As part of Wednesday’s Spending Review, Rishi Sunak will pump an extra £2.3bn of funding into the Government’s housing budgets over the next four years.
Announcing the £7.1bn National Home Building Fund (NHBF) during his speech in parliament, the Chancellor referred to it as part of ‘the highest sustained level of public investment in more than 40 years’. The majority of the funding will take the form of loan finance for house builders, especially those using modern methods of construction.
Examined more closely, however, the Spending Review documents disclose that £4.8bn of the £7.1bn consists of previously announced capital grant funding ‘including for land remediation, infrastructure investment and land assembly’.
A further £2.2bn in new loan finance will be provided for house builders across England, to support small and medium-sized businesses and self and custom builders through Help to Build, and to encourage use of contemporary methods of construction.
The remaining £100m will be extra cash for non-mayoral combined authorities in 2021-22, for measures to support house building and regeneration, such as redeveloping estates, releasing public sector land and the repurposing of brownfield sites. The cash will also apply to serviced plots for self and custom builders.
Mayoral combined authorities were given £400m of similar funding in last year’s budget.
In response, the National and Custom and Self-Build Association (NaCSBA) said they looked forward to working with the Ministry of Housing, Communities and Local Government (MHCLG) to ‘shape the parameters of the programme’, in the absence as yet of a format or timescale for the Help to Build scheme.
Additional support for first-time buyers urged
The £7.1bn, separate from the Affordable Homes Programme worth £12.2bn between 2021 and 2026, takes the Government’s total capital housing investment to just shy of £20bn.
Next year alone, overall government capital spending is set to total £100bn, £27bn more than last year in real terms. Further funding is promised for the next multi-year Spending Review commensurate with the Government’s commitment to provide £10bn for infrastructure projects that enable housing to be built.
Ministers are hopeful the NHBF, together with a £4bn ‘Levelling Up Fund‘ for investment in local infrastructure projects, will lead to the ‘unlocking of 860,000 homes’.
Jeremy Leaf, north London estate agent and former RICS residential chairman, hopes the funds will be used to improve the speed of delivery of affordable new housing for sale and to rent in places where it is most urgently needed.
Additional support for first-time buyers, he believes, when the stamp duty holiday ends and the second phase of Help to Buy begins in the spring, could help to boost the number of transactions. These two measures have been critical in recent months in promoting the wider economic recovery, particularly in employment, he said.
The stimulus of spending on infrastructure, too, would be very welcome as the dearth of these projects often causes delays in the delivery of housing, he added.
National Infrastructure Bank to be launched in spring
Also on Wednesday, the Government published the Green Book Review and the National Infrastructure Strategy, which will lead to the launch of a National Infrastructure Bank next spring and the transfer of billions of pounds into major capital projects.
Melanie Leech, CEO of the British Property Federation, commented that delivering on the Government’s Net Zero Commitments, while investing in infrastructure to connect and modernise areas, will be essential for UK recovery.
Furthermore, the announcement of a new National Infrastructure Bank indicates that the Government acknowledges the need for a long-term strategy and is committed to attracting private sector investment along with public spending.
The result of the Green Book Review, she said, which puts forward changes in how government assesses and evaluates spending decisions, should result in the private sector being able to form partnerships more effectively with public investment to bring about wider economic, social and environmental benefits across the country in an inclusive way.