certain
builders from delivering a greater number of homes parts of England. This requires us to tailor our
including: a lack of development finance; a land interventions so that they address the specific
market weighted in favour of larger builders; and a obstacles in local housing markets.
complex planning system.
Although housing affordability is a problem
This is why we’ll create a more resilient and throughout England it is particularly acute in certain
competitive market by supporting smaller builders areas. This is most notable in the South East, where
and new entrants. In addition, Homes England will the ratio of average house price to average income
work with house builders to promote better design has reached 10.3.
and higher quality homes.
In other parts of England opportunities for significant
growth exist such as the development of High Speed 2
and new settlements.
This is why we’ll offer expert support for priority
locations, helping to create and deliver more
ambitious plans to get more homes built.
Decline in number of SMEs 1988 – 2017
12,000 2017
2,500
1988
13HOMES ENGL AND
Ratio of average house prices to workplace-based average earnings, England
Source: Office for National Statistics, April 2018
9
8
7
6
5
4
3
2
1
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
8x
Millions of households are priced out of the housing
market, with the ratio of average house price to
income reaching record levels.
Demand for housing (driven up by an increasing
An average home now costs population, decreasing household size and improved
almost eight times more credit availability) has outpaced housing supply.
than average earnings. As a result, England has seen some of the highest
house price inflation in recent years and has some
of the least affordable areas in the OECD, with an
average home now costing almost eight times more
than average earnings. This means millions of younger
families and first-time buyers are unable to purchase
a home. As a result, owner occupation has gradually
declined from a peak of 71% in 2003 to around 63% in
2014, where it has since remained. This trend should
be reversed.
That is why we’ll effectively deliver home ownership
products, providing an industry standard service
to consumers.
14S T R AT EG IC P L A N 2018 /19 – 2022 / 23
Our impact is measured using
the key performance indicators
set out below, with relevant
targets set against these on
an annual basis.
New 1. 2. 3.
homes Total completed new Total completed homes Total completed
homes supported by which are additional homes supported
Homes England to the market indirectly
Right 4. Value for 5.
places Share of funding to the money Total economic
50% least affordable benefit provided
local authorities by the
price: earnings ratio
Type of 6. 7.
homes Total affordable Total households
completed homes supported into home
supported by Homes ownership by Homes
England England
Shaping 8. 9. 10.
the Share of transactions Share of supported Average Building for Life
market with low/medium
volume housebuilders
completions using
Modern Methods of
12 score for supported
completions
Construction (MMC)
15HOMES ENGL AND
2
16S T R AT EG IC P L A N 2018 /19 – 2022 / 23
Our
objectives
17HOMES ENGL AND
Unlocking land
We’ll unlock public and private land where
the market will not, in order to get more
homes built where they are needed.
A lack of land available for housing, especially acquired land, we’ll use our resources and expertise
in the least affordable areas, has been one of to bring these sites to market, supporting both major
the key reasons for England’s undersupply of developers and small builders.
housing. Only around 11% of land in England is
We’ll also control a significant amount of public sector
developed. A combination of fragmented land
land. We have a responsibility to make best use of this
ownership, protective land use designations, a
and we support the government ambition to release
lack of infrastructure and other local barriers to
surplus public sector land for housing. So, we will:
development mean that we are not delivering
sufficient land to meet England’s housing need. • Be transparent about our landholdings and act
commercially in bringing land to market.
The government has introduced a range of measures
to stimulate greater private sector land supply through • Hold land for no longer than necessary, making
the planning system. Reforms, beginning with the sure that it is disposed of to support local plans
Housing White Paper and culminating in the revised and local ambitions.
National Planning Policy Framework, include a new • Dispose of land on terms that promote early
standardised approach to assessing housing need development, economic growth and achievement
and measures to maximise the use of brownfield land. of the government’s diversification objectives.
