Homes England are a key partner and landowner in York Central. They are also the government agency charged with promoting house building. Many of the questions that are arising from the My York Central process are about affordable housing: ‘what does ‘affordable mean?’ ‘why 20% – not more?’ ‘how can we ensure homes built to be affordable stay so and not get sold off for holiday homes, investments or buy-to-let?’. To explore these questions Phil and I met with Helen Fielding, the Senior Specialist for Home Ownership and Supply for Homes England. Before joining Homes England, Helen was the strategic lead for housing for two local authorities and, in her Homes England role, has particular responsibility for affordable and community-led housing delivery.
What is the role of Homes England?
In York Central we are wearing different hats, we’re land owners as well as potential funders and strategic promoters. It was a bold move to buy the land. It was about us saying how – as the national housing agency – are we going to intervene in the housing market so it can deliver what it needs to deliver. As delivering housing is our central purpose and mission, our involvement brings certainty to the process. That was a proactive step, how do you get away from being tied to those markets and market driven forces? The most powerful way is to take control. The Homes England leader on the York Central Partnership, Dilys Jones, is passionate about York and it really is her personal commitment and vision that drove this very proactive decision.
But we have other hats too. We are potential investors and funders of the project. York Central is a priority site for capital investment into infrastructure, and as part of the York Central partnership, Homes England is investing significantly both in bringing these proposals to fruition and accessing these central Government funding opportunities. In addition, we could be development financiers of the homes to be developed on the site, through our Home Building Fund which is aimed at for small and medium-sized builders as well as larger firms.
There is also a role we might play in terms of funding the affordable homes. The role of local authority (City of York Council) is key. The Council have set a 20% minimum for affordable housing which the developers will have to cover under what is called ‘Section 106’. But because we administer the Government’s affordable homes schemes there is an opportunity for additional affordable homes beyond the Section 106 requirements to be funded via our Affordable Homes Programme if this is viable. This will clearly need further investigation and scrutiny given the financial position of the project.
As Landowners who have bought land with public money we need to cover our investment, but we are keen to be active brokers, we bought ourselves a seat at the table. The aim is not necessarily for us to maximise our profit at all costs, but to deliver as many of the right types of homes as possible, as quickly as possible.
Why not more than 20% social housing?
York Central is a big brownfield site with lots of remediation and infrastructure requirements. The site has effectively been stalled for c20 years. Most of these costs (which are really significant) will need to be paid for by the development. So affordable housing – whilst really important – is just one of the issues that needs to be considered alongside all the other site requirements, and the development does need to be viable. Despite these challenges we’re committed to delivering 20% of the homes on site as affordable housing. There is a very crucial deliverability test – in other words, for the economics of this development to be viable – when setting policy requirements for Section 106 housing. What we might be looking at is the right mix of affordable housing within the policy-required 20% and collaboration to see how to produce more affordable housing in the widest sense in the rest of the site, which might include self-build, community-build or possibilities like older persons shared ownership.
How can we ensure that housing built to be affordable stays affordable long term?
New homes can be secured as long term affordable housing if it is specified in the Section 106 agreement. One mechanism for this is if there is a portion of housing which is ‘discount for sale’, you can restrict the resale value in perpetuity. You can express the resale value as a fixed percentage of open market value (noted in the National Planning Policy Framework, within definition of ‘affordable in perpetuity’).
More mortgage lenders are opening up to shared ownership and intermediate home ownership options, and mortgage finance is more readily available now. Other forms of affordable housing in perpetuity are Affordable Rent, Social Rent and shared ownership.
Are there specific issues in York – and for York Central – because housing is so unaffordable to so many?
In York there are a significant number of people that cannot currently access market housing as well as a lot of people who need social rented housing. I am talking about people who wouldn’t necessarily think of going into social housing but can’t afford to buy at current market prices. There is a lot of scope within this intermediate market for other forms of tenure that are not social rented housing, but are not open market housing either – but between the two. This could be affordable rents at up to 80% of open market value, Shared Ownership or Discount for Sale home ownership options. Within the 20% mix, there is obviously a need to ensure there are some rented housing (council or housing association) options as well as intermediate, and beyond the20% there is the opportunity to seek grant funding to intervene in the market to create a greater variety of possibilities for this intermediate market.
