Correspondence

Homes England ‘Rural Housing Statement'

Published 2 October 2023

Applies to England

Homes England’s mission and objectives

Homes England’s new Strategic Plan sets out our mission, “to drive regeneration and housing delivery to create high-quality homes and thriving places across England”.

At the heart of this is a commitment to work with places, including rural communities, to deliver on their housing and regeneration priorities. To do this we bring together all our assets – our relationships, our unique blend of skills and expertise, our statutory powers, our land, and our financial support – to deliver housing and mixed-use schemes.  

We work in partnership with the whole market to drive delivery of the government’s housing and regeneration priorities. This includes working with affordable housing providers, combined and local authorities, infrastructure providers, institutional investors and lenders, master developers, private landowners and all types of housebuilders, including SMEs. We ask our partners to: ­

• be creative and ambitious in identifying opportunities for housing and regeneration that meet the needs of local communities with whom they work, and to be assertive in championing these opportunities
• support and accelerate the delivery of housing-led, mixed-use regeneration projects with a brownfield first approach, focused on areas of greatest need
• support our efforts to attract more investment into the sector from a wider group of investors and to support new entrants to grow
• collaborate, share good practice and identify opportunities for partnership­
• set high aspirations for beauty, quality and sustainability, exceeding existing standards and regulations where possible
• engage proactively with local communities from the outset of any housing development or regeneration project, offering meaningful opportunities for a range of stakeholders to contribute to the design and planning process

Our work to overcome specific housing and regeneration delivery challenges for rural areas

As the government’s housing and regeneration agency, we work with partners across the country, including in rural areas, to support them to tackle delivery challenges. In doing so, we work closely with the Department for Levelling Up, Housing and Communities, which has overall responsibility for addressing many wider areas affecting rural communities, including overall housing policy, local growth, local government and devolution, planning policy and reform of the planning system.

We recognise that the costs and risks involved in housing development can often be disproportionately high in rural areas due to a combination of a lack of:

• development opportunities, smaller sites, and limited capacity in the construction industry
• that development finance can be difficult to access, particularly for smaller developers
• that mortgage availability can be constrained where, for example, there are local eligibility and connection restrictions

That is why, through the Affordable Homes Programme (AHP), we have the flexibility to provide higher grant rates in light of higher costs associated with rural housing delivery, where the need can be evidenced. We are also able to provide the majority of grant funding upfront, at start on site, to improve viability and cashflow. The renewed focus on social rent within the AHP should also benefit rural areas, where affordability is a particular issue.

In allocating grant funding, we will consider how schemes demonstrate alignment with our strategic objectives and support quality homes and places, sustainability and healthy local housing markets. For example, use of Modern Methods of Construction (MMC), use of the National Design Guide, working with local SME contractors and provision of rural housing and supported housing. See Annex A, case studies 1-5 for examples of where AHP grants have been used to support rural affordable housing delivery.

It is also why, through the Levelling Up Home Building Fund, we support SMEs and innovative housebuilders, including community-led and custom and self-build projects, with development loan finance (see Annex A, case study 6 for an example of how we have used loan finance to support local SMEs in rural areas).

Our recently launched Brownfield, Infrastructure and Land fund works across the country in urban and rural areas to support economic growth and housing supply. We support smaller projects as well as larger infrastructure schemes, with our funding designed to meet the individual needs of each project. Under the fund, activity could include land acquisition, preparation and enabling works, provision of on- and off-site transport infrastructure, provision of placemaking and community facilities and provision of section 106-required infrastructure (excluding affordable housing). See Annex A, case study 7 for an example of where we have used land acquisition to unlock rural housing.

We also recognise that, in rural areas, a combination of factors can limit opportunities for new homes. These include:

• a lack of land becoming available for housing
• the presence of one or more planning designations and requirements
• the concerns of local communities about the suitability of housing development

This is why, through the AHP, we are able to use grant funding to improve the viability of Rural Exception Sites (see Annex A, case studies 2, 3, 4 and 5). It is also why a core part of all our work is engaging extensively with local government (including national parks) to support the development of their housing strategies – and identify how our programmes can complement them (see Annex A, case study 4).

Our work to acquire, remediate and release land to the market also helps to address local challenges around land availability (see Annex A, case study 7). When developing homes on our own land, we engage extensively with local communities to ensure they have a say in the future of their local area. We are also confident that our growing emphasis on design quality and sustainability will help secure more local support for housing in rural areas.

We recognise that, in rural areas, as in many other areas around the country, there is often a shortfall in the skills and expertise needed to deliver housing and regeneration ambitions. Whether that’s the availability of contractors, the capacity of developers and local authorities, or the coverage of Rural Housing Enablers (RHEs). That is why, through the AHP, we work with a large number of small rural housing providers and community-led organisations (see case studies as Annex A), either independently or as part of consortia, and can use grant funding to support eligible Rural Housing Enabler costs.