These have been introduced against an improved
In addition, we are significantly increasing our
planning environment: in the year ending June 2018,
partnerships with other government departments
the planning system granted permission for 351,700
to further support the release of surplus public land.
new homes, up 6% on the year ending June 2017 and
Through our Small Sites Fund we will also support
up 26% on the year ending June 2016.
local authorities and other government departments,
For the housing sector to sustainably deliver 300,000 as well as the private sector, to unlock land and
homes a year on average, a long-term pipeline of bring it to market. Our Local Authority Accelerated
developable land is needed. That is why we’ll be more Construction programme will help to increase the
active in enabling land to come forward for housing, speed of construction and build out, and encourage
especially in the least affordable places. more widespread use of MMC and smaller builders on
By acting as a master developer, and using our publicly owned land.
£1.03 billion Land Assembly Fund, we will acquire
challenging sites that the private sector cannot
progress without public sector intervention. We’ll also
£1.03bn
acquire sites which are not progressing into production
on a commercial basis – for example, intervening
where landowners cannot collaborate effectively or
where planning and technical challenges are beyond Land Assembly Fund will bring forward
the appetite of the private sector. Once we have sites that the private sector cannot
18S T R AT EG IC P L A N 2018 /19 – 2022 / 23
CASE STUDY complexities of land
Master developer ownership and the need
for upfront strategic
In July 2018, Homes England infrastructure delivery.
acquired land around the
We have worked closely
Northern Arc in Burgess Hill
with Mid Sussex District
to deliver more than 3,500
Council, the landowners
homes, alongside schools
and the site promoter to
and leisure facilities.
acquire the land. As the
The site, which has been land owner for the whole
identified as a location for site, we will invest in the
major housing delivery for required infrastructure and
over 10 years, had been release the first phases of
stalled due to the development early.
“Despite Burgess Hill’s huge potential
to deliver more than 3,500 homes,
development of this site had been stalled
for over 10 years due to the complexities
of land ownership and the need to deliver
significant upfront infrastructure. We
are delighted that Homes England has
intervened to unlock this site”.
Councillor Garry Wall
Leader of Mid Sussex District Council
2018-20 priorities Longer term priorities
Ò Progress enabling Ò Pilot a direct commissioning Ò Deliver at least 2,000 starts Ò Unlock surplus local
infrastructure works on contracting approach under on site by March 2023, authority land with
major developments at which risk and reward is 4,000 starts a year by the capacity for up to 32,000
Northstowe and Burgess Hill. shared with partners, in mid-2020s and 23,000 homes by investing in
return for a significant completions by March 2030 infrastructure and enabling
Ò Acquire land and invest in
increase in the pace of through the Land Assembly works through our Local
enabling infrastructure to
delivery. This will deliver Fund. This fund should be Authority Accelerated
bring forward developable
over 1,300 starts on seven self-financing by March 2023. Construction programme.
sites where the market will
sites in the next two years. In return, we will seek
not, using our £1.03 billion Ò Unlock public and private
to secure commitments
Land Assembly Fund. Ò Accelerate delivery on our land, with capacity for up to
from local authorities to
land by incorporating a 27,000 homes, by funding
Ò Continue disposing of progress sites at pace and
requirement to use MMC on-site infrastructure and
our surplus public sector encourage the use of MMC.
into our leases, and by land remediation on small
land holdings under the
increasing our collaboration sites through our Small Ò Formalise and implement
government’s Public Sector
with Registered Providers, Sites Fund. new partnering agreements
Land programme 2015-20.
smaller house builders and with other government
Ò Drive forward the delivery of Build-to-Rent providers to departments to support an
public sector land by working drive forward sites with a increase in the disposal of
with other government wider tenure mix. surplus public sector land
departments, including for housing.
Ò Improve design quality
through land transfers and
through the use of Building
partnership working.
for Life 12 and other tools.
19HOMES ENGL AND
Unlocking investment
We will ensure a range of investment
products are available to support
housebuilding and infrastructure, including
more affordable housing and homes for
rent, where the market is not acting.
