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Solace blog

5th March 2018

New models for housing delivery

It is clear that the supply of new homes is one of the top agenda items for both Central and Local Government and that we need major changes to our ambitions to achieve the accelerated growth necessary.

The Prime Minister’s Housing Implementation Taskforce appears to be concentrating on the strategic issues of supply of new housing, public sector land sales, land banking, housebuilding skills and building the infrastructure needed for new housing developments. Their focus is on Homes England, transformed under Nick Walkley, to be the driver of the change required. All in conjunction with a whole host of industry drivers that need to come together to make inroads into faster, sustainable supply of affordable homes. This will all take time as there is no silver bullet and projects will move at a different pace in each Authority.

The supply of new homes has traditionally been the domain of the volume house builders, large developers and the Registered Providers. Lack of grant funding has required developing Registered Providers to look at new ways of raising funds through, for example, homes for sale and shared ownership. The many changes Local Authorities have experienced over the last few years has also led them to rethink their roles and responsibilities in the provision of homes and as importantly, improving revenues.

This has seen a race for Local Authorities to create their own Housing Companies. The latest information indicates that almost a quarter of councils in England have invested some £130m in creating 58 new house building companies since 2012. Many more are in the pipeline or are being considered as an option for councils to build homes and create new income.

This is a positive move, but the main problems for these new companies are capacity, political support and scale. Essentially they are competing with other local councils, builders and the registered providers for scarce resources.

Land and funding do not appear to be a problem. Creating a delivery vehicle with the right skills that can move at pace with full support of members and officers is more problematic. It can also be the case that the land values, development costs and sales/rental values do not work.

In some cases, the ambition for the new companies is to build new social homes for rent and other affordable models. This can be limited to 20 to 50 homes per annum. The need to drive revenue streams and increase capacity necessitates much larger projects and the creation of partnerships to deliver them.

It also raises the question of long term stewardship and management of these new assets, where quality, customer service, and cost are essential drivers. Different aspirations require new innovative solutions.
The formation of a housing company is just the initial step for creating a delivery model for any council.

In each case the projected outcomes and ambitions will be different, localised to that councils strategic aims. Member and officer alignment is crucial to a successful outcome. As is the choice and procurement of partners.

There are many examples of successful partnerships between councils, private companies, and registered providers, however, new procurement and delivery models are needed. These new housing companies create the opportunity to design the next generation of joint venture partnerships. Where the partnership can provide the full range of long term investment necessary to create places we can all be proud of.

This could be housing sectors opportunity to create the “disrupter” solution.

A guest blog by Neil Euesden, Group Director of Operations, Pinnacle Group