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Communities Secretary calls for borrowing to invest in building new homes

A senior Cabinet minister has said the Government should borrow money to invest in hundreds of thousands of new homes in what appears to be a significant shift in Conservative thinking.

Communities Secretary Sajid Javid said ministers should take advantage of record low interest rates to deal with the housing crisis, which is “the biggest barrier to social progress in our country today”.

Asked if Chancellor Philip Hammond was on board with the idea a month away from his Budget, Mr Javid told BBC One’s Andrew Marr Show: “Let’s wait and see what happens in the Budget”.

But his call to borrow more cash to pay for spending on housing and other infrastructure appears to echo Labour’s own “fiscal credibility rule”, which states that the government should not borrow for day-to-day spending but be prepared use it to fund long-term investment.

Asked whether there would be a new housing fund to build homes, Mr Javid said: “We are looking at new investments and there will be announcements.

“I’m sure at the Budget, we’ll be covering housing but what I want to do is make sure that we’re using everything we have available to deal with this housing crisis.

Communities Secretary Sajid Javid
Communities Secretary Sajid Javid (Stefan Rousseau/PA)

“And where that means, so for example, that we can sensibly – you borrow more to invest in the infrastructure that leads to more housing – take advantage of some of the record low interest rates that we have, I think we should absolutely be considering that.”

He added: “I would make a distinction between the deficit which needs to come down and that’s vitally important for our economic credibility and we’ve seen some excellent progress, some very good news on that just this week.

“But investing for the future, taking advantage of record low interest rates, can be the right thing if done sensibly and that can help not just with the housing itself but one of the big issues is infrastructure investment that is needed alongside the housing.”

Mr Javid also suggested the Government would not relax protections for the green belt.

new homes

“I don’t believe that we need to focus on the green belt here, there is lots of brownfield land, and brownfield first has been a policy of ours for a while,” he said.

“There is a lot more that can be done, density is a big issue – if you look at the density of London for example, it won’t surprise your viewers to learn that London has some of the highest levels of demand in the country, the density in London is a lot lower than many other cities, Paris, Berlin, compared to most cities around Europe, so that’s one area where you can expand more.”

At the Conservative Party conference this month, Theresa May pledged to “dedicate” her premiership to fixing Britain’s housing crisis as she announced an extra £2 billion for affordable housing.

An extra 25,000 social homes could be built under the plans outlined by the Prime Minister but her promise was overshadowed by her mishap-strewn conference speech and subsequent Tory infighting, and the party remains under pressure to do more.

Environment Secretary Michael Gove appeared to back Mr Javid’s suggestions, tweeting that he was “v impressive on #Marr”.

Shadow housing secretary John Healey said: “If hot air built homes, ministers would have fixed our housing crisis.

“Any promise of new investment is welcome, but the reality is spending on new affordable homes has been slashed since 2010 so new affordable house building is at a 24-year low.”

Source: BT.com

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Historic UK/US agreement by development finance bodies

Transatlantic exchange will benefit responsible finance providers

The two national bodies representing the development finance industries in the UK and US have today signed a historic partnership agreement.  The US-based Council of Development Finance Agencies (CDFA) and the UK’s Responsible Finance are establishing a transatlantic exchange that will boost finance practitioners in both nations.

The exchange will help foster best practices, collaboration, learning and a greater understanding of how economic development and infrastructure is financed in the two nations.

The CDFA and Responsible Finance represent a total of 500 finance providers, which all support economic development and have an impact on their local economies. International collaboration and agreements are currently hot topics, and this new exchange will strengthen understanding as well as supporting growth.

Responsible Finance supports a strong network of responsible finance providers who are increasing access to fair finance across the UK. Jennifer Tankard, CEO of Responsible Finance, commented:

“The transatlantic exchange is a great opportunity for responsible finance providers in the UK to learn from US peers and share our own experiences. We have a special relationship with the CDFA and this new agreement means that by working together we can achieve more than the sum of our parts. Our research, webcasts and visits will enable finance providers to take advantage of learning, funding and training opportunities. This is good news for the businesses, communities and people they serve – those that can’t access finance elsewhere and that need a strong national network of finance providers.”

Source: London Loves Business

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More than 10,000 extra homes planned for Shropshire – with some on green belt land

Shropshire Council is reviewing its local plan, moving it forward by ten years.

The plan is now set to be presented to cabinet on October 18.

Although almost 19,000 homes are already set to be built in the county, the plan says a further 10,000 will be needed by 2036.

Adrian Cooper, planning policy manager at Shropshire Council, said: “Shropshire Council has got a local plan already, the job at hand is keeping it up to date.