Developers of new homes face a range of issues Alongside our programmes, greater flexibilities over
in attracting the investment needed to increase how and when grant funding can be drawn down
delivery. We’ll target our money, where possible in are being introduced through our new Strategic
partnership with private financiers, to address this. Partnerships with housing associations. These
flexibilities will come into our wider programme under
Alongside the uncertainty caused by the restrictive
continuous market engagement. Moving forward,
planning system, a key challenge facing smaller house
we want to explore the possibility of developing new
builders is their ability to access private finance. That
approaches to investment for housing associations
is why, in addition to providing infrastructure loans,
(including equity, debt and guarantees) in return for
the £4.5 billion Home Building Fund will provide
ambitious delivery targets.
development finance to developers of all sizes. We
will also invest in partnerships and joint ventures to Improving construction productivity is another of
increase the pace and scale of our partners’ delivery our key aims, so we will encourage developers to
and generate value for public money. By taking a use MMC and increase the capacity of the off-site
longer term view and allowing funding to be recycled manufacturing industry, including through our
into future schemes, we are able to support significant provision of development finance.
schemes that commercial lenders would not.
In addition, we know that unlocking significant housing
To increase the delivery of affordable housing, we growth requires upfront infrastructure provision. Our
will continue to provide grant funding through our £5.5 billion Housing Infrastructure Fund will provide
Shared Ownership and Affordable Homes Programme. grant funding, alongside our wider expertise, to local
Between April 2011 and March 2015, these authorities to bring forward land they could otherwise
programmes delivered over 116,000 new affordable not develop.
homes outside of London. Additional investment,
Over the next five years we will be more targeted
including for social rent in the least affordable places,
with our interventions, identifying priority places
has been introduced.
where homes are least affordable and where
increased investment can unlock delivery.
£5.5bn
Housing Infrastructure Fund will
bring forward land for development
20S T R AT EG IC P L A N 2018 /19 – 2022 / 23
CASE STUDY Homes. This will deliver “Our joint venture
Partnering with more than 5,400 homes over
with Homes
industry the next nine years, 30% of
England and Cross
which will be affordable.
Through our commercial Keys will enable
The £42 million deal has
partnerships we’re working us to maximise our
allowed our partners to
with the sector to increase
greatly increase the pace and
funding, resources
housing supply, address
scale of their delivery. The and capabilities
affordability issues and
joint venture will also invest to deliver more
generate value for the
public purse.
in skills and apprenticeships, homes faster”.
and aspires to deliver
John Anderson
In June 2018 we launched a 20% of the new homes
Executive Director,
national joint venture with through Modern Methods
Kier Living
Kier Living and Cross Keys of Construction (MMC).
2018-20 priorities Longer term priorities
Ò Consider further proposals Ò Provide development and Ò Work with local authorities Ò Deliver at least 130,000
for Strategic Partnerships infrastructure finance to to complete funding affordable housing starts
with housing associations – home builders of all sizes clarification, enter into by March 2022 through
looking at greater flexibilities through the £4.5 billion contract and make the first the Shared Ownership
over how and when grant Home Building Fund. payments on successful and Affordable Homes
funding can be drawn Marginal Viability Funding Programme, including at
Ò Work with the Department
down through our Shared bids under the Housing least 12,500 homes for
of Health and Social Care
Ownership and Affordable Infrastructure Fund. social rent in areas where
to allocate up to £125
Homes programme, homes are least affordable.
million additional funding Ò Co-develop bids shortlisted
working towards the
to 2020/21 through the Care for Forward Funding Ò Continue to provide funding
delivery of at least 130,000
and Support Specialised under the Housing for strategic infrastructure
affordable housing starts
Housing Fund. This will Infrastructure Fund. to local authorities
by March 2022.
be used to develop new through the Housing
Ò Provide development
Ò Deliver our share of the affordable homes, which Infrastructure Fund.
finance to smaller builders
£163 million national meet the needs of older
through the Housing Ò Continue to provide
Community Housing Fund, people and disabled adults.
