Does cheaper money equate to more affordable housing?
Chancellor Philip Hammond’s Spring Statement in which he announced a new £3 billion Affordable Homes Guarantee scheme is certainly welcome news.
Under the scheme the government will guarantee up to £3 billion of borrowing to support the delivery of around 30,000 new affordable homes and the renewed commitment to this scheme will hopefully bring some encouragement for a hard-pressed sector.
But for Local Authorities and Housing Associations, a guarantee of funding isn’t a guarantee of affordable homes. Even if it were, a figure of 30,000 is nowhere near the 145,000 affordable homes we need every year – a figure that is further still from the government’s own target, set in 2017, to build 300,000 homes a year. We believe the sector needs consistent funding year on year to get anywhere near this.
For Housing Associations and developers these are extremely ambitious targets. In the commercial sector Affordable Housing remains all too frequently way beyond the reach of first-time buyers and even shared ownership properties are proving difficult to sell. The challenge remains how to produce suitably priced homes, whether to buy or rent, in sufficient quantities, year after year.
Breaking away from traditional construction, which repeatedly delivers inflexible and over-priced accommodation despite everyone’s best efforts, has to be a factor here. The price of land is a major problem – and the main reason why affordable homes aren’t as affordable as we would like them to be. Getting hold of suitable plots is difficult essentially because you have to compete with all the high-volume house builders.
Modular, high specification space compliant homes, manufactured quickly off-site and which can be installed rapidly over existing city centre car parks, using air rights, have to be part of the solution. With all that tarmac we believe there are hundreds of maybe potential town and city centre sites that could be developed quickly, without sacrificing the original parking resource which could generate potentially 200,000 homes.
It’s a neat solution – which effectively separates land and building costs, but it also places accommodation near to where people need to work, essential for keyworkers, and with all the advantages of existing amenities and public transport infrastructure.
This is an approach that ZED Pods has championed with super-efficient, affordable accommodation, taking advantage of modern building methods and technologies to deliver net zero carbon buildings with near zero running costs. It’s worth noting that Homes England is also pushing modular solutions alongside Modern Methods of Construction for the same reasons.
Modular solutions should be quick to build, affordable, with similar longevity to conventionally built homes. What’s more, they should be demountable and easily repurposed so you can take advantage of temporary sites or windfall land that may be developed at a later date.
Local Authorities and Housing Associations are looking for rapid low-cost solutions – more homes for people in need, with less effort and at the lowest cost. A government promise of cheaper borrowing will always be helpful, but we’ll need to see the detail in the Autumn Spending Review to know what the real impact is and how this will help keyworkers and Generation Rent. Above all what new money will be available for social rented housing? And will any of this be specifically for offsite modular?