The government’s target of 40% affordable homes for its new towns could prove “really challenging”, experts have warned a House of Lords committee.
The government’s new towns plan, which is defined as schemes of 10,000 homes and over, plays a major role in reaching its 1.5 million homes target. 12 sites are set to be green-lit for new towns this summer, with the New Towns Code saying that the new developments will target 40% affordable housing and focus on social rent.
Yesterday (3/6) experts from the property and development sector provided evidence to the House of Lords build environment committee to help shape the new town policy.
Charlotte Neal, director of professional practice and research at the Royal Institution of Chartered Surveyors, questioned the level of affordable housing and said that supply constraints would make viability “really challenging”.
Neal said: “We’ve got material costs, construction cost inflation, and actually, if it then makes a site unviable, you get nothing delivered, whereas if you reduce that affordable amount, then it might make something viable, and therefore you at least get delivery.”
Neal recommended that instead of a blanket 40% quota, a system for offsetting affordability requirements in separate parts of the country may provide a better solution.
Neal added: “We need to be careful about getting rather than just putting a blank blanket amount on, really looking at what does make it viable for the private sector to get behind, because there are lots of other options, particularly if you’re a pension fund or an institution investor, where you can deploy capital, and so we have to make this an attractive prospect for them.”
“In some areas, you could possibly offset where they don’t need quite so much to somewhere that needs more and try and somehow balance that across.”
The development director at Urban & Civic, Caroline Foster, warned that housing associations would struggle to achieve the target currently.
Foster said: “We know that 10%, 20%, 25% is doable under the Homes England loans. If you start to say it’s 40%, then absolutely it will need additional funding and additional support in a variety of ways.”
Melanie Leech, chief executive of the British Property Federation, warned that the industry recognises that public sector funding would not be available at the same level as past generations of new town development.
Instead, Leech called for a partnership approach to be adopted and for the public sector to “carefully” pick private sector partners to find the “kinds of investors that have that long-term patient outlook”.
Leech continued to say that lending for new towns should be “multi-decade” and to be secured against the land and buildings meaning it could be deemed an investment rather than a loan.
Leech also suggested that there could be an extension of models currently used for funding infrastructure, saying that the government could “create mechanisms whereby the private sector could be repaid for more than just the infrastructure through some kind of additional Levy, whether that’s on community assets or whether that’s on as part of the business rates surcharge”.
The new towns taskforce has been examining over 100 sites before making its decision which is expected this summer.
