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London and SE take majority of government housing fund

Almost three-quarters of a £2bn infrastructure pot in the government’s £3.5bn Home Building Fund has gone to projects in London and the South-east, Construction News can exclusively reveal.

When the government unveiled its £3.5bn Home Building Fund in October 2016, £2bn was earmarked for infrastructure loans, which private developers could acquire in order to prepare land for housebuilding.

Data obtained by CN under a freedom of information request shows that out of the £894m of infrastructure loans agreed so far, £515m has gone to projects in London and £130m has gone to projects in the South-east.

Together this accounts for 72.2 per cent of all loans.

The remaining £248m is spread across projects in the East and West Midlands, the East, Yorkshire and Humber and the North-west.

As of 21 December 2017, no projects in the North-east or South-west had received any infrastructure funding.

A spokesperson for Homes England, which manages the fund, said: “The South-east along with London is the part of country with the highest housing demand, which is reflected in the number of supported schemes from this area.

“The fund is open to bidders from across England and has a set of agreed investment and risk parameters.”

But Labour MP for Warwick and Leamington Matt Western said that housing pressures weren’t confined to London and the South-east.

He said: “The fact that three-quarters of this funding is going to London and the South-east is astounding.

“Of course, housing pressures are most acute in these areas, but places outside the South-east are also really suffering.

“Warwick & Leamington has seen a £100,000 increase in average house prices since 2010.”

RegionLoans agreed (£)% of totalPotential units to be built
London         515,073,729 57.6%                 116,701
South-east         130,980,287 14.6%                    88,383
East Midlands         104,400,316 11.7%                    32,545
East           67,509,961 7.5%                    26,512
West Midlands           35,470,000 4.0%                      5,721
Yorkshire and Humber           32,183,090 3.6%                    19,059
North-west             9,216,658 1.0%                      5,606
Total         894,834,041                   294,528

In addition to London receiving 57.6 per cent of all loans so far, four of the five largest loans were for developments in the capital.

The largest of these is a £200m loan for Canary Wharf Group’s development of Wood Wharf in east London.

The loan is being used for remediation works, installation of roads, bridges and utilities, and public realm works. Up to 3,610 homes could be built on the site, which will also feature offices and commercial space.

Wood Wharf secured the loan under the then Homes and Communities Agency’s £1bn Large Infrastructure Sites Fund in March 2015.

Some of the loans agreed under this were rolled into the £2bn infrastructure element of the Home Building Fund.

This meant that when it was unveiled in August 2016, only £1.5bn was actually available, with the rest having already been committed.

The second largest loan was £150m, which went to Earls Court Partnership for the redevelopment of the old exhibition centre site in west London and the surrounding area.

This partnership, which comprises of developer Capco and TfL, applied for the loan to carry out demolition, ground works, utilities installation and upgrades to nearby tube stations.

The scheme has faced growing political opposition in recent months with Hammersmith and Fulham council demanding the return of estates purchased by Capco, and the Royal Borough of Kensington and Chelsea objecting to the terms of the current proposal for the area.

The Homes and Communities Agency, which was renamed Homes England in January, refused to reveal the interest rate charged on the loans due to commercial sensitivity.

In addition to the regional skew of the loans granted so far, the fund is on course to miss its target of unlocking land for 200,000 homes by 25 per cent, as reported by CN last week.

Readers' comments (1)

  • A) How and why is LONDON and SE absorb majority of housing budget a headline? It’s hardly surprising!

    B) As I’ve commented previously and elsewhere perhaps this funding model simply shows that the current delivery model doesn’t work. The builders aren’t going to flood the market and de value their product overnight. No one else would!

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