Growth Partnership and development and
to increase the number
Ò Provide grant funding, Housing Delivery Fund. infrastructure finance
of homes delivered by
through the Social Sector through the Home Building
the community-led
ACM Cladding Remediation Fund, Housing Growth
housing sector.
Fund, for the removal and Partnership and Housing
Ò Provide up to 879 bed replacement of unsafe Delivery Fund.
spaces for rough sleepers aluminium composite
Ò Explore a range of potential
and those currently living in material (ACM) cladding
investment options –
hostels or refuges by 2021, systems on buildings
grant, debt, equity and
through the £44 million owned by local authorities
guarantees – to ensure
Move On Fund. and registered providers
we offer the right mix of
that are 18 metres tall or
financial interventions
over (in London, this fund is
to most effectively
administered by the GLA).
unlock development.
21HOMES ENGL AND
Increasing productivity
We’ll improve construction
productivity.
The housebuilding construction industry is facing construction, address labour and materials shortages
significant challenges in terms of productivity, and deliver a number of additional benefits such as
workforce, skills and materials. If these challenges improved energy efficiency and health and safety.
are not addressed, the industry will lack the As a result, developers are already introducing MMC.
capacity to deliver the infrastructure and homes However, the MMC industry is currently immature
that England needs. with limited production capacity and supply chains. It
requires stimulus if it is to evolve further.
Skills shortages already exist in traditional areas of
construction and, based on current levels of new We will support the uptake and development of MMC
entrants, we are likely to see a 20% to 25% decline in through a range of interventions. We’ll incorporate
the workforce within a decade. This comes on the back MMC into our building lease disposals to demonstrate
of years of low productivity growth in the sector. While a range of MMC products on Homes England land.
there has been some improvement in construction We’ll also encourage partners to use MMC through
productivity over the past five years, it remains low our provision of development finance to developers.
and continues to lag behind the UK economy as a Our Local Authority Accelerated Construction
whole. Traditional methods of house building have programme will also encourage more widespread
barely changed in the last 100 years and the rate of use of MMC to help increase the speed of construction
modernisation has not kept pace with technological and build out.
innovation in other sectors of society.
In addition, the government’s Industrial Strategy has
We must embrace change to improve productivity and committed to building the skills of the future workforce.
reduce the impact of the declining workforce. MMC We are engaging with the Department for Education
have the potential to be significantly more productive and Ministry of Housing, Communities and Local
than traditional methods and greatly increase the Government to develop modern construction skills by
pace of delivery. MMC can also improve the quality of increasing the number of skilled apprenticeships.
22S T R AT EG IC P L A N 2018 /19 – 2022 / 23
CASE STUDY looking at new ways to By supporting the scheme the potential to greatly
Supporting address the housing crisis by we’re helping to build accelerate the delivery
innovation to constructing homes faster, in confidence in the MMC of homes and potentially
a more energy efficient way industry, which has change the future of housing.
speed up delivery using smart technology.
In March 2018, we provided The innovation village “We’re all incredibly excited about this
£2.5 million through
our affordable homes
will test five different
project as it will see a wide range of
types of Modern Methods
programme to Home Group, of Construction (MMC)
homes and construction methods being
one of the UK’s largest alongside traditional tried and tested together on the one
providers of homes for sale construction methods in site. The support from Homes England is
and affordable rent and one order to understand ongoing pivotal in helping us make the Gateshead
of our new strategic partners. performance, how they help Innovation Village vision a reality, building
The funding supports the
construction of 41 affordable
build a community for Home
real homes for real people using the latest
Group customers and how
homes at the Gateshead MMC integrates with smart
construction methods and technology”.
Innovation Village, a live technology and energy Brian Ham
research project that is efficient heating systems. Executive Director of Development, Home Group
2018-20 priorities Longer term priorities
Ò Incorporate MMC outcomes Ò Encourage developers to Ò Capture and disseminate
into our contracts, both for use MMC and increase the best practice and
land and investment. capacity of the off-site knowledge of MMC across
manufacturing industry, the industry and encourage
Ò Support pilot projects
including through our uptake by housebuilders.
where there is developer
provision of development
interest in testing MMC, Ò Work with the Construction
finance.
to learn lessons and Leadership Council, other
understand costs. Ò Develop and implement industry leaders and
a consistent approach developers to improve the
to measuring the impact understanding and uptake
of MMC in partnership of MMC.
with industry.