There has been a lot of questions about Community-led Homes, what are the possibilities for York Central here?
Homes England are charged with contributing to the Government target of building 300,000 homes a year by the mid 2020s. We’re simply not going to get this many homes built in the timeframe only by relying on the big 6 housing developers. We need new delivery partners, we need local authorities and Housing Associations to do more, we need to attract investors to come and develop private-rented housing as well as housing for sale, we need self-build and we need community-led forms of development, we need to encourage much more diversity in the players involved in delivering housing.
In York there is clearly a growing head of steam community led with YorSpace. One issue is access to the right kind of land opportunities. One option could be to enable community-led housing by facilitating the supply of those sites by sub-dividing and servicing sites and smaller plots, and making them available to small builders, self-builders and community groups. Our emerging role in Homes England is increasing intervention in the land market to make land available for all sorts of types of housing.
In a rural context we are interested in a revolving land bank model, similar to an example in the Highlands, it is acquiring rural sites, putting in infrastructure, servicing and obtaining planning permission and then making them available to housing associations and community groups, capturing the uplift in value as the land is sold on.
In York they’ve got a self-build register going but it seems we do need a bit of a handholding service to act as intermediary, currently due to cuts the council can’t do that?
For Homes England, community-led activity is about affordable housing. The Community Housing Fund is about to be launched which is likely to include revenue grant funding to support the development of community-led housing proposals. This is a great opportunity to support some capacity building within the community-led sector, as well as support individual projects’ development. We’re hoping to be able to launch this Prospectus in May. The Community Housing Fund is £60m a year. It was first launched in December 2016 with 148 local authorities receiving initial funding, York wasn’t included in that first wave of funding. The next wave will be to invite bids following the release of a funding Prospectus, we hope in the next few months.
Phase 1 of the Community Housing Fund is likely to provide revenue support to groups to get up and running and fund pre-development costs. It can allow them to employ professionals, cover planning applications and design fees. It doesn’t help with buying land. It can provide capital funding for small scale development, access roads, sewage, electricity and we expect this element of the fund to be routed through the local authority.
We are also likely to be able to provide revenue funding to local authorities, for staff in order to build capacity. There is also a plan to provide national funding for the development of a network of Community-led support ‘hubs’ as a resource for new and developing groups.
Phase 2 of the Community Homes Fund is hoping to offer grant funding to support the development costs of delivering community led affordable housing. There are a few issues to sort out with this. For example, at the moment if you want to be the landlord of affordable housing for rent, you have to be a registered provider, like a Housing Association. We’re currently trying to understand if there is another way to support community groups who don’t want to Register or partner with a Housing Association.
Shared ownership is a tenure where the resident buys a portion and rents the other half, Homes England can also grant fund that. This can be a really good option for people who want to own their home and can afford a mortgage, but perhaps can’t raise the full deposit, or need time to develop a positive credit history. It allows people to own their own home in stages, by buying more of the equity in their homes as their circumstances permit. We can fund this tenure now, through our Affordable Homes Programme, and people who want to provide this tenure don’t need to be Registered Providers. We think this might be an attractive option for community-led housing groups to consider.
A big question raised so far is how to keep graduates and housing cost is an issue there, what about if the Universities, produced low rents to keep graduates developing start ups?
It is all possible. It is about segmenting the market and then producing the right kind of housing to make a vibrant and sustainable community.
This issue of how housing and making a community interrelate seems key. What might useful ways forward in developing this conversation?
One key question for the York Central Partnership is ‘what is the criteria for land disposal?’ Is it money, quality, community engagement? As we said earlier, Homes England is using taxpayers money to finance this development, so we can’t sell at a loss. But there may be an opportunity to collectively explore how we maximise social value for this once in a lifetime opportunity to build a new community in the heart of the City, using all partners’ expertise, financial influence and capacity.
It seems like from our discussions there is a possible structure here for the conversation between local people and York Central Partnership. There is something about a brief – which might be prompted by the question ‘what community to we want in York Central?’ That could then influence the criteria for land disposal. A segmentation could be produced through that to help indicate the different types of housing identified to meet this. Then look at the variety of delivery mechanisms, including market, co-creation, partnership community-led and self-build working to make it happen?
This is the kind of conversation Homes England would be really interested in taking part in – and could potentially facilitate in various ways – in York Central.