Policy predictions

Once again we approach another Whitehall set piece and once again housing is said to be at its heart. The chancellor?s Autumn Statement has been important for the housing sector on several occasions in recent years, so what will Philip Hammond?s first in the job contain? And what of other major policy announcements that the sector is looking out for?

Courtesy of housing minister Gavin Barwell, we already know that one major rabbit out of the hat for the housing sector is the fact that the Pay to Stay policy for high-earning council tenants will no longer be compulsory. Local authority landlords will be expected to issue fixed-term tenancies for new tenants. We await the details of any discretion to charge rents to high earners.

Housing providers had also been awaiting confirmation on housing benefit changes that will see all tenants in receipt of Universal Credit have the housing part of their monthly benefit capped at the Local Housing Allowance (LHA) rate. Welfare minister Lord Freud confirmed this earlier in the week. This is a particular issue for supported housing tenants and their landlords, as their accommodation costs are significantly higher, due to the provision of specialist facilities and services. Currently these higher costs are covered by housing benefit, but in the future this will not be the case.

A consultation document on the LHA cap changes has also been published, with responses due by 13 February. Landlords with supported housing businesses want to see if the government is willing to negotiate a cap on housing benefit spending in supported housing, but at a higher rate than LHA. If this does not happen, a number of housing providers have said they will have to close or sell supported housing schemes, or re-let them as different tenures where possible.

The key issue of boosting housing supply remains, and it is likely that this will feature heavily in the Autumn Statement. However, we may well have to wait a little longer ? perhaps into 2017 ? for the detail behind some of the chancellor?s announcements to be published in the expected Housing White Paper.

Here?s my take on the remaining key points to look out for on Wednesday:

Housing supply

The government has shown welcome flexibility on the tenure of homes to be funded by the ?4.7bn Shared Ownership and Affordable Homes Programme 2016/21. This suggests that housing associations will be well-placed to continue to contribute to the upturn in housing supply.

Recent government figures have shown new housing supply in England is now at more than 163,000, taking total net additions to 189,000 (including conversions) ? just shy of the 200,000 annual figure required to hit the government target of one million homes by 2020. Housing associations and councils are crucial to the deals done to continue this trend to help Theresa May?s ?just managing? households.

Savills has worked closely with a number of recent entrants to the affordable housing market, such as Rentplus and London developer Pocket. In addition to the shared ownership drive I have already mentioned, these private providers offer important additional routes into homeownership. As the Neighbourhood Planning Bill is already in parliament, it would be a surprise if further significant change was unveiled to the planning system.

In my view, the current environment presents an excellent opportunity for housing providers to become a new form of real estate organisation that can build mixed developments at scale that cater for all income and tenure types. Other policies to watch out for from the chancellor on housing supply include:

• Buy as you go (see below)
• A revolving infrastructure fund to get large-scale residential developments moving
• Local authorities partnering with smaller housebuilders to build affordable housing ? the BBC has suggested an indemnity fund where the government would underwrite the funds needed to build more homes
• Further support for institutional investment in the private rented sector (in addition to the successful ?265m debut bond issue last week by the government-guaranteed PRS Finance)
• And ? whisper it ? the return of government grant for the construction of affordable rented homes

Buy as you go

This policy has been modelled by Savills for the National Housing Federation. It has received significant publicity in recent weeks and it is anticipated it will be mentioned in the Autumn Statement.

The aim of buy as you go is to help the one million households in private rented homes that Savills Research has shown make up the ?just managing? generation. Buy as you go would allow tenants to build up an equity share in their housing association home in exchange for paying rent at 90% of the market rate. After a period of time the tenant would be able to end the lease and use the equity they?ve accumulated to buy a home on the open market. Alternatively, after 30 years, they would own the home.

If the government is to take up the plan, the next step will be to agree a means by which the cost of the equity share built up by the tenant can be funded. This is important, as it will ensure housing associations are able to use the approach to build more homes.

Voluntary Right to Buy

The plan to sell high-value council homes to fund the extension of the Right to Buy to all housing associations was a flagship housing policy of the Cameron administration, and the sector is awaiting full details of its implementation.

Government sources have reportedly recently said that the policy has been delayed by the Brexit vote and the resulting change in priorities. Although this is perhaps unsurprising, it does mean local authorities remain unclear about how and when they will require to find the funds to pay what the legislation in the Housing and Planning Act 2016 indicates will be a high-value asset levy.

The extension of the Right to Buy will be mentioned by the government alongside the Autumn Statement, but it is likely only to be a holding statement. Previous research by Savills has shown that the sale of high-value council homes in many parts of the country may not generate enough funds to compensate housing associations for lost stock.

Housing association deregulation

The power to implement a number of measures to deregulate English housing associations was added to the Housing and Planning Act 2016. This was as a result of the decision in October 2015 by the Office for National Statistics (ONS) to reclassify English housing associations as part of the public sector. The powers covered in the Act included:

• Removing local authority powers over housing associations (e.g. voting rights and seats on boards of stock transfer landlords)
• Removing the requirement for regulatory consent for stock disposals, business restructuring, mergers and some other organisational changes
• New rules for handling housing association insolvency

The regulations allowing these powers have yet to be set out, although several other powers outlined in the act have been implemented. There may be more on this from the Department for Communities and Local Government alongside the Autumn Statement.

Housing associations have digested the implications of these new powers for their businesses. Once they are implemented the ONS is expected to reclassify English housing associations out of the public sector. Welsh, Scottish and Northern Irish landlords will be watching this process closely, as they will hope to be following suit in 2017.

Homes and Communities Agency (HCA) regulatory split

This was a hot topic at the recent Social Housing Annual Conference ? particularly when Julian Ashby, chair of the HCA regulation committee, revealed the likely cost of regulation would be ?5 per home. The review of the HCA was launched in February by former housing minister Brandon Lewis. At the time it was feared the HCA would be scrapped. That now seems unlikely, with recent reports suggesting the investment and regulatory functions of the HCA will instead be split ? as was previously the case with regulation handled by the Tenant Services Authority.

Recent comments by the current housing minister, Gavin Barwell, imply that the ?strong, clear, robust role of the regulator? is to ?look at the interests of tenants?. I welcome the move to a new approach that separates regulation and investment roles. It makes sense, as landlords start to consider making use of deregulation measures and as the risk profile of the sector gradually increases through mixed tenure and new business models. On the investment side, as the HCA administers such a broad range of programmes, a more investment-bank-style approach seems entirely sensible.

Robert Grundy, head of housing, Savills