23HOMES ENGL AND
Driving market resilience
We’ll create a more resilient and
competitive market by supporting smaller
builders and new entrants, and promoting
better design and higher quality homes.
The house building market is increasingly made up builders and innovators. We are also considering a
of a small number of major housebuilders. A study range of financial support, including equity investment
by the Home Builders Federation found that in 1988 and guarantees, to support the sector.
more than 12,000 SMEs were responsible for nearly
We’ll also support smaller builders to access land.
40% of all new homes: today, only around 2,500
Often, small sites require upfront financial support
SMEs are active in the sector with responsibility
to unlock them for development. We will support
for just 12% of new homes. The resulting lack of
this through the Small Sites Fund. Where we own
competition has led to low levels of innovation,
sites which are too large to be developed by smaller
with relatively homogeneous homes being built.
builders, we’ll look for opportunities to create smaller
There are a number of barriers preventing smaller parcels which better suit their capacity.
builders from delivering more homes. A 2017 survey
In addition to this support, we’ll promote good design
by the Federation of Master Builders found the top
across the sector. The revised National Planning Policy
two constraints to delivery are a lack of finance and
Framework (NPPF), published in July 2018, embedded
viable land. We are addressing these challenges.
high-quality design in the planning process and
We’ll continue to provide short-term development ensured that local authorities use the appropriate
finance for smaller and custom builders through our tools for assessing design. Our main focus over the
£4.5 billion Home Building Fund. We’ll also continue next five years will be to utilise and promote design
to invest in lending partnerships, such as the £1bn quality assessment tools to ensure that we deliver
Housing Delivery Fund with Barclays, to improve the high-quality schemes.
availability of credit to smaller builders, and increase
our investment with Lloyds Bank in the Housing
£1.1bn
Growth Partnership. We’ve already committed over
£1.1bn of development finance – including part of the
additional funding allocated at Autumn Budget 2017 –
to deliver more than 55,000 homes, with over 96% of committed to date to deliver
the funded schemes supporting smaller and custom more than 55,000 homes
24S T R AT EG IC P L A N 2018 /19 – 2022 / 23
CASE STUDY alongside office space, bars
Supporting smaller and restaurants. Step Places
builders to grow have worked closely with
us on this development to
In 2014, we supported ensure it meets local needs.
Step Places, a small firm
Our support for Step Places
struggling to access private
has enabled it to grow its
finance, with a £700,000
workforce from three to 11.
loan for a 24-home scheme
It is now taking on bigger
in an area of urban renewal
and better projects such
in East Manchester.
as the regeneration of
On the back of this project’s Wigan Pier on the Leeds
success, we loaned the firm & Liverpool Canal.
a further £2.5m to develop
a 28-home custom build “Without Homes
scheme with a focus on England’s support,
quality and environmental
Step Places would
impact.
not be at this stage
The profit generated by of expansion”.
this development enabled
the company to purchase a Harinder Dhaliwal
piece of land from us in 2016 Managing Director,
that will provide 23 homes, Step Places Ltd
2018-20 priorities Longer term priorities
Ò Provide up to £2.5 billion Ò Increase our co-investment Ò Improve how smaller Ò Bring more small sites
development finance with Lloyds in the Housing builders access our land to market by unlocking
to smaller builders who Growth Partnership to and development finance. public and private land
are unable to access provide up to £220 million with capacity for up to
Ò Consider extending the
funding from banks of equity finance for 27,000 homes through our
support provided via the
through the £4.5 billion smaller builders. Small Sites Fund.
Home Building Fund to
Home Building Fund.
