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We now need funding solutions to make housing a lever for economic growth
The Labour Party Conference focused on housing’s role in delivering greater social equity and economic growth. Now, we need the funding solutions, writes Priya Nair, chief executive of The Housing Finance Corporation
Priya Nair is CEO of the Housing Finance Corporation
For those of us at the Labour Party Conference this week, it was nigh impossible to move without stumbling upon a housing seminar or a familiar face from our sector. Housing has well and truly arrived at the top of the political agenda. Most in our sector would say it’s about time, too.
The government sees solving the housing crisis as central to addressing the longer-term productivity and economic issues facing the country. Housing impacts everyone, including politicians. But it’s also become clear that this government very much sees housing as one of the levers at its disposal to drive the economic growth it knows it needs to be seen as credible.
We’ve already seen some promising headlines in recent months, not least the suggestion of a long-term rent settlement that will enable housing providers and councils to borrow and invest well into the future. We expect to hear more at the Autumn Budget, albeit there will be some tough decisions to come at the Spending Review.
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As this week’s party conference demonstrated, it’s not just the social housing sector that is lobbying for housing policy. There’s a broader church of business, investors, industry and political heavyweights from the government, combined authorities and local councillors – so much so that quite a number of housing events at conference weren’t able to cope with the sheer numbers.
The vast majority are also singing from the same hymn sheet, calling for much-needed public capital funding to invest in new and existing homes that are truly affordable.
Despite all the positivity, we can’t afford to wait in hope when the government is saying there’s no money in the pot. We need to be proposing the solutions, showing we can think differently and grasping the nettle, too.
Given the shortage of social homes, ongoing cost of living pressures and the viability of new development, it’s clear that to truly make progress against the government’s ambitious 1.5 million homes target, we need to unlock both public and private investment in housing.
“To truly make progress against the government’s ambitious 1.5 million homes target, we need to unlock both public and private investment in housing”
This was something we discussed in detail at the ‘Driving funding into UK housing’ panel hosted by Inside Housing at the conference. Speaking alongside Melanie Leech, chief executive of the British Property Federation, and Guy Slocombe, chief investment officer at Hyde, we each shared our thoughts on elevating the UK housing agenda as national infrastructure, while discussing the role that housing plays in driving economic growth.
To address the housing crisis, we need to combine public sector funding with responsible private capital investments. What this really comes down to is the word of the year: partnerships.
Both delivery and funding partnerships are key. This starts with exploring ways to pool resources, and coming together to identify the challenges and take an open mind to how others can contribute to the solutions.
In doing so, it’s crucial that organisations work with responsible capital partners, ensuring alignment of values and accountability with shared outcomes.
It’s also time to get more creative with public sector funding. At The Housing Finance Corporation (THFC), we support the call for a longer-term capital grant settlement – one that makes the delivery of more social housing truly viable. The current affordable housing funding regime needs to be reviewed to ensure we’re doing more with what we’ve got, and above this, the sector needs to look at ways to remove risk to allow private capital crowding.
The strongest way forward is to establish an integrated programme to address the market failure. This includes creating a pipeline of investable projects – everything from building local capacity to showcasing innovative finance models.
To move the dial, more innovative funding solutions and new partnerships are needed. One recent example of this is the role of the UK Infrastructure Bank, which intends to partner with THFC to launch a financial debt guarantee for housing providers to access funding for retrofit projects
This reinforces that the focus isn’t solely around channeling investment into new homes. The UK has set a target for the country to meet net zero by 2050. Decarbonisation is front and centre in any housing conversations held across the sector.
“The strongest way forward is to establish an integrated programme to address the market failure. This includes creating a pipeline of investable projects”
During the ‘Unlocking net zero – financing and delivering a just energy transition’ roundtable I attended with Miatta Fahnbulleh at the conference, it was very apparent that local net zero cannot be delivered by public funds alone. There was also a very clear message that housing is an essential part of the country’s net zero ambition. While programmes such as the Social Housing Decarbonisation Fund are an important ingredient, we discussed how the housing sector needs to leverage private investment to truly make a difference.
It’s widely known that local authorities and investors find the current landscape of net zero support and public funding fragmented, difficult to navigate and highly competitive. If these obstacles aren’t addressed, there’s no chance the country will reach our net zero target within the proposed timeline.
As we enter the next chapter as THFC, we will continue to do all we can to deliver the kind of finance that affordable housing sector needs. We’re committed to catalysing innovative financial solutions and forming new partnerships to support housing associations to deliver on their core purpose and help the government to use housing and other social infrastructure to drive economic growth.
The Labour Party Conference demonstrably showed housing as a priority for the government and while we welcome their ambitious plans and targets, we need a collective effort between investors, housing associations and policymakers to meet them.
Priya Nair, chief executive, The Housing Finance Corporation
Sign up to the Social Housing Annual Conference 2024
The two questions of whether to invest funds in revitalising existing stock or in the development of new affordable homes, and how to raise social housing investment, are inextricably linked.
That is why the Social Housing Annual Conference is now running alongside the Inside Housing Development and Regeneration Summit, giving you the opportunity to gather comprehensive insights to inform your key strategic decisions in just one day.
Join 600 senior leaders with a common vision of funding and delivering quality, affordable homes and places for tenants and residents.
