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.

Barriers for local authorities
On the 16th November 2017, Sajid Javid announced that he was taking action against local authorities which have failed to deliver their local plans and is seeking to put forward regulations that would see these reviewed every five years. This is a significant burden for local authorities and would result in additional costs. Currently, it is proposed that these costs would be covered by the government’s commitment to increase planning fees for applicants by 20%.

Balancing local needs with certainty for developers regarding planning requirements will continue to plague the UK’s development landscape for some time. For transactions that were conditional on planning, we used to advise clients to look for conditional periods of 12 – 18 months. Now, we advise to look for a minimum of two to three years to allow time to navigate our cumbersome planning process.

Addressing this issue will require an investment in extra resources within local authorities.

Committing to new approaches
Despite these challenges, PRPs and local authorities have the potential to overcome some of the hurdles if they explore and commit to different approaches to boosting supply.

This includes forming joint ventures, which have been largely embraced by PRPs and sectors of the private development market. These now need to evolve and adapt to new situations and to involve new participants. Stronger commercial ventures and flexible partnering between local authorities and PRPs would not only improve the delivery of homes for market sale but provide different and more sustainable housing solutions in a market downturn.

In addition, the growth of joint ventures and collaborating arrangements between PRPs could increase capacity through shared resources and remove the need for large-scale mergers. Key to the success of these structures is a need to acknowledge the strengths of other parties. Combining the expertise and market knowledge of a dedicated local PRP with the insights from an PRP operating in a different region and which has already delivered new models of housing, could result in cost and delivery efficiencies as well as potential new sources of funding.

Funding for SME builders
The budget message emphasised the Government’s focus to work with local SME builders to assist in delivering housing. The exact funding details are due to follow however, we wonder whether there will be opportunities for PRPs to work with SMEs to secure potential funding so that both parties can make those sub twenty unit schemes viable for affordable tenure units in line with local needs.

The challenges raised in the Autumn Budget aren’t new but they do underline the need for fresh thinking. PRPs and local authorities will always face hurdles in boosting supply but there are opportunities too. By considering new approaches and ways of working with different partners, housing providers can be a massive part of the solution to our housing crisis.

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