It is four years since ARK Consultancy undertook research for the GLA into creating opportunities for helping local authorities increase housing supply, At the time there was plenty of appetite for development, a willingness to take risk and a range of creative initiatives in place to make it happen.
Since then, uncertainty has increased and the ability to access decent affordable housing, even for those on reasonable incomes, has decreased – creating further divisions between generations and pressure on those on middle incomes. This has pushed housing up the political agenda and resulted in various government initiatives- the latest of which is the lifting of the HRA borrowing cap.
But do more readily available funds address the problem?
ARK Consultancy have been rooted in development and regeneration and are fully supportive of the new flexibility. However, having supported numerous social landlords we are also alert to the practicalities of development and the challenges Local Authorities face – improved access to finance may make borrowing less complex but it will not make development faster, easier or reduce the risk in a rapidly changing market.
What is not evident now and what was not in evident from our previous research is lack of funding being an inhibitor, indeed, funding was generally plentiful and cheap for those who had the appropriate borrowing vehicles in place. There were some spectacular results, even with the HRA cap in place.
For successfully developing LAs the key determinants were political will, land availability, leadership, risk appetite and the appropriate skill set rather than finance.
Even with increased funding LAs will inevitably struggle to secure opportunities in the highly competitive open market for land, so their primary focus for development will inevitably be on land in their ownership. This may bring viability advantages but there are procedural and consultation requirements that will constrain pace.
Development and regeneration ambitions and opportunities therefore need to be considered in the round, using the appropriate skills to optimise the assets already owned. For Local Authorities strategic asset management and development or regeneration should be inextricably linked within a cohesive development strategy.
The motivation for development or regeneration is also important – is it to improve poor estates, increase housing supply generally or add significant additional affordable homes? Homes need be in the right place of the right type and available at the right price,
We welcome all supply side initiatives, however, the notion that there is a “broken housing market” where increasing supply can create equilibrium is misguided. The market is not broken, it is merely reacting as the housing market does. It is impossible for LAs to increase numbers sufficiently in the right place, at the right time and in the right numbers to improve accessibility/affordability – this can only ever be achieved with some form of subsidy.
We applaud the lifting of the HRA cap (albeit we await the detail) and the opportunity should be grasped, however, we should not lose sight of the fact that further interventions will be required to put housing within the reach of those who have been marginalised
To misquote Kevin Costner “build it and they will come.” To which we would add – but can they afford it?