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Social Housing Speed Read – diversifying the housing market

We look at the Housing White Paper's plans to diversify the house-building market.

Please click here for our first update on the Housing White Paper and click here for the second.

By diversifying the market, the intention is to build homes in greater numbers, and make sure that new housing meets consumers’ expectations on choice and quality. We will also consider the role that social housing providers have to play in a revamped house-building programme.

What does the Government suggest is wrong with the house-building market?

Chapter Three of the Housing White Paper identifies areas for improvement. These include:

  • A lack of competition among house builders, with too great a dependence on the largest commercial builders;
  • The need for housing associations, which already build around one-third of all new homes, to build even more;
  • The need to drive innovation, productivity and efficiency in the construction sector;
  • The need to simplify the planning process – addressed in Chapter One, which we looked at in our first White Paper Speed Read; and
  • Make the building of “customised” homes easier.

To support these targeted improvements, the Government launched the £3 billion Home Building Fund in October 2016 to help finance new builds by smaller developers.  The Accelerated Construction programme will introduce a range of new measures to boost the building of new homes.

What can housing associations expect from the proposals?

Chapter Three acknowledges the “vital role” that housing associations have to play in building these essential new homes.  Whilst housing associations already build the “vast majority” of new affordable homes, the Government also states that investment in affordable housing is a better, longer-term strategy than relying solely on market house-building, being  “more resilient” to changing market conditions.

To support housing associations in their building, the Government is looking through de-regulation, to place associations in the private sector.

In addition, the Social Housing Regulator is to become a stand-alone body, and will consult before introducing the next rent policy for the period beyond 2020 to enable better financial planning.

In return for this support, housing associations are expected to “explore every avenue” to build more homes, and to “make every effort” to improve their efficiency through, for example, merging and partnering with other associations; all associations are expected to make the best use of what ever development capacity they have to help meet local housing need.

How has the sector received these proposals?

Plans to deregulate the sector will be an interesting development; some associations have long argued that excessive regulation has limited their ability to invest in new homes.

Inside Housing has described a “direct challenge” from government, to housing associations: the White Paper has backed associations’ lobbying asks, and now expects more efficiency and more house-building.

David Montague, chief executive of London and Quadrant, has voiced his concern that the White Paper does not address problems with land availability.

Terrie Alafat, Chief Executive of the Chartered Institute of Housing, points out that the affordability of housing is not comprehensively dealt with, either.

The Government’s recognition of the crucial role of Registered Providers in fixing the broken housing market will hopefully be supported by strategy that enables the investment required to deliver.

The sector has been issued a challenge which it will undoubtedly rise to – and recent government announcements suggest that the future may see a more collaborative and partnering approach than we have seen in recent years.

If you have any questions on the above and how it will affect social housing providers, or any other questions as a social housing provider, please do not hesitate to contact John Murray or a member of our expert Social Housing Team.

Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

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