Following our initial observations on the Autumn Budget, we’ve put together this briefing which delves into the detail to bring you further insights into what it means for those operating in the housing industry.
We explore some of the challenges that the proposals raise for housing associations and local authorities as well as the approaches that these organisations can take to help overcome them and boost supply.
Following the Chancellor’s measures to prevent land banking, our real estate and property litigation experts discuss the impact of extending compulsory purchase orders.
For those responsible for social housing finance, we provide our views on gearing covenant constraints and the impact on housing supply.
And in our final article, we look at the role of local authorities in meeting the Government’s housebuilding targets.
For further information on any of the topics discussed in this briefing, please do not hesitate to contact us.
Doing more with less
Jonathan Corris and Andrew Cowan summarise some of the challenges which follow the Autumn Budget and how housing providers and local authorities can respond.
Although the debate continues on whether it was a homeowners or homebuilders budget, the key message from the Government remains the need to address the housing crisis.
It is clear that the Government is looking for private registered providers (PRPs) and local authorities to plug the gap and take even bigger steps to deliver more housing in a variety of tenures. However, the Chancellor is looking to promote alternative means of delivery and not to provide additional funding through the previous grant regimes.
This lack of grant support raises the question as to how PRPs and local authorities are going to deliver new social rent schemes in those critical areas of the country which are in desperate need of true affordable housing.
The Budget focused on the target of 300,000 homes per year but as reported by Savills, at least a third of this needs to be delivered below market levels. Through our work with a variety of clients across the country on a range of tenure-focused schemes, it is also clear, even to us lawyers, that one solution for the entire country will not address the different needs of local communities.
Closing the Gap
Caroline Mostowfi and Neil Lawlor review the Chancellor’s compulsory purchase order proposals.
The Chancellor has announced that he is establishing a review to look at the gap between grants of planning permission and housing construction. This is aimed at addressing and analysing “land banking” ie where land which has deliberately remained undeveloped for commercial reasons such as to keep housing supply low and prices high in areas where demand is high.
It was announced that if these practices were found to exist, that they could be subject to government intervention, including using compulsory purchase powers to ensure the land was developed. An interim report from the review is expected in time for the Spring Statement 2018.
The Chancellor also revealed that to increase development and housebuilding, the Homes and Communities Agency will expand to become “Homes England”. This will then bring together “money, expertise, and planning & compulsory purchase powers”.
Gearing cuts against the grain
Gary Grigor discusses the gearing covenant constraints and the impact on housing supply.
In light of recent initiatives in the 2017 Budget to stimulate housing supply, there is an ever-growing argument that gearing covenants constrain Registered Providers (RPs) and Registered Social Landlords (collectively, Associations) from reaching their true potential.
Most mature Associations on corporate covenants are expected to demonstrate their perceived financial health via annual interest cover compliance (sometimes on a three-year rolling basis) and gearing compliance at all times. Net rental income tests are also infrequently requested by some funders in the sector.
The role of local authorities in hitting the 300,000 new homes target
Jonathan Jarvis explores what needs to change to help local authorities play a bigger role in boosting housing supply.
The Autumn Budget confirmed the Government’s commitment to fixing the broken housing market. A key tenet of that commitment is its aim for the country to be building, on average, 300,000 new homes per annum by the middle of the next decade.
For that aim to be met, all housing providers will need to pull together and maximise their capacity.