“The current plan covers 2006 to 2026, the new plan we’re working on is moving forward by 10 years to 2016 to 2036.

“Back in January we asked the public the big questions in an eight-week consultation and we had about 400 responses from across different sectors.

“This next step is about responding to these comments and starting to take decisions about the preferred approach for the new plan.

“We’ve gone for the highest housing growth, there’s a nine year overlap between the current plan and the plan we’re doing so we’ve got quite a lot that we can count towards that 28,000.

“If you add up those houses that have already been built it comes to 18,583, so the new housing required by 2036 is 10,347.”

About 300 hectares of employment development would be earmarked under the new plans.

Mr Cooper added: “We’re looking to deliver a balance between the level of housing and employment.”

The extra 10,347 houses are mostly planned for the towns in Shropshire, with 30 per cent planned for Shrewsbury, 24.5 per cent planned for the bigger towns such as Market Drayton, and Whitchurch, 18 per cent for smaller towns such as Much Wenlock and Bishop’s Castle, and 27.5 per cent for rural areas.

Mr Cooper added: “It will focus the development in towns. About 70 per cent of the development will be in towns.”

Green belt land in Shropshire could also be released for development under the new local plan.

Mr Cooper said: “The green belt is very specific planning designation.

“Shropshire’s green belt was established in the 1970s, it includes the land east of the River Severn and south of the A5, land around Shifnal, Claverley, Alveley, Quatt.

“The planning inspector we had last time instructed us that we had to do this.

“We’ve got a specialist consultant who has done a piece of work which will be published looking at the green belt in Shropshire and has divided it up in manageable chunks.

“They have measured how well these chunks of land are performing as green belt.

“We will then look at what the impact would be if we were to release that land. It then falls to Shropshire Council to see how we want to run with that.”

The housing growth of 28,000 is equivalent to an average of 1,430 homes being built a year.

Ian Kilby, planning services manager, said: “In the recession there were about 800 houses built per year, and last year we had 1,910 delivered.

“It’s only a few years ago that next to no houses were being built.

“There was significant more development last year that what would be happening.”

But as of this year, there were more than 11,000 cases where planning permission has been granted for homes, where construction is yet to start.

Mr Cooper said: “We are to some extent dependent on our colleagues in the industry to build the houses. If they don’t build them it impacts on us.”

Mr Kilby said: “We’re trying to get the industry to raise its game on quality, so this year we’ve brought in industry awards.”

There will now be an eight-week public consultation on the plan, which will start on October 27 and close on December 22.

Source: Shropshire Star

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More land needs to be released for new homes in the UK to meet demand

A rapid expansion of the house building industry has the UK on track to deliver the Government’s target of one million new homes by 2020, but more are needed, according to a new analysis.

Indeed, an additional 100,000 homes are needed each year if the new supply is to have any effect on housing affordability and to boost volumes and improve affordability more land needs to be released in the areas of greatest need, including green belt swaps, says the report from international real estate adviser Savills.

It explains that new homes volumes are up almost 50% on three years ago, meaning that new housing supply is almost meeting demand across most of the UK. However, London and South East regions are bearing the brunt of the shortfall, accounting for 104,000 of the 2015/2016 total, which puts great pressure on affordability. Only a fifth of households can afford to buy the average new home in these regions.

‘Policymakers must take this shortfall in the south east of England seriously if we are to finish the job of solving the housing crisis. Many more new homes are needed at price points that are affordable to the many, and across a range of tenures, if affordability pressures are to be eased,’ said Chris Buckle, director of Savills residential research.

New homes need to be priced as a mass market product to ensure high sales rates, the report says. Increased land release in areas of high housing demand would reduce competition for development sites, leading to lower land values and enabling new homes to be sold at lower price points.

If there were more land on the market, land owners may need to realign expectations on the value of land, Savills argues, though that value will still need to be high enough to persuade them to sell. For the policymaker, it means recognising that lower new homes values may result in less land value to be captured through CIL and section 106.

A commitment to solving the housing crisis is evident in the housing white paper, but to address the crisis where it is most acute will require a regional market led strategy for land release, including a programme of green belt swaps, the firm says.

The report also points out that Government aid, particularly in the form of Help to Buy, has helped boost the number of homes being built and will support around 20% of the 190,000 new homes expected to be built in 2016/2017, compared with 34,000 in 2015/2016 and 28,000 in 2014/2015.

Far the biggest increase has been in the number of homes being built without public funding, both market sale and built to rent units, up from only 62,000 in 2015 to an expected 111,000 this year, an increase of 79%.

