Getting the homes built
This content applies to England only.
Shelter is campaigning at national, regional and local levels to ensure the Government honours their commitment to build 3 million new homes by 2020 and deliver these vital homes with an appropriate mix of low-cost homes, property for private sale, social rented housing and family-sized accommodation.
How the new homes are delivered
Getting new homes built depends on the operation of a complex delivery chain, involving a range of different players from across the private and public sectors, including:
- private developers: who build new homes to sell on at a profit
- local authorities: who allocate land for development and grant planning permission
- central government: which sets the policy and regulatory framework for housing delivery and draws up national planning guidance
- housing associations: which build and manage affordable, including social rented, homes
- the Homes and Communities Agency: which is a new national body charged by the Government with overseeing the delivery of affordable housing in England and supporting regeneration.
Section 106 agreements and subsidies
For social rented or other affordable homes to be built, they need to be subsidised so that housing can be offered at below market rents. This happens in three main ways:
- through grants from the Government: mainly to housing associations, administered through the Homes and Communities Agency
- through private borrowing: by housing associations against future social rental payments
- through planning agreements: negotiated by local authorities, under which developers have to agree to build a certain proportion of affordable homes as a prerequisite for planning permission. The technical term for these is ‘section 106 agreements’.
Barriers to getting the homes built
Before they can start building new homes, developers must identify land on which to build. This involves not just purchasing a suitable site, but also obtaining planning permission from the relevant local authority in order to build.
For developers to be willing to build, they must be convinced that they will be able to find a purchaser for their homes when they are built, at a price that means they will make a profit once the costs of building and buying land are taken into account. This is likely to be more difficult in situations where house prices are falling or where there is a shortage of potential buyers.
The Government has reformed the planning system to try to increase the supply of land available for developers to build new homes. National guidance now requires local councils to identify enough land that is ready for development in their local areas for at least 5 years in advance. Those councils that do so will receive additional grants from the Government. In addition, reforms are being introduced to the regional level planning system, with the aim that every region sets housing targets in line with the Government’s overall commitment to build three million new homes.
One important source of land is the large number of surplus sites owned by public authorities such as the National Health Service or the Ministry of Defence. The Government has created a register of surplus public sector land and has committed itself to release enough of this land to deliver 200,000 new homes by 2016.
Changes such as these should help to increase the supply of land. But it is equally important to ensure that there is strong leadership at local level to get new homes built. Shelter believes that local politicians and community leaders need to demonstrate greater leadership in overcoming opposition to house-building plans by engaging with local people to make the case for why new homes are needed, and to show how they can benefit their local communities.
Maximising the number of new social and affordable homes
To tackle the growing housing crisis, it is vital that as many affordable, including social rented, homes as possible are built. Local and regional government must set ambitious targets for the number of new social and affordable homes. Local councils, developers and housing associations must work together to get them built. If we are to solve the current overcrowding problem, we must also ensure that enough family-sized homes are included in any new social and affordable housing.
Local councils have a particularly important role to play in delivering affordable housing through section 106 agreements. A report published in 2006 estimated that around half of all the affordable housing in England was provided through these agreements. [1] However, while some local authorities are very good at negotiating to achieve as much social and affordable housing as possible, others have a poorer record. Sometimes homes agreed under section 106 agreements are not actually delivered.
Shelter believes that the Government and the Homes and Communities Agency must investigate what further measures could be introduced to increase the total number of social and affordable homes delivered through section 106, particularly now that so many private developments have ground to a halt.
While most new social housing is currently provided by housing associations, the Government is now looking to encourage other organisations - such as councils to fulfil this role through the formation of 'local housing companies'. Shelter supports this, so long as new housing providers compete on a level playing field and that public subsidy is used in the most cost-effective manner.
[1] Monk S, Delivering Affordable Housing through s106, JRF, 2006