For the most part we work locally as part of local rural networks, enabling us to engage with local community sensitivities. However we also do work with national organisations (e.g. National CLT Network) to explore the application of successful local and regional models across the country. We have also committed to support DEFRA to deploy the £2.5m of funding for RHEs announced in Unleashing Rural Opportunity. More broadly, our Local Government Capacity Centre provides invaluable learning and support to local authorities and housing associations up and down the country.

As part of our commitment to working with places to meet their housing and regeneration needs we have agreed in Devolution Deals, with DLUHC support, to work with Mayoral and Combined Authorities to address the needs of all communities, including rural communities, through the development of regional housing pipelines. For Mayoral Devolution Deals, we do this through formal Strategic Place Partnerships and for non-Mayoral Devolution Deals we work through shared Area Action Plans. For example, we have made commitments to support rural housing in the York and North Yorkshire, Norfolk, Suffolk and North East Devolution Deals. 

In summary, Homes England is using (and will continue to use) its land, funding and expertise to support rural communities to build new homes for local people where they are needed, alongside the government’s wider work on levelling up, planning policy, housing delivery, homelessness and second homes. We are committed to working in partnership with DLUHC, DEFRA and other government bodies to support the delivery of government’s emerging and future policy priorities for rural housing. We encourage partners with the ambition to deliver new homes in rural areas to speak to us about their plans.

Annex A: Case Studies

1: Working with a rural provider to bring forward a package of rural schemes across Cornwall

In August 2022, a housing association brought forward proposals for seven 100% affordable housing schemes to deliver 270 new homes, a mix of social rent, rent to buy and shared ownership, across Cornwall, of which 194 were in rural areas. We are providing over £20m of grant funding through the AHP to support the delivery of these homes, which will all be built to EPC B and use either air or ground source heat pumps. Whilst many of these sites face delivery challenges, we have been working to overcome these, working closely with the housing association to ensure these projects meet the AHP’s strategic objectives.

2: Supporting a local partnership to bring forward a rural exception site

Through the AHP, we are providing £350,000 of grant funding to support a Community Land Trust (CLT), in partnership with a local housing association, to deliver six new affordable homes on a rural exception site in Wiltshire (alongside a further four new affordable homes and one self-build serviced plot). The homes will be built to Passivhaus standard, using off-site, timber frame construction, with a mix of affordable rent and shared ownership. The CLT had also previously used our Community Housing Fund to support the costs and works involved in making the planning application for the scheme.

3: Working with a Community Land Trust to bring forward a rural exception site

In 2014, a local housing needs assessment identified six households that couldn’t afford to rent or buy across three parishes in Devon. To address the lack of a housing association or privately rented homes in those areas, volunteers established a Community Land Trust to directly support the delivery of new homes to meet local need. In January 2024, in partnership with a local housing association, they will start construction on the long-awaited development of six homes for social rent on a rural exception site. We are supporting this with over £500,000 of grant funding through the AHP, with homes benefiting from air source heat pumps, EV charging points, and enhanced biodiversity and public realm.

4: Supporting a partnership between housing associations to develop a rural exception site in a national park

We are investing £1.2m of grant funding through the AHP to support a partnership between two local housing associations to deliver 20 affordable homes for affordable rent and shared ownership on a rural exception site in the Yorkshire Dales National Park. These homes will be delivered adjacent to a development of 29 homes, a mix of open market homes and section 106 affordable homes, and are the first new affordable homes to be built in the village in decades. The development will also have high sustainability credentials, with air source heat pumps and EV charging points.

5: Providing flexibilities to overcome high infrastructure costs in an Area of Outstanding Natural Beauty

We are investing around £500,000 of grant funding through the AHP to support a housing association to deliver seven new affordable homes for affordable rent and shared ownership on a rural exception site in Surrey. A further two homes for open market sale will be delivered on the site and support the cost of delivering the affordable homes. The land was purchased back in 2014, with planning permission only secured in 2020, illustrating the challenges of delivering homes in rural areas. Construction started in 2022 following extensive pre-construction works to remove farm buildings and asbestos, improve drainage and flood alleviation measures, and find local contractors.

6: Grant and loan funding to unlock new homes across tenures in a village in Devon

We provided funding to unlock eight homes for market sale, three converted barns and five new homes, along with four homes for affordable rent in an isolated village in Devon. The market sale homes were delivered by an SME contractor who received a £982,000 development loan from our Home Building Fund (similar funding is currently available through LUHBF). The affordable homes, on an adjacent part of the site, were delivered by a Community Property Association, which became a Registered Provider and received £190,000 of grant funding through AHP.

7: Creating rural housing supply in an area of high unaffordability through land assembly

We acquired, through our Land Assembly Fund, a site comprising brownfield land (covered by a derelict factory, service roads and car park) and adjacent greenfield land. The site was not allocated for redevelopment in the local plan but is in a rural market town in an area of high unaffordability. We subsequently secured outline planning consent for the demolition of the existing buildings and the development of up to 72 new homes, 20% of which will be affordable housing, as well as light industrial units and high-quality public open space. The site has now conditionally sold to a regional developer who will deliver the scheme, subject to planning approval.