The Geographical Spread of recent Homes England Grants

On 30 October 2018 in a short statement placed on the Ministry of Housing, Communities and Local Government website, the Government announced the ‘geographical targeting’ of the following five housing programmes:

  • the Housing Infrastructure Fund (HIF) Forward Fund (FF) (£500m announced in the Budget, in addition to £5 billion previously announced);
  • Estates Regeneration Fund (approximately £180m);
  • the short term Home Building Fund (£4.5bn);
  • Small Sites Fund (£630m); and
  • Land Assembly Fund (£1.3bn).

A minimum of 80% of resources available from those programmes will, on average over the next 5 years, be directed at areas of ‘highest affordability pressure’. These are defined using the ratio of median house prices to median workplace-based household income figures.

Homes England have verbally confirmed that this methodology applies to the HIF FF business plan projects already in development, which were announced in February 2018. Those local authority areas with a Forward Fund bid and not identified as having ‘high affordability pressure’ will be competing for a share of 20% of the £5.5 billion available for HIF FF.

This shift in direction is reflected in the Homes England Strategic Plan also published on 30 October 2018, with one of the Agency's key performance indicators being the share of funding to the ‘highest affordability pressure’ areas.

This geographical targeting of the five housing programmes follows the July 2018 announcement that £2 billion of Shared Ownership and Affordable Homes Programme grant funding now available for new social rent homes is limited to local authority areas with a ‘high affordability pressure’ where private rents are £50 or more higher per week than social rents. Only ten local authorities across the North are able to bid. This formula was also to be applied to the Housing Revenue Account borrowing programme until the Prime Minister announced that the borrowing cap was to be lifted.

The new targeted approach of investment can be traced back to the inclusion of major housing programmes in the National Productivity Investment Fund (NPIF) established at Autumn Statement 2016, and then expanded to £31bn at Autumn Budget 2017 along with commitment to Government investment to the Cambridge-Oxford Arc. Responsibility for NPIF lies with the Treasury, with a consequent emphasis on financial criteria driven by property values, which disadvantages lower value areas including many parts of the North and Midlands.

We are particularly disappointed that areas that Key Cities represent appear to suffer as a result of this formula, particularly the North of England and the Midlands. We call on government to reconsider the methodology being used to calculate these grants.