The Intermediary – July 2025 - Flipbook - Page 47
SPECIALIST FINANCE
Opinion
We must support
developers to
build new homes
E
very time the
Government is due
to deliver a Spending
Review or annual
Budget, the housing
market holds its breath.
The spring Spending Review this
year focused on funding for affordable
and social housing – but will it deliver
meaningful change?
Chancellor Rachel Reeves confirmed
that the Government will invest
£39bn over the next 10 years as part
of its Affordable Homes Programme,
calling it “the biggest cash injection
into social and affordable housing in
50 years.” The money will be allocated
in tranches, with around £3bn
released each year until 2029, rising to
£4.5bn by 2035-36.
It constitutes direct Government
funding to support housebuilding,
with a particular focus on new homes
for social rent. Government will
also provide an additional £10bn for
financial investments, including to
be delivered through Homes England
to “crowd in private investment
and unlock hundreds of thousands
more homes.” This was interesting,
particularly considering the method
of distribution that is proposed.
We will see a new National Housing
Bank (NHB) established, which will be
a publicly owned subsidiary of Homes
England and backed with a further
£16bn provided by the Government.
According to a statement, the
NHB will “accelerate housebuilding
and leverage in £53bn of additional
private investment, creating jobs and
delivering over 500,000 new homes.”
In practice, this means Homes
England will issue Government
guarantees directly, with greater
autonomy to make the long-term
investments and support small to
medium enterprises (SMEs) with new
lending products. It’s hoped it will
also enable developers to unlock large,
complex sites through infrastructure
finance, and scale up investment
into partnerships that draw more
institutional investment into housing
and mixed-use schemes.
The NHB will also work with
local leaders to develop integrated
packages of financial support to
deliver their housing and regeneration
priorities, alongside wider land and
grant funding.
Reactions were mixed, Kate
Henderson, chief executive of the
National Housing Federation, quoted
as saying the funding package was
“transformational” and the “most
ambitious affordable housing
programme we’ve seen in decades.”
Several think-tanks were less
enthused, suggesting that it wasn’t a
real boost from previously announced
finance at all.
However, what really maers is
how this money is deployed on a
practical level – and whether planning
bureaucracy can be sorted out to make
a sufficient difference to the situation
we have seen over the past few years.
A survey of 31 house builders by
the Home Builders’ Federation last
October found that almost 20,000
Section 106 affordable homes with
advanced planning permission had
been put on hold due to a lack of buyer.
Barra Homes’ director of planning
Philip Barnes has suggested that
“thousands of completed affordable
homes” sit empty. The reasons are
complex, but come down to funding
and other priorities such as retrofiing
existing housing stock. The boost to
publicly funded grants for housing
associations could begin to alleviate
this challenge. Local authorities will
have to play ball, however.
Last summer, Savills outlined
CRAIG HALL
is director, strategic
partnerships, financial services
at LSL Property Services
the challenge. Planning obligations
typically require affordable homes to
be occupied before the private offering
on a development can be completed.
In some instances, private developers
are unable to access development
finance, progress on site, or even
seal a land deal without a Section 106
partner in place. Greater flexibility
has to be pushed – otherwise this will
continue to hinder the provision of
new affordable homes, and planned
developments to deliver all other
forms of housing will stall as a result.
Collaboration
At a recent collaboration meeting,
we were delighted to hear from key
industry players. Overall, the outlook
for the mortgage market is reasonably
upbeat – brokers are reporting
that affordability has significantly
improved in the past six to eight
weeks, with some borrowers able to
secure around a £35,000 upli due to
improved stress testing changes.
Housebuilder incentives continue
to play a key role with supporting
homebuyers. We have also seen several
lender criteria improvements, such
as increased loan-to-values (LTVs),
improved foreign nationals policy,
enhanced affordability on new-builds,
and innovation such as the GenH New
Build Boost scheme.
The sector has come a long way
since the depths of the Global
Financial Crisis; achieved through
cross industry collaboration and
reflected in lenders’ risk appetite and
proposition improvements, providing
greater choice for brokers and the
end consumer. ●
July 2025 | The Intermediary
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