Private Housebuilding: Opportunities

The Government's intention is to expand the new homes market, having set a target of at least 240,000 net additional homes per annum in England by 2016.  This was expected to produce 2 million homes by 2016 and 3 million by 2020, now unlikely following the collapse of the housing finance market.

Productivity to Increase Under the National Affordable Housing Programme (NAHP) 2008-2011

As the speculative market slows, many housebuilders are beginning to shift attention towards social housing new build projects, and are now able to obtain grant funding under the Homes and Communities Agency’s NAHP.  The programme provides a huge funding stream for such developments, with an estimated project value of approximately £21billion over a three-year period from 2008-11.

Additional NAHP Funding

In June 2009, it was announced that additional funding would be made available to the NAHP as part of the £1.5 billion allocated for affordable housing announced in the Building Britain's Future policy document.  £656 million additional funding was allocated to the programme, bringing the total available funding to just over £9 billion. 

How Much Funding is Left?

Following NAHP allocations in December 2009 under the CME 6 funding round, £8.54 billion has now been committed.  This leaves £525 million still to be allocated under the programme.

Kick-Start Housing Delivery Programme Aims to Restart 'Stalled' Sites

The Kick-Start Housing Delivery Programme aims to increase the amount of affordable housing across the country, providing positive stimulus for companies working in the new build sector.  The initiative is primarily aimed at starting stalled developments by reducing up front costs with equity, gap and infrastructure loans.

How Much Funding is Available?

Originally, £400 million had been made available across all tenures, to produce homes for private sale, intermediate rented and social rented schemes.  In June 2009, it was announced that a further £525 million would be made available, bringing the total funding for this initiative to £925 for 2009/10 – 2010/11.

Under Round 1, 156 successful schemes have been allocated a total of approximately £450million, leaving over £475million to be allocated under Round 2.  The remaining funding will be allocated under a rolling programme from December 2009.

Who Can Bid for this Funding?

The deadline for expressions of interest for Round 2 funding has now passed.  All housebuilders, developers and Housing Associationss were able to bid, provided sites met certain criteria including a minimum number of 50 homes per scheme.  

Private Rented Sector Initiative to Create Long Term Funding for Private Housing

The Private Rented Sector Initiative (PRSI) is a new initiative first announced in June 2009.  Initially focusing on London and the South East, the long term aim of PRSI is the creation of a long term funding model for the large scale provision of private new build and intermediate rented housing.

PRSI will encourage Institutional investors, such as pension funds, to invest together for the first time, 'pre-purchasing' a percentage of homes to be built.  This will then aid housebuilders, enabling a percentage of new developments to be sold 'off plan' to these investors. 

The Homes and Communities Agency has now selected the first six sites for the PRSI, to be developed by members of its Development Framework panel.  investors are expected to put up around £1 billion for this first wave of schemes.