On Wednesday 26 June 2013, the Chancellor set out Government’s spending plans for 2015/16. On housing specifically the Spending Round unveiled a £3.3bn package to support 165,000 new affordable homes over 3 years from 2015/16. This includes an extension of the Affordable Homes Programme (AHP) with £957m of capital funding each year, for 3 years up to 2017/18; and a new Affordable Rent to Buy scheme with £250m in 2015/16 and £150m in 2016/17.
Further details for housing and other capital investment were set out on Thursday 27 June, with the publication of Investing in Britain’s Future. This included confirmation that the HCA will become the centralised disposal agency for surplus public sector land.
What does the affordable housing settlement mean for the sector?
It’s a strong settlement for the housing sector. I say this because it provides certainty around funding for affordable housing into the next Spending Period. Confirmation of the rent regime for housing providers over the next 10 years from 2015 will bring reassurance to the sector and its investors, as providers can make long-term decisions with increased confidence.
This is a significant amount of money and is a reflection of the Government’s confidence in the sector. It is also recognition of the importance of meeting housing need and supporting the supply of housing overall, as well as the direct role housing plays in driving economic growth.
What does it mean for the HCA?
As the Government’s affordable housing delivery agency, the investment is very significant for us. I’ve said above that it shows Government’s commitment to the sector and continues to demonstrate confidence in HCA as its delivery body.
The HCA will administer the allocation of the AHP investment – which builds on the current AHP, on track to meet government’s target for up to 170,000 new affordable homes by 2015 - and is likely to do the same for the new “Affordable Rent to Buy” scheme, outside of London. We’ll be talking to DCLG and the sector to establish the details of delivery, but as always, we’ll be keen to move quickly in getting new programmes up and running successfully.
What is the new Affordable Rent to Buy, announced in the Spending Round?
This is anew programme to help people who need a limited period of support through a sub-market rent, so they can save for a deposit and achieve their aspiration of home ownership. The £400m funding announced will help fund new build homes that will be let at Affordable Rent for a limited time before being sold, with the tenant getting the first chance to buy.
The HCA, as likely administrator of the scheme, will provide investment which is repayable when the period of sub-market rental ends. We will work with the sector to design the scheme and start delivering the new homes in 2015/16 and 2016/17.
What about the public land role and news that HCA will be the single disposer of public land?
This is exciting news for the HCA, and another endorsement of the Government’s confidence in the Agency as its trusted delivery partner on public land. It builds on the HCA’s role as the Government’s Agent to increase the amount of public land for development and speeding up the rate at which it is brought to market.
Our public land work is core business for the HCA, but this confirmation by Government recognises our commercial expertise, experience of managing large portfolios of land, and delivery performance in contributing to the Prime Minister’s target to release enough land by 2015 to support development of 100,000 new homes.
How does the social rent regime affect the HCA’s regulatory role?
The guideline limit for social rent increases has been set at CPI (Consumer Price Index) + 1% per year for the next 10 years from 2015-16 to 2024-25, a change from the previous rent regime of RPI (Retail Price Index) +0.5%.
This provides the much-needed long-term certainty and stability I’ve mentioned above. It will give investors confidence and help landlords plan for future investment, and will support them to build more new affordable homes. As regulator we welcome this, and we’ll continue to focus on ensuring providers have appropriate management strategies in place to protect public interest and maintain lender confidence.
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