Ò Improve opportunities for include the provision Ò Explore opportunities
Ò Launch a Housing Delivery smaller builders to access of finance for housing for removing the
Fund with Barclays to our land, and introduce development on planning burdens faced
provide £1 billion of simpler tender and legal land which is at the by smaller builders on
development finance documents on smaller pre-planning stage. more complex sites.
to increase the pace sites to make the bidding
Ò Incorporate design
and volume of housing process easier.
quality assessments
delivery and support
Ò Adopt Building for Life across our programmes.
smaller builders.
12 as a tool to improve
the design of new
communities through
the activities within our
Land programmes.
25HOMES ENGL AND
Supporting local areas
We’ll offer expert support for priority
locations, helping to create and deliver
more ambitious plans to get more
homes built.
Where places have ambition, potential for growth We’ll help local areas plan for the future and embrace
and a clear plan, we’ll combine our tools to partner new technologies to meet the changing needs of
with them and support delivery. society. We plan to give places the longer term certainty
they need to leverage their own investment, alongside
Local housing markets face local challenges, so
private finance, to increase affordability.
leadership from local authorities and Local Enterprise
Partnerships is crucial. Leaders are often pro- In particular, we’ll target our interventions in places
development, but their ambition can be frustrated by where high development potential has not yet been
planning challenges and insufficient infrastructure. unlocked by the market. We already have a track
This is where we can make a difference by using a record of delivering major projects in places like
tailored mix of land, money, people and powers. Allerton Bywater in Leeds and Cranbrook near Exeter,
and we are currently:
• Supporting the delivery of major developments
including the Northern Arc, Burgess Hill in Sussex,
and Northstowe in Cambridgeshire.
• Supporting local partners in Oxfordshire to deliver their
housing deal, which was signed in November 2017.
• Working with government and local partners in the
Oxford-Milton Keynes-Cambridge arc, to set the vision
for delivering up to one million homes by 2050.
• Establishing a joint delivery team with the West
Midlands Combined Authority to align our investment
and expertise to increase housing supply, increase
the proportion of affordable housing, and acquire
and assemble land.
Over the next five years, we will work with more local
authorities with big ambitions to get more homes built.
26S T R AT EG IC P L A N 2018 /19 – 2022 / 23
CASE STUDY Phase two of the town will phase two will be designed town centre retail and office
Supporting local focus on the development to help young people get space, with the potential
areas to grow of the town centre and onto the housing ladder. A for small businesses
immediate surroundings, further 10% will be available and independent outlets
We don’t just make homes creating 3,500 new homes, for affordable rent. The to establish themselves
happen, we make places including 1,000 town centre development also includes in Northstowe.
possible. apartments. We’re leading
this work in partnership with “I’m looking forward to working closely
In July 2018, work began
local leaders, including the with Homes England to continue driving
on the second phase of
Northstowe, Cambridgeshire’s
elected Mayor and Local forward the important development at
newest town. Located on
Enterprise Partnership. Northstowe. The bricks and mortar that
the site of the former RAF Work is already underway we’ll start to see rise out of the ground
Oakington barracks, the to create the transport links, over the coming years will provide much-
town will provide 10,000 infrastructure and leisure needed homes for thousands of families”.
new homes and will be the facilities the community
needs. Forty per cent of Cllr Hazel Smith
UK’s biggest new town since
the homes delivered in South Cambridgeshire District Council’s
Milton Keynes.
Lead Cabinet Member for Housing
2018-20 priorities Longer term priorities
Ò Work collaboratively with Ò Support the government Ò Support the Oxford-Milton Ò Align the delivery of
local areas to identify in the delivery of new Keynes-Cambridge arc. housing with major
and overcome barriers Garden Communities. Subject to consultation, transport infrastructure
to growth, such as further analysis and projects such as HS2 and
Ò Support the
infrastructure and planning. government decisions, we Northern Powerhouse rail
implementation of the
will support the delivery where possible.
