Financing new housing
Heather Wheeler, who is the Member of Parliament for South Derbyshire, sits on the Communities and Local Government Select Committee and is also a Conservative Vice-President of the LGA
For many years house building levels in England have been far too low. It is estimated that 232,000 new homes a year are needed, however, last year fewer than 110,000 new homes were completed.
In May, the Communities and Local Government Select Committee, which I sit on, launched its report examining the financing of new housing. Unfortunately there is no single remedy for this issue; however, the committee concluded that there is plenty of scope for a range of approaches to funding.
Our report suggested that pension funds and large financial institutions, which tend to have a blind spot when it comes to housing, could deliver a number of new homes for rent and achieve a steady return on their investments.
We also looked into the funding of housing associations and how this could benefit future demand. We heard a number of suggestions including converting housing associations historic grants into equity. Places for People estimated that this could attract £750million of equity to fund the production of 5,000 new affordable homes without the need for further Government grants. We recommended that the Government consult on housing association grants, as they could potentially be a significant untapped resource.
We also suggested the expansion of self-build housing. This came following evidence we heard from Almere in the Netherlands – Europe's largest low-cost self-build project. The minister, Grant Shapps, has taken this idea forward and has since announced a £30 million investment fund to offer people the money they need to lay the foundations for their self-build projects. This is the first time this has been done in the UK and the money could be used to pay up to 75 per cent of a project's land and early construction costs. It will be available to organisations planning to build five or more homes at a cost of up to £3 million.
The Government is taking this issue very seriously. Its current housing strategy will make a difference and provide a welcome boost for house building. However, we need to keep our eye on a long-term approach to ensure that enough finance is brought in to see sustainable change in the housing supply. Our report, and the LGA's Housing the Nation campaign, will contribute to this debate and help develop a package of measures which will deliver the homes this country needs.
If you would like to see the CLG Select Committee report in full please visit the following link:
Relevant links
LGA 's Housing the Nation Campaign
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2 August 2012
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