What does this policy tell property developers about their future?


Unbuttoning the Homes England Strategic Plan 2018 to 2023

At the end of October 2018, Homes England set out its new policy and plan in the ‘Homes England Strategic Plan 2018 to 2023’ with the subhead of “Making Homes Happen”. It introduces the plan in the following way:

This five-year strategic plan sets out our ambitious new mission and the steps we will take with industry to respond to the long-term housing challenges facing this country. We plan to be bold, creative and think big. We hope the whole of the housing sector – big and small, up and down the country – will join us for the next five years and beyond.

We’ve dissected the nearly 40-page report. Here’s our view of the main thrust of the new policy.

The government is getting more involved in housebuilding

It’s inevitable that the government wants greater involvement in the housing market. After all, it has promised delivery of 300,000 new homes each year by the mid-2020s. In a recent article, we asked what is stopping property developers hitting government targets for new homes?

In that article, we identified three of the inhibiting factors as:

  • A lack of supporting infrastructure
  • A shortage of skilled employees
  • A planning system that puts up barriers to development

All these factors are impacted by government policy and action. It’s right that it should seek greater involvement – providing it is constructive, of course. This report sets out how it wishes to become more involved, with a plan that includes:

  • Unlocking land
  • Unlocking investment
  • Increasing productivity
  • Supporting local areas
  • Delivering home ownership products

Sounds like the government wants to tackle those three factors we identified as critical to delivering on its targets, doesn’t it?

Delivery targets

Home England sets out several delivery targets and promises to help all property developers, housing associations and local authorities to meet them. It plans to do this with funding, support and providing ready-made sites. This is its part of the collaboration. In return, Homes England demands that commitment is made to building more homes and increasing the supply of housing by all its ‘partners’.

It’s bold stuff, and the confident and aggressive tone is evidence of the increasing importance of housing in public policymaking.

In the report, Homes England specifically targets deliveries for two housing funds:

  • The £1.03bn Land Assembly Fund – set up to acquire and prepare land for development – is targeted to complete 23,000 projects by March 2030
  • The £630m Small Sites Fund – to help public bodies provide infrastructure to accelerate delayed housing projects – is targeted to unlock the land required to build 27,000 new homes in the ‘long-term’

This type of direct involvement could help to address the structural problems that hold back supply in the housing market, especially in a more uncertain environment such as we are currently witnessing through the Brexit shenanigans.

Is brownfield land enough?

The Homes England strategy paper sets out a compelling case for developing brownfield land, saying that it has the potential to deliver one million homes. It also says that other land owned by the government and local authorities could provide for a further 160,000 new homes.

This is all very well, but based upon the target of 300,000 new homes per year by the mid-2020s, this land availability is less than four years off total target.

While development of brownfield land is crucial, making greenbelt available for property development is also essential. This could be the blockage that derails the project. Plus, as we’ve seen with Sadiq Khan’s London Plan, words and action are two very different things. When mayors can meddle in local planning issues, developers are likely to think twice about undertaking larger-scale projects.

Accelerating delivery

Homes England is backing the increasing use of modern methods of construction (MMC) such as modular housing. It quite correctly asserts that using such methods to deliver new homes could speed up delivery and reduce the impact of a tighter labour market – as we discussed in our article ‘Could modular housing be the future of property development in the UK?’ several months ago.

What Homes England says is that it will provide incentives for property developers to use MMC, by accelerating “delivery on [its] land by incorporating a requirement to use MMC into our leases”. It also proposes to provide financing to property developers who use MMC and partner with Homes England.

Access to land and financing are convincing arguments for property developers to use MMC, but some investors are hesitant to own homes constructed with modular build techniques. This becomes less of a problem the more that MMC is seen as standard.

The bigger problem associated with MMC is local authority design and build requirements and lenders’ acceptance of MMC when offering mortgages. There needs to be more work done to bring these two vital components onboard with MMC.

In summary

This new strategy is certainly a step in the right direction, and it’s good news to see the government finally putting some weight behind the main issues facing the industry. Homes England could yet prove to be the force behind a more dynamic housing sector in England.

However, for its strategic mission to be successful, it is clear that more work needs to be done on changing policies toward MMC and modular housing – property developers are onboard, but other essential pieces of the puzzle must still be convinced. If lenders won’t advance mortgages on modular homes, but Homes England only aids developments where modular homes are to be built, the impasse could be the biggest of all roadblocks to hitting new homes targets.

For now, then, the Homes England Strategic Plan 2018 to 2023 is a welcome and positive step in the right direction. However, I feel that more work and the political emphasis is needed before the government can really claim to have ushered in the reforms needed to deliver on its promise of 300,000 new homes each year by the mid-2020s.

Are you a property developer seeking to maximise opportunity through larger-volume sales? Contact Castlereach to discover how we can help boost sales.  Call the team on 0207 923 5680. Our partnership will help get your new build and off-plan development sales to where you need them to be.

Live with passion

Brett Alegre-Wood

About the Author

Brett has over 20 years experience in all facets of property, he owns various companies centred around property and is the driving force behind the education and training at Castlereach. His companies have sold over £850 million in UK and London property and he manages over 1200 properties through his estate agency chain. Today he shares his time between UK, Australia and Singapore. He is married to Arlene and together they have 4 kids. Brett holds both the Level 3 Property Mark Qualifications for Property Sales and Property Lettings and Management.