Homes England’s new five-year strategy, published last week, reflects the more interventionist role the government housing agency has taken in recent years.

Construction

Homes England’s new strategy has set several delivery targets

Source: Shutterstock/SpeedKingz

It promises developers, housing associations and local authorities funding, support and ready-made sites – but demands in no uncertain terms that they  must commit to increasing housing supply.

So how has the property sector reacted to Homes England’s new strategy?

Adam Challis, head of residential research at JLL, calls it a “bold statement from the government”, showing Homes England’s desire to “be disruptive and cause change”.

This reflects a change in housing’s perceived importance as a policy area. “The language is much more assertive, partly reflecting government support for Homes England and policy priority for housing,” says Helen Collins, head of housing consultancy at Savills.

Homes England’s document includes delivery targets for the two new housing funds communities secretary James Brokenshire announced in September. It says that the £1.03bn Land Assembly Fund, which will acquire land and ready it for development, will complete 23,000 projects by March 2030, while the £630m Small Sites Fund, which public bodies can use to provide infrastructure for stalled projects, has a “long-term” aim to unlock land for 27,000 homes.

Short- and long-term goals

Collins says Homes England’s direct intervention in the land market will be “important in the medium to long term to address structural problems and in the short term to help maintain supply levels in the second half of the property cycle”.

She adds that “a one-stop shop for infrastructure, investment and grants is new and important, particularly for partners seeking to develop at scale”.

Urban Splash co-founder Tom Bloxham goes even further, saying that if Homes England delivers on its plan, the “next few years could be the most exciting times for housing delivery in my lifetime”.

To enable it to hit its targets, Homes England will double in size from 750 employees to 1,500 in the next 18 months.

But some say the new strategy does not address other roadblocks to developing more housing.

“The public sector has a responsibility to set an example by improving and evolving itself, especially if it expects the private sector to do the same,” says Anthony Shapland, head of development advisory at Colliers International. “This includes unlocking public land, reforming the planning system, making public sector frameworks more accessible and better resourcing public sector bodies.”

Green Belt question

Addressing the question of where land for new housing could come from, the strategy says available brownfield land has the capacity for one million homes to be  developed, while land owned by local and central government offers capacity for an additional 160,000 homes.

However, some have questioned whether these sites alone will provide the kind of housing people want to live in.

“Where housing is most needed, and prices are highest, is where the green belt is preventing housing from being delivered,” says Gregg Wilkinson, group managing director at strategic land investor and developer Gallagher Estates. “That needs to be looked at wholesale.”

“Where housing is most needed is where the green belt is preventing housing from being delivered”

Gregg Wilkinson, Gallager Estates

One of the most noticeable changes from previous policy is that Homes England has fully thrown its weight behind modern methods of construction (MMC), citing their ability to “improve productivity and reduce the impact of the declining workforce”, which it says could fall by a further 20% to 25% by 2026.

Bjorn Conway, chief executive of modular housing company Ilke Homes, believes this could have a big impact on housing provision. “Historically, the biggest issue holding the sector back from meeting the government’s housing targets has been time, both in terms of planning processes and time taken to deliver new homes using traditional build methods,” he says.

Accelerating delivery

To give developers an incentive to use MMC, the agency says it will “accelerate delivery on [its] land by incorporating a requirement to use MMC into our leases”. But there is a carrot as well as a stick for developers, as the document also proposes providing finance to developers that both partner with Homes England and use MMC.

Modular housing

“MMC is an attractive delivery method to private developers but still creates uncertainties and risks that investors and developers are uneasy about,” says Ed Fowkes, development director at residential investor and developer Prosperity Capital Partners. “The proposed provision of development finance to developers partnering with Homes England that use MMC could help create the stability and confidence needed to speed up its adoption.”

However, Wilkinson says reservations about MMC among planning departments and mortgage lenders could prevent it from being widely adopted. “Some local authorities will need to be more lenient on reserved matters planning applications and their design codes and it is still not clear whether mortgage providers will be happy to lend against the products when they are built,” he says.

Other than coming out in favour of modular construction, the new strategy largely serves to reinforce Homes England’s existing mission to act as a partner to the housing industry – albeit in stronger, more specific terms. Now that it has unequivocally set out its stall, its success will be measured by whether it lives up to its promises.