Press release

PM: the government will directly build affordable homes

The Prime Minister will today announce that the government is to step in and directly commission thousands of new affordable homes.

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  • Ground-breaking new policy will see the government fast-track building of affordable homes on publicly owned land

  • Direct commissioning approach has not been used on this scale since Thatcher and Heseltine started the Docklands regeneration

  • Additional £1.2bn fund to build 30,000 affordable ‘starter homes’ on underused brownfield land in the next 5 years also announced

The Prime Minister will today announce that the government is to step in and directly commission thousands of new affordable homes.

In a radical new policy shift, not used on this scale since Thatcher and Heseltine started the Docklands, the government will directly commission the building of homes on publicly owned land. This will lead to quality homes built at a faster rate with smaller building firms – currently unable to take on big projects – able to get building on government sites where planning permission is already in place. The first wave of up to 13,000 will start on 4 sites outside of London in 2016 – up to 40% of which will be affordable ‘starter’ homes. This approach will also be used in at the Old Oak Common site in north west London.

The government is also today announcing a £1.2bn starter home fund to prepare brownfield sites for new homes. This will fast-track the creation of at least 30,000 new starter homes and up to 30,000 market homes on 500 new sites by 2020 – helping deliver the commitment to create 200,000 starter homes over the next 5 years.

The new investment will help kick-start regeneration and secure planning permission in urban areas – renovating disused or under-occupied urban sites so builders can get to work without any delays.

Prime Minister David Cameron said:

This government was elected to deliver security and opportunity - whatever stage of life you’re at. Nothing is more important to achieving that than ensuring hard-working people can buy affordable homes.

Today’s package signals a huge shift in government policy. Nothing like this has been done on this scale in 3 decades – government rolling its sleeves up and directly getting homes built.

Backed up with a further £1.2 billion to get homes built on brownfield sites, it shows we will do everything we can to get Britain building and let more people have the security that comes with a home of their own.

Communities Secretary Greg Clark said:

We’re pulling out all the stops to keep the country building with a clear ambition to deliver a million homes by 2020 and support hard-working people into home ownership.

Today’s radical new approach will mean the government will directly commission small and up-and-coming companies to build thousands of new homes on sites right across the country.

This, and the £1.2billion new starter homes fund, will help thousands of people to realise their dream of owning their own home.

Currently the top 8 house builders provide 50% of new homes. The direct commissioning approach will support smaller builders and new entrants who are ready to build but lack the resources and access to land.

The pilot for direct commissioning on publicly owned land will start in 5 sites:

  • Connaught Barracks in Dover

  • Northstowe in Cambridgeshire

  • Lower Graylingwell in Chichester

  • Daedelus on Waterfront in Gosport

  • Old Oak Common in north west London

Brian Berry, Chief Executive of the Federation of Master Builders (FMB), said:

When it comes to building new homes, the availability of small sites is the single biggest barrier to SME house builders increasing their output.

Any measures that the government can introduce that will increase the number of small sites suitable for SME house builders will help address the housing shortfall.

It is also encouraging that the majority of these sites will already have planning permission in place as obtaining permission is all-too-often a lengthy and protracted process – avoiding this time delay should help house builders increase their supply much more quickly.

Jeremy Blackburn, Head of Policy at the Royal Institution of Chartered Surveyors (RICS), said:

This government has already introduced a great many initiatives that we believe will slow current high rates of house-price growth. Today’s announcements will further help to bring much-needed new developments swiftly to market.

Notes to editors:

  • The government is already committed to a wave of significant reforms to drive up housing supply and increase home ownership including through the Housing and Planning Bill. Further details will be announced shortly on how a number of the Bill measures will operate.

  • A starter home is a home sold to a first time buyer under 40, for at least a 20% discount to market value, with a cap on the value of the property. The government expects most of these homes to be well under any cap, as with the Help to Buy equity loan scheme. The purchaser must live in the home for five years to gain the full benefit of the discount, and if they move earlier, they will lose the discount.

  • The government is committed to building 200,000 starter homes by 2020 – to be exclusively offered to first time buyers under 40 at a minimum 20% discount on market value.

  • The commitment will be principally delivered through planning reforms to ** Release more land for starter homes ** Require a proportion of starter homes on ‘reasonably sized’ sites as part of section 106 affordable housing contributions.

  • The Spending Review announced £2.3 billion funding to support the delivery of up to 60,000 starter homes between 2016/17 and 2020/21, to complement the planning reforms.

Details of direct commissioning sites:

Old Oak common in London

In London we will pilot direction commissioning in Old Oak Common. Old Oak Common will be built on brownfield land in west London, around the transport ‘superhub’ off the HS2, Crossrail and National Rail interchange. The site is a Mayoral Development Corporation.

The Old Oak Common site will deliver 24,000 new homes of mixed tenures, including low cost homes, that cater for residents at all stages of life. A minimum of 1,500 new homes will also be brought forward on non-industrial locations in an associated development nearby at Park Royal. A new high street, schools and leisure facilities will also be part of the development.

It will also include commercial and office space around a new Old Oak Common station, providing space for 55,000 new jobs, as well as space for 1,500 businesses on the Park Royal industrial estate.

Northstowe

Northstowe is a proposed new town that will provide 10,000 new homes alongside a town centre, community facilities and commercial space set to be developed on the former Oakington Barracks site to the north of Cambridge. The scheme will be the first new town delivered in a generation and the direct delivery model provides an opportunity to deliver the necessary infrastructure and housing at a pace that would not be possible by the private sector working alone.

Connaught Barracks (Dover)

Connaught Barracks is a former MOD site of 55 hectares acquired by the Homes and Communities Agency (HCA) in 2008. At its core is a Napoleonic fort now owned by the Land Trust. The site is allocated for up to 500 housing units. It is considered challenging by private developers due to complex demolition and utility upgrade works that are required prior to development. As a result work on the site is currently stalled and incurs significant holding costs. Direct commissioning will enable this site to be brought forward, reducing the costs to the public purse and bringing forward additional housing that the market alone would not deliver.

Lower Grayling Well (Chichester)

The site is located in the north eastern suburbs of Chichester, West Sussex immediately to the south of the former main building of Graylingwell Hospital. The HCA acquired the site from Sussex Partnership NHS Foundation Trust in Spring 2014. The HCA marketed the site for development in Summer 2015 and received interest from several national house builders but was ultimately unable to reach a commercially acceptable agreement. Direct Commissioning provides an opportunity to take forward the development of this site in the short-term, delivering locally supported housing on a vacant site including 40% starter homes.

Daedelus Waterfront (Lee on Solent Gosport)

The Daedalus Waterfront site is part of a former MoD site. The HCA has been successful in facilitating a development programme across the wider site including a new college, an innovation centre and the delivery of new commercial units targeted at the aviation and advance manufacturing sectors. The waterfront part of the site has the potential for further commercial space aimed at the marine engineering sector as well as 249 residential units. Upfront infrastructure requirements and complexities around listed buildings on site mean the viability of development is challenging and credible bidders have been deterred. The direct commissioning pilot provides an opportunity for early delivery of housing, including starter homes, on the site along with infrastructure that will also catalyse the delivery of the wider commercial development in line with the Enterprise Zone vision.

Published 4 January 2016