I’m delighted to be able to join you here. Thank you for asking me to speak.
This week marks the first anniversary of the NewBuy guarantee scheme. I want to thank Stewart Baseley and the team, and you as companies, for getting it up and running.
In the first 10 months there were 3,000 reservations made under the scheme. That’s a really good start. But I know you and the lenders can achieve more. We are very committed as a government to helping you and in so doing, to helping thousands more people to buy their own home.
We are also halfway through the life of this Parliament. So today I want to speak to you about what we’ve achieved so far and then look ahead to what more we will be doing over the coming months and years.
In 2010, we inherited a housing market in crisis, following the credit crunch and a sharp and deep collapse in the mortgage market. But underlying this was a long term persistent market failure. For 15 to 20 years or more, we have been building half the homes we need - both freehold and rented. Indeed, we’ve seen the rate of house building drop to its lowest peacetime level since the 1920s.
As a result, supply and demand was completely out of kilter. So, to address this, we needed a comprehensive approach that stimulated new housing supply; supported consumer demand and which would bring new investment into the housing market, for the longer term.
We have taken the view to sweep away the top-down approach and have fundamentally reformed the planning system to support the delivery of new housing. Already there are early signs of progress – plans for over 33,000 new homes were given permission between July and September 2012 up from just 25,000 in the previous 3 months. And your own figures for quarter 4 suggest this improvement is continuing.
In addition, the New Homes Bonus has delivered a real incentive to local communities to support new housing development - we have made £1.3 billion available under the scheme, for the first 3 years.
We are also helping builders with the Get Britain Building fund, particularly small and medium sized enterprises. To date, commercial contracts worth over £300 million have been signed, to deliver nearly 9,000 homes.
But we have also intervened to unlock latent demand; after all - 85% of people still say that they aspire to own their own home.
In these straightened times, our interventions to help people access mortgages have proven critical. I have already talked about how NewBuy has helped. Well the FirstBuy scheme has helped nearly 7,000 households into home ownership.
And underlying both of these is the £50 billion Funding for Lending Scheme, which is starting to make a real difference to both the range of mortgage products and their price.
At the same time we have introduced a new business model for the funding of affordable housing. We have delivered more homes for less capital subsidy, using £4.5 billion of government grant to lever in £15 billion of private investment. In 2011 to 2012 we built 58,000 new affordable homes - one third more than the annual average in the 10 years up to 2010 and we’re on track to deliver 170,000 new affordable homes for rent by 2015.
Alongside this, we are taking a radical new approach to encourage institutional investment in the private rented sector. We need a bigger and better private rented sector to complement private home ownership and evidence from other countries shows that where institutional investment is strong, costs can be driven down and the sector becomes more professional.
To further these objectives, we have announced a new Build to Rent fund to kickstart large scale, good quality projects and to lever institutional investment into the sector. I am pleased to say that we have been heavily over subscribed for the fund, which means a healthy competitive process, as we assess the bids.
I can also say we’ve had a variety of bids from across the country, and from different types of house builders and developers. This is not just about London.
At the same time, we have launched our Housing Guarantees Schemes, for up to £10 billion of debt, to support the delivery of new homes for both the private rented and affordable housing sectors.
The 2 guarantees schemes will use the government’s balance sheet and so make borrowing cheaper for investors. This should increase the delivery of new build housing through encouraging institutional investors to enter the private rented market.
Of course, there are challenges associated with driving change and this requires experience and expertise which is (frankly) beyond the skill set of Whitehall. That is why we are setting up an expert Private Rented Sector Taskforce to stimulate the market.
The taskforce brings together developers, management bodies and institutional investors to facilitate local deals and support the delivery of good quality rented homes for long-term institutional investment.
Today, I am pleased to announce that the new Head of the Taskforce will be Andrew Stanford. Andrew joins us with an impressive track record and reputation - with real ambition for the sector. He is currently managing director and founder of Stanford Mallinson and is former Cluttons Residential consultancy.
