The housing markets across the North of England present their own challenges to building more homes, requiring careful planning and close working with local and combined authorities.
Paul Fiddaman, Group Chief Executive, Karbon Homes
25 March 2019
Solving the housing crisis has become the second highest domestic political issue, with broad consensus that a significant increase in supply is essential. The Government has committed to delivering 300,000 new homes a year by the end of this Parliament and it is clear that the provision of more high quality, affordable homes for rent is a critical element of the mix.
The National Housing Federation’s own research suggests we need 90,000 new homes for affordable rent per year, and 340,000 new homes in total, to meet housing need. This implies that housing associations must find a way to more than double their output in a short timeframe – a tall order against the backdrop of an uncertain housing market, and a looming Brexit.
The North, of course, needs to play its full part in the increased delivery of affordable homes. Recent research by Homes for the North estimates that we need 50,000 new homes each year across the region to achieve our economic growth ambitions, as well as broader and more equitable investment in related infrastructure.
But the housing markets across the North of the country are more nuanced than is often supposed. There are localised pockets of acute affordability problems, alongside housing which can be unpopular because it is remote from centres of economic strength, or is located in communities whose historical economic purpose has waned.
So it is a challenge to regenerate areas of low demand in physical, social and economic terms as well as increasing the number of new homes to support economic growth. But these need not be incompatible objectives.
Delivering a significant increase in the supply of affordable homes will require close co-ordination of local authorities’ plans, and those of the emerging devolved authorities. They need to clearly articulate ambitious new homes targets, setting out the required tenure mix, based on demographic trends and household formation.
Those plans need to coordinate housing demand with economic development aspirations and infrastructure investment to ensure that the right homes are built in the right places to support future prosperity. At Karbon Homes, our experience of this coordination across our geography is mixed. Hard pressed and under-resourced local authority partners can sometimes struggle with the requirements of the current planning system.
But despite these challenges, housing associations across the North are committed to providing the homes we need and developing innovative solutions to make sure we keep on building and investing. With the right support from the Government we can do even more.
However, none of this addresses the issue of land values – arguably the biggest single barrier to affordable housing delivery. It’s well documented that much of the uplift in land value from existing use to residential development use is currently retained by the landowner.
This creates tension in the system between the ‘hope value’ that can be realised by building upmarket developments for sale, and the lower values that can be generated by providing housing for the needs of average and lower wage earners, or for those who need support to access any kind of housing. It is almost inevitable that in a bidding war on price alone, affordable housing will lose out.
There have been several proposals over the last few months to introduce mechanisms to capture part of that uplift in value for infrastructure or community benefit. It is hard to imagine a more compelling use of that captured value than providing the homes that would enable a community to thrive and prosper.