Ò Deliver the first stage of West Midlands, West of
of new settlements,
primary infrastructure on England, Oxfordshire Ò Deliver 300 homes and
major urban extensions
our land in Northstowe and Greater Manchester begin construction on 1,000
and significant additional
by March 2022, and enter housing deals and the town centre apartments,
housing across the arc.
into contract with the first delivery of their outputs. and launch phase three at
housing delivery partner. Ò Develop a plan for the Northstowe by 2022/23.
Ò Negotiate new housing
South East to significantly
Ò Secure approval for the deals with areas that Ò Continue to develop the
increase housing delivery
3,500 home masterplan experience housing Northern Arc in Burgess
across the region, by the
and outline planning to affordability challenges Hill with 500 homes and
mid-2020s.
enable investment in the and share our ambition a major spine road under
delivery of the Northern for housing growth. Ò Support local authorities’ construction by 2022/23.
Arc in Burgess Hill. This ambition for growth
Ò Co-ordinate a collaborative Ò Begin major infrastructure
investment will include by providing additional
government response to work and start construction
enabling infrastructure as professional skills capacity
the National Infrastructure of the first 200 homes in
part of our role as a master where required.
Commission’s report on Ifield by 2022/23.
developer of the scheme.
the Oxford-Milton Keynes- Ò Support joined up housing
Ò Progress the promotion Cambridge arc. and infrastructure delivery
of Ifield as a strategic in major new corridors such
growth area for a minimum as the Thames Estuary.
of 3,250 new affordable
homes in Horsham,
West Sussex.
27HOMES ENGL AND
Delivering home ownership products
We’ll effectively deliver home ownership
products, providing an industry
standard service to consumers.
Home ownership is becoming increasingly up to 135,000 more people buy new-build homes. The
unaffordable for millions of families across government also announced in Budget 2018 that from
England. Decades of undersupply of housing April 2021, a new Help to Buy Equity Loan scheme will
alongside rising housing demand has seen average run for 2 years before closing in March 2023. To ensure
house prices increase faster than average incomes. future support is targeted at those who need most help
Younger households on average incomes in high into homeownership, the new scheme will be available
demand parts of England feel the impact of this for first-time buyers only, and for houses with a market
particularly acutely. value up to new regional property price caps. These
caps are set at 1.5 times the current forecast regional
Home ownership remains the most popular tenure.
average first-time buyer price, up to a maximum of
Given the choice, 88% of people would choose to
£600,000 in London. The government does not intend
buy their own home. Similarly, owner occupiers are
to introduce a further Help to Buy Equity Loan scheme
far more satisfied with their accommodation, local
after March 2023.
area and tenure than social or private renters. This is
why we’ll invest heavily in supporting peoples’ home We’ll continue to invest in shared ownership and rent
ownership aspirations. We’ll reduce the deposit burden to buy through our Shared Ownership and Affordable
faced by prospective home owners by helping them Homes Programme 2016-21. Since 2010, over 100,000
buy with a smaller deposit, buy a share of a home, new homes for affordable ownership have been
or save for a deposit by paying a below market rent. delivered, including 60,000 for shared ownership,
and there continues to be high levels of consumer
We have already made good progress. By March 2018,
demand for this stepping stone into home ownership.
the Help to Buy: Equity Loan had supported 169,102
We’ll keep working with our partners, as well as
property purchases, including 136,657 for first-time
mortgage lenders, to reduce the barriers to entry and
buyers. In a survey, most buyers said that they both
encourage them to become more actively involved in
started looking for a property to buy sooner than
growing the scheme further. Furthermore, building on
they would have otherwise and that they would not
the Social Housing Green Paper, we will work with our
have been able to buy the same property without
partners to identify how they can help shared owners
assistance. For these reasons, the government
build up more equity in their homes and progress to
announced in 2017 that it will invest up to an additional
full ownership.
£10bn in the Help to Buy: Equity Loan to 2021 to help
Finally, we’ll support the Voluntary Right to Buy pilot
for housing associations tenants in the Midlands.