The Savills report details evidence of high delivery sites in high demand areas across the South East. These include sites in Andover, Aylesbury and Bedfordshire where homes are priced at a discount of up to 15% compared to the local market on an average price per square foot basis. Each of these sites completed more than 600 new homes for sale in the past three years, a build-out rate significantly above average.

Even in high demand areas, such as Cambridge and Horsham, there are large numbers of homes being sold at a discount to market averages on a per square foot basis, the firm’s researchers found.

‘To build on this momentum, policy needs to go further, and our report contains some uncomfortable truths. Help to Buy may have helped boost housing delivery and given aspiring home owners a welcome leg up onto the market, but something more fundamental needs to be done to ensure we deliver more homes quickly, and at prices that more people can afford, whether to buy or to rent,’ said Buckle.

‘Policymakers need to recognise that high volume delivery of lower priced housing will limit the capacity of developers to fund infrastructure and affordable housing in the way they currently do, via section 106 and CIL payments, so other sources of funding for infrastructure and affordable housing will be essential,’ he added.

Developers will need to change their approach, Savills says, adding that the Government clearly wants to hold developers to account for new home delivery, through better, more transparent data and sharper tools to ensure housing with planning permission is built.

‘Although it is unclear what form these tools will take, this pressure, combined with the new housing delivery test for local authorities, means that it will not be enough for the development industry simply to maintain current modes of delivery,’ Buckle concluded.

Source: Property Wire

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The World Bank’s new Women Entrepreneurs Finance Initiative: Recycling a broken model?

In July at the G20 meeting in Hamburg, the World Bank announced the Women Entrepreneurs Finance Initiative (We-Fi), a financial intermediary facility housed and managed by the Bank, that seeks to “advance women’s entrepreneurship” in developing countries by providing “increased access to the finance, markets, and networks necessary to start and grow a business”. The brainchild of Ivanka Trump, daughter of US president Trump, the facility aims to “leverage donor grant funding of over $325 million and mobilize more than $1 billion in international financial institution and commercial financing, by working with financial intermediaries, funds, and other market actors”.

The Bank will act as We-Fi’s trustee and secretariat whilst, “Multilateral development banks, including the World Bank and IFC [International Finance Corporation, the Bank’s private sector arm], are eligible as implementing partners to propose private and public sector activities”, and apply for funding. A governing committee, composed of the founding donors, such as United Arab Emirates and Saudi Arabia, will make its allocation decisions. The first meeting of the governing committee is planned in October 2017.

Concerns raised about facility’s ability to reach poorest women

In July, Devex reported concerns that “We-Fi’s mission will overlap” with pre-existing initiatives such as the joint IFC and Goldman Sachs’ Women Entrepreneurs Opportunity Facility (WEOF) and the Banking on Women program (see Update 85). While We-Fi is dubbed, “the first World Bank-led facility to advance women’s entrepreneurship at this scale”, the IFC’s 2014 WEOF press release stated that its 10,000 Women programme, comprised a $600 million global facility, would, “increase access to finance to as many as 100,000 women entrepreneurs in emerging markets”. It further stated that it “is the first of its kind to be dedicated exclusively to financing women-owned small and medium businesses in developing countries”.

Women who own SMEs [small and medium-sized enterprises] are not among the poorest segments of the populationCINDY HUANG, CGD

In July, Nancy Lee of the Center for Global Development (CGD) raisedquestions about how the success of We-Fi and the previous Bank initiatives are measured, stating that, “It would be helpful to know more about the track record of IFC’s WEOF so far”. There are no updates available on WEOF, which makes it difficult to assess the outcomes of the programme and use lessons learned for We-Fi. Cindy Huang of CGD made detailed suggestions in August on how We-Fi can learn from existing research on women’s economic empowerment, reminding the Bank that, “a well-designed approach to empower women must recognise and incorporate the rich evidence base that supports the connections between economic outcomes for women and investments to improve their health and education, decrease gender-based violence and unpaid care work responsibilities, and promote women’s voice and agency in advocating for their own rights” (see for example GADNBreaking Down the Barriers). Huang questioned whether the Fund will reach poor women, stating that “women who own SMEs [small and medium-sized enterprises] are not among the poorest segments of the population”.

Elaine Zuckerman of Washington-based NGO Gender Action also expressed concerns about the facility’s target audience, saying: “While We-Fi may empower some women it is questionable whether it will contribute to achieving the Bank’s goal of ending extreme poverty. We-Fi loans will target small to middle-sized enterprises, which evidence shows fail to reach poor women. We-Fi aligns with the Bank’s ‘Gender Equality as Smart Economics’ framework that supports female enterprises as instruments of economic growth without complementarily promoting women’s and men’s equal human rights”

Source: Bretton Woods Project