Press Release: "Wider vision on housing finance essential to provide sufficient new homes" say MPs
Published: 09 May 2012 | Author: Karl Williams
The Government must employ a basket of measures, covering all tenures of housing, if sufficient finance is ever to be available to tackle the country’s housing crisis, says the Communities and Local Government Committee in a report examining the financing of new housing supply.
Launching the report, Clive Betts, Chair of CLG Committee said, “For decades, successive Governments have failed to deliver sufficient homes to meet demand. The country faces a significant housing shortfall, and the financial crisis has amplified the problem. 232,000 new households are forming each year in England, and yet last year fewer than 110,000 new homes were completed.
“There is no ‘silver bullet’. We have to muster all the resources we can. The Government’s housing strategy has made a useful start and we hope many of its measures will provide a stimulus over the short to medium term. But we need more action if we are to see significant long term improvement in housing supply”.
The Committee sets out four key areas for action, which, taken together, could go a long way to raising the finance needed to meet the housing shortfall:
The Committee finds that large institutions and pension funds, which have only ever made a limited contribution to new housing, could provide a substantial source of investment.
“We should be looking to new forms of investment to help address the housing shortfall. Pension funds and large financial institutions have a blind spot when it comes to housing but could deliver a significant number of new homes for rent and achieve a steady return on their investments. Public sector bodies and housing associations must encourage such investment. The Government should also look to establish a housing investment bank, to channel investment into housing. Expanding the Green Investment Bank to cover housing would be one way of achieving this,” adds Clive Betts.
The Committee questions the Government’s flagship Affordable Rent model. “We have a number of concerns about Affordable Rent. How will it play out in different parts of the country? Will it prove unaffordable in parts of London? Is housing benefit now expected to take the strain of paying for new affordable housing? Is this model sustainable beyond 2015,” says Clive Betts.
The Committee calls on Ministers to set out proposals for the future delivery of affordable homes, and to consult on how housing associations should be financed in future. “We must look to the long-term delivery of affordable housing. We heard a number of proposals for the future financing of housing associations, including suggestions for the future use of the historic grant on their balance sheets. This grant is potentially an untapped resource, and the Government must clarify how it can be used to best effect,” adds Clive Betts.
The Committee concludes that local authorities have an important role to play, but may struggle to fulfil their potential because of centrally-imposed constraints. “The Government should give councils greater freedom to decide on the best housing solutions for their areas. Local authorities must also be allowed, within prudential limits, to safely increase their capital borrowing for new housing,” adds Clive Betts.
Finally, the Committee urges ministers to look to different models of delivery to help meet the housing shortfall. It sees interesting potential in self build, where people manage the construction of their own homes, and points to Almere in the Netherlands as a useful model.
“Self build schemes could be a major new source of housing in England, but it will take substantial institutional change to realise this potential. Government, local authorities and lenders must work together to remove the barriers that currently restrict self-build and commit to getting pilot schemes underway very quickly,” says Clive Betts.
A copy of the Communities and Local Government Committee: Financing of new housing supply - publication of the Committee's Eleventh Report of Session 2010-12 will be available on The housing Forum website very soon.
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