And Andrew will be joined by 6 members of the taskforce drawn from across the industry, and together they will help us truly establish this new market.
Let me say a word about quality.
What we build matters just as much as the number of homes constructed. Too often, new housing has been seen as a threat both to communities and the environment. However, if done in the right way, with communities on board from the start, new housing can reflect local character and improve local communities.
You will know better than most there is a negative stereotype of some volume housebuilders: the belief that you build rabbit hutch homes, that bear no reflection to the local village, town, or area. Now I appreciate that this is, largely, just a stereotype. But I want to stress that as a government we’re not chasing quantity. Quality matters. This is why the National Planning Policy Framework promotes the development of well-designed new homes and neighbourhoods and involves local communities early in the planning process.
The Prince’s Foundation for Building Community has also recently set out examples, such as Highbury Gardens in Islington, that show how involving communities to create well-designed schemes can make it easier to secure planning permission.
The Building for Life design checklist is a practical tool for achieving well-designed homes and neighbourhoods. I welcome the recent work that Home Builders Federation has done, (with the Design Council and others) to re-launch this in a new, simpler format.
I hope to see this more widely adopted by housebuilders over the coming months. After all, if communities see new housing as adding to the character and amenity of their area, they’re much more likely to support them.
Next steps - looking to the future
So, there is much to report on, since 2010, but I now want to turn to the challenges that lie ahead.
My background is as a Chartered Surveyor so I come to the role of Housing Minister with a different focus to that of a typical politician. Since taking up post in September, I have also focused on getting new homes built now and in particular on unlocking large schemes.
We are already making good progress. In November, we announced that we had successfully agreed deals to unlock developments at Cranbrook and Milton Keynes using our £225 million large sites fund. Cranbrook in Devon is the first of the large scale housing sites to receive capital funding with £20 million being invested to accelerate delivery of the scheme. And today I have announced a £24.7 million loan to Reading University to build a new access road and bridge in Wokingham which will unlock a large site delivering 2,500 new homes, as well as two primary schools, a neighbourhood centre, shops, park and ride facilities and a new specialist Science and Research Park.
But we have the potential to do much more. In December we secured significant additional funding which with the large sites fund totals £474 million for local infrastructure to support housing and commercial development. Last month the department published the prospectus for this Local Infrastructure Fund which invites interested parties to bid for funding, to support delivery of large housing sites and commercial projects in Enterprise Zones.
In the longer term, we also want communities to start thinking about whether they could support very large scale developments.
We are also working at pace to accelerate the release of surplus government owned land with housing capacity. Governments have held onto this land for too long. We need to put it to good use to provide new homes. To bring more certainty and pace to the programme we have £290 million funding to support a targeted programme of investment.
This will help to bring sites forward for development and get them to market more quickly. We are also making good progress in acquiring redundant sites from the NHS which will allow us to make use of Homes & Communities Agency expertise in the marketing and sale of sites.
Put together these initiatives will help us turn idle assets into homes and jobs.
The housing market is still weak but as an industry you have weathered the worst of the storm.
I commend you and your staff for doing so. Let me be clear, the fact that profitability is returning to the sector is something this minister applauds. No profit, no future investment.
And there are now some encouraging signs that the overall market is picking up - Net additions to housing stock rose by 11% last year to 135,000. This is the highest level for 4 years. Meanwhile home sales have grown month on month since June 2012 and are well above the trough in January 2009.
But there is still a long way to go before we reach the sort of levels of growth we need.
However, by promoting a comprehensive programme of reform and investment, we are determined to lay the foundations for a sustained improvement in our housing markets, regardless of tenure.
Of course, we cannot do this alone. We need your investment and entrepreneurial skills and, those of the wider property and construction sector.
It won’t be easy, or quick. But together I believe we can build more homes, and better communities for generations to come.