169,102
Right to Buy has helped almost 96,000 people living
in council housing to buy their homes since 2010. The
pilot will test the voluntary agreement with housing
property purchases have been associations to extend the scheme to their tenants, in
supported by Help to Buy: Equity order to enable more people to realise their dreams of
Loan up to March 2018 home ownership.
28S T R AT EG IC P L A N 2018 /19 – 2022 / 23
CASE STUDY To date, we have agreed “Our new Strategic Partnership
A new way 15 strategic partnerships
with Homes England is the
of working which will deliver over
beginning of an improved
27,000 additional affordable
with housing relationship that will enable
homes starts by March
associations 2022, including homes for us to deliver significantly
We’re changing the way
social rent in areas of high more affordable homes where
we work with housing
affordability pressure. In they are most needed”.
return, we’ll provide housing
associations to help the David Montague
associations with greater
sector deliver significantly Chief Executive, L&Q
flexibilities and certainty
more affordable homes.
around funding.
2018-20 priorities Longer term priorities
Ò Strengthen Help to Buy Ò Agree further commitments Ò Provide shared ownership Ò Provide continued support
delivery by implementing to shared ownership and rent to buy through to the Help to Buy: Equity
the changes recommended and rent to buy through the Shared Ownership Loan programme. By March
by the end-to-end review Strategic Partnerships and Affordable Homes 2018 over 169,000 homes
carried out in 2017/18. with housing associations Programme, which will were completed using
and our wider Shared deliver 130,000 affordable this scheme.
Ò Provide an industry-leading
Ownership and Affordable housing starts by March
service to Help to Buy Ò Enhance our Help to Buy
Homes programme, and 2022.
customers, from initial loan book administration,
raise awareness of the
purchase through to loan Ò Support people buying focussing on value for
opportunities available
redemption, including shared ownership money.
and size of the market.
through digital solutions. properties to build up more
Ò Support the Voluntary equity in their homes.
Ò Work with mortgage
Right to Buy pilot in the
lenders to encourage
Midlands to enable housing
lending on our home
associations tenants to buy
ownership products by
their homes.
promoting understanding
of them.
29HOMES ENGL AND
3
30S T R AT EG IC P L A N 2018 /19 – 2022 / 23
Achieving
our plan
31HOMES ENGL AND
Financial plan
We’re subject to spending controls as set out in
HM Treasury’s Capital Budgeting Guidance. We
work with the Ministry of Housing, Communities
& Local Government to establish transparent
and robust annual budgets within the context
of a multi-year government spending review.
The tables set out our agreed budget for 2018-19 and Investments
provisional budgets for future years. Budgets beyond
31 March 2021 will be agreed following a forthcoming Capital Financial Transactions
spending review. All figures are in £000s. Investment £3,740,099
Income -£1,054,812
Land
Capital Grant
Capital Financial Transactions Investment £245,234
Investment £5,181 Programme Resource
Capital Grant Investment £32,800
Investment £1,557,036 Net Budget
Income -£884,906 £2,963,321
Programme Resource
Investment £90,515
Housing Infrastructure Fund
Income -£127,998 Capital Grant
Net Budget Investment (over > 3 years) £5,500,000
£639,828 Programme Resource
Investment £45,000
Affordable homes
Net Budget
(including the Community Housing Fund)
£5,545,000
Capital Grant
Investment £3,686,244
Income -£46,063
Programme Resource
Investment £5,800
Net Budget
£3,645,981
32S T R AT EG IC P L A N 2018 /19 – 2022 / 23
Help to Buy Small Sites Fund
Capital Financial Transactions Capital Grant
£13,869,000 Investment £410,484
Programme Resource Programme Resource
Investment £10,500 Investment £1,200
Net Budget Net Budget
£13,879,000 £411,684
Finance
Capital Grant (Admin)
Investment (Year 1 & 2 only) £27,593
Net Budget
£27,593
Total Programme
Total
Investment £29,226,686
Income -£2,113,779
Net Budget
£27,112,907
Total Admin
Total
Investment £209,600
Income -£165,889
Net Budget
£43,711
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