Boris wants a housing boom: Here’s how to spark it

COMMENT The chancellor is on the hunt for emergency measures to support economic recovery and create jobs, in response to expectations of unemployment spiking over the coming months. In particular, the government has signalled it wants to kick-start construction activity to build homes and other infrastructure. Housing, transport, energy and other infrastructure projects take years to mobilise, yet we face a jobs crisis now. The overwhelming focus should be on how to rapidly mobilise developments that already have planning permission. Analysis earlier in the year found that more than 1m homes with planning consent in the last decade have not been built. Without intervention, construction on a very large proportion of such sites will simply not happen. Shifting this dynamic will require bold action from the government. The simple message from the state to landowners and developers with a planning consent should be: we will help you build out your projects quickly, but if you don’t, we will build them out for you and take a fair share of the financial upside for doing so. Emergency measures Drawing on the approach we have been developing in recent years in Barking and Dagenham to pursue inclusive growth, the government should create a special, emergency “Accelerated Homes, Infrastructure and Jobs Order”, lasting for the next two years. Government should offer very low interest, long-term loans to landowners or developers with consented, or nearly consented, schemes in return for strict commitments on rapid build-out, a high proportion of social and affordable homes, and the recruitment and training of the unemployed. For this emergency period, government should also mandate that any consented scheme with more than 50 homes provides 50% social and affordable housing. This should be combined with providing local authorities significant grants to then purchase those newly built homes. This would provide developers with finance and a guaranteed buyer, encouraging them to build out, while also expanding the supply of social and affordable homes by potentially tens of thousands. Where councils do not want to acquire the homes built, housing associations could access the grant to buy. Retaining the Help to Buy scheme during the downturn for new build homes would also help too. With these two measures in place – to deal with finance and demand – there would be powerful incentives for landowners and developers to accelerate economic activity and create jobs as we go into recession, rather than the market driven outcome of stalled construction and land banking. If a consented scheme had not been meaningfully started within 12 to 18 months of planning approval, emergency arrangements should enable government to assume control of the development and build it out directly. To protect public investment and not disincentivise the landowner or developer from starting construction, the state’s contribution should be recouped via a direct capital receipt on sale or an ongoing revenue return from a rental product. In effect, the state would be procuring contractors and development managing the build out, before transferring the scheme back to the landowner, minus fees and construction costs (plus a small share of the development profit). This role could either be undertaken by local authorities, where they have the capability, or could be overseen by an agency like Homes England. Innovative interventions In Barking and Dagenham, the council established Be First as a wholly owned regeneration company to directly build out council-owned sites on its behalf. Last year, 20% of all the new affordable homes built by councils across London were started in Barking and Dagenham. Over the next few years, Be First will build more than 3,000 new homes in the borough, 75% of which will be affordable. Supported by Be First, the council is also intervening to accelerate local development sites in private ownership by offering development finance and purchasing completed rental homes, where this brings forward construction and increases the proportion of social and affordable housing. With government backing, we could scale up this model. The government recently asked local authorities for ‘shovel ready’ capital projects in their areas. We are ready to deliver any that ministers are prepared to fund. We are entering extremely choppy economic waters and kick starting the economy prior to a vaccine will require bold and innovative interventions. Rather than focusing on a time-consuming upheaval of the planning system, the real challenge now is that there are thousands of consented sites around the country that, without state intervention, will not be built out as recession hits. By harnessing the state’s unique ability to reshape the default market outcomes, the opportunity is to generate jobs, stimulate economic activity and meet the massive unmet demand for social and affordable housing. Graeme Cooke is director of Inclusive Growth at the London Borough of Barking and Dagenham and Pat Hayes is managing director of Be First, the council’s regeneration company