EC Harris head of strategic research Simon Rawlinson
This is a long term strategy but most of the headline-grabbing proposals feel a bit short term.
Encouragingly, many of the proposals, freeing up public sector land, New Homes bonus, renegotiated s106 agreements and the land auction process can be traced back to the 2004 Barker Review, which focused on the need to increase the supply of housing in order to maintain long term affordability.
Given the current state of the housing market, the proposal that will get the greatest coverage is the House Builder Indemnity Fund.
The advantages of the HBIF are speed of implementation and simplicity of operation. The long term disadvantage may be the competitiveness of the rates offered on the 95 per cent deals.
Government will need to ensure widespread participation to maintain competitive rates. The main criticism is that HBIF is providing state support for house prices that remain unsustainably high and that once introduced, the indemnity will be very difficult to withdraw.
The other high profile announcement relates to the right to buy for social housing, linked to the commitment to replace all sold accommodation with new dwellings.
Given the success of the policy in the 1980s, this could create a significant shot in the arm for the social housing tenure – particularly if combined with other measures such as Growing Places Fund, Get Britain Building and Build Now, Pay Later.
With the new affordable housing being delivered into the new affordable housing model of market rents -10 per cent, this move could accelerate the very significant changes to the funding of social housing envisaged in welfare reform.
Viewed collectively, the measures appear to be coherent, although there are aspects that either look underfunded (such as Growing Places Fund, given the importance of infrastructure in levering planning) or challenging to implement, such as the National Planning Policy Framework.
The most positive aspect of the policy is the speed of implementation.
If the timetable is adhered to, we will be seeing land auction pilots in 2011 and the indemnity scheme launched in Spring 2012. Given the scale of cuts within DCLG, this will be a truly impressive performance – let’s hope the policy can withstand their first engagement with the realities of the house building industry