RIBA commission proposes £10bn housing fund
The RIBA Future Homes Commission has published a major report claiming 300,000 new homes could be built every year without spending a penny of government money
The commission’s long-awaited report claimed tens of thousands of jobs could be created through a ‘major overhaul’ of the way housing is funded, built and marketed.
The document suggests that the largest local authorities could pool 15 per cent of their pension fund assets to create a £10 billion local housing development fund which would invest in new mixed tenure communities.
A three-fold increase in new homes completions from 100,000 to 300,000 would be achieved through the programme, the commission claimed.
The report also advocated a more ‘consumer-oriented’ housing market with better information for buyers and a renewed focus on design to ensure new households are ‘fit for future generations’.
Commission chair John Banham said: ‘There is no better time to tackle the UK housing crisis. After a year-long national inquiry, the Future Homes Commission has concluded a housing revolution is entirely possible and will lead economic growth.
‘We need to increase massively the number of quality homes being built for many years to come, but also to develop communities which enhance the quality of life for both new residents and those living in existing communities nearby. All this has to and can happen without any additional government funding.
He added: ‘We strongly believe that local government can become the leader of new development once again, by using their assets and powers to create the type of mature, sustainable, mixed tenure communities that Britain needs and that institutional and international investors want to invest in.
‘After decades on the sidelines, the time is right for local government to show real leadership and realise their potential to shape a positive future for local people by delivering strong, self-financing communities where people want to live and to kick start the demand for better quality housing in the future.’
RIBA president Angela Brady said: ‘The Future Homes Commission’s recommendations provide an excellent starting point for delivering a radically improved housing market. In particular, the RIBA supports the clear value that should be placed on ensuring the homes we build today meet current buyers’ needs and are fit for future generations.
‘This report gives a most comprehensive picture of the current housing crisis and details some simple solutions that will, with a concerted effort, result in better housing. We support the need for greater collaboration between all parties involved in delivering housing in the UK and will be looking in detail at the Commission’s specific recommendations to ensure we play an active part in the housing revolution.’
David Allsop, partner of GSS Architecture said: ‘to kick start housing, there needs to be more incentive for the private sector to build. This can be achieved by allowing the private sector to build for their own perceived markets and taking into consideration the normal planning controls. Clearly the ability to earn profits and allow reinvestment is essential.’
He added: ‘Building more houses that meet the markets needs will free up other properties that could address other social housing requirements. We, as architects, would always argue for quality designs combined with good construction that continually address and raise standards right across the housing sector.’
Glenn Howells Architects director Dav Bandal said: ‘This is an innovative approach to stimulate house building and meet the growing demands. It will also encourage local authorities to be involved in developing potential sites instead of selling them to house builders.
‘A financial partnership arrangement with LA’s and private developers could help to kick start housing. A key challenge will be how to ensure quality is not secondary but a primary objective, hence the selection of the design team and decision process will be crucial to the success of delivering long-term, low-energy quality housing.
He added: ‘Such government initiatives to seek funding coupled with lenders easing their borrowing criteria, such as level of deposits are very welcomed and should positively contribute to the much needed growth of this sector.’
Capita Symonds associate director Tony Hutchinson said: ‘The creation of a local housing investment fund is certainly an interesting idea. The returns available from rental income and capital growth are compelling in comparison with equities or gilts. The willingness of pension funds or other long term investors to fund housing development needs to be tested.
‘It is telling that the terms on which long term funding is available tend to be contingent on an income guarantee. This means that student housing can be funded on the back of a guarantee from a major university. Other projects backed by lesser institutions struggle to find backers. Investors also seek an immediate return on their investment and want to buy an income stream rather than the underlying asset. Funding to develop projects is therefore more difficult to obtain and needs a guaranteed purchaser to recover development finance at completion.
‘The emphasis on design is important. The successful projects quoted show a high quality of design but often the planning process squeezes out innovation in favour of being ‘in keeping’ with what is there already can perpetuate mediocrity. There is a strong tendency to conservatism in matters of taste, often this produces a consensus or pastiche design pleasing no one that serves only to reinforce the view that modern design is poor.
The tension between affordability and the standards of homes is a critical issue, the point that valuations fail to account for the quality of accommodation provided and focus on quantity, focusing on the number of bedrooms to establish value is well made. There is little incentive to innovate if the valuation of properties fail to recognise the benefit to owners from flexible design, lower energy costs, or reduced maintenance bills.
The report poses a range of relevant issues, puts forward good ideas and rightly emphasis the need for good design that reflects the need to embed sustainability in homes. This covers the whole life cycle of the building, the changes in the way households use their homes over time, depending on composition or circumstances, and the changes in lifestyle over time.
The arguments and recommendations are well made but ultimately fail to provide the compelling argument that will drive change.
Asked what needs to be done to kick start house building, he listed: ‘Consistency of standards covering space, sustainability and amenity so that occupiers in every sector can be confident their home will be good value for money, economic to run and enable them to live comfortably in their home.
‘Regulation of the private rented sector to put in places minimum standards of provision and service to push up standards and prevent a “race to the bottom” in standards to maximise short term gains
‘Providing tax incentives for investment in homes contingent on meeting standards of provision and service in the rented sector
‘Rethinking stamp duty, perhaps replacing it with a tax on consumption rather than purchase, avoiding the price block at £250,000
‘Transparency and clear democratic accountability over planning decisions, including where conditions are agreed to mitigate the adverse consequences of a development having been set in the context of financial viability these are kept to even if these are rescheduled where circumstances change including being changed into a profit share agreement.
‘Smart use of public land and the sector’s ability to fund projects to stimulate investment including picking up on the local housing investment fund.’
Stride Treglown director Dominic J Eaton said: ‘I think the report is very constructive and is another incentive to help boost the housing market. Raising design standards, encouraging communities and future proofing are all to be encouraged. And it feels right that the RIBA should be at the forefront leading these initiatives.
He added: ‘I sincerely hope that the Future Homes Commission’s recommendations do have an impact on the sector, only time will tell. It seems that the report has been received positively by the industry and government which would indicate that it will have influence on the emerging housing market. I cannot really comment on the idea of funding by pooling investments from local authority pension funds. Although in principle it looks feasible, there is a lot to this that I don’t fully understand and there is a lot of detailed information that I am not privy to. So in that respect I look to the experts to advise.
‘With regards “kick starting” the housing market. My biggest concern is always the planning process. My experience of delivering housing from inception to completion, is that the biggest area of risk is during the preparation of the application, the public consultation process and of cause the application period. I am aware of government targets and the housing shortfall, but we are involved in a number of large scale housing projects in the South East and the time spent negotiating the planning process is very disproportionate to the overall programme and even the 13 weeks period that it should take? Following planning approval you are really able to manage and plan your time, prior to this it is all a bit of an unknown.
‘I know planning is an obvious target but in my experience there appears to be plenty of appetite amongst residential developers to bring projects forward and there also appears to be funding in place. It just seems that on a number of projects the whole momentum has been slowed down by public objections. There is still a healthy amount of nimbyism around, concerns of traffic generation and the impact of this on the local infrastructure, and the provision of affordable housing. What I have found more recently, particularly at public consultations. Is a real concern and objection to high numbers of affordable housing, which at 40per cent on a scheme of 800 houses is a lot. Ironically, this issue that the majority of the public object to, we are promoting as a positive element of the scheme proposals. The most asked question is “how will this proposed residential development benefit me”? Which I think is a bit short sighted.’
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