Peter Denton discusses the Homes England review and Section 106 jitters

The report did, however, urge Homes England to define “clear objectives” for each of its priority places and agree them with the government. So how will the agency balance traditional housing delivery with placemaking?

“If you look at all the places we’re helping, then what you find is that you end up doing both,” Mr Denton says.

Forth Yards, a brownfield site the agency recently bought in Newcastle, is a regeneration project that is also providing 2,500 homes. “I think, more and more, they’re symbiotic. They’re not one or the other. They are the same thing.”

Mr Denton says Homes England has identified 23 places where it believes “large-scale catalytic regeneration can occur”, from York to Bristol, Newcastle to Sheffield, Plymouth to Liverpool.

But what about Leeds and Cambridge, two cities for which housing secretary Michael Gove has set out grand plans in the past year?

“Leeds, in my view, is exactly the same as other places,” says Mr Denton.

“It has had slightly more focus from the secretary of state himself, and that’s for lots of reasons – not least because Tom Riordan [chief executive of Leeds City Council] has been saying for many, many years that Leeds was the largest city in Europe without a public transport system.”

Cambridge, however, is different. “There are particular national-interest reasons, as well as growth reasons, where Cambridge should have a particular focus.”

Peter Freeman, who chairs Homes England, has been leading the creation of a growth company in anticipation of a development corporation there. Homes England’s and ministers’ priority places “are really consistent”, Mr Denton adds. “There’s an integrity to it all.”

One of the review’s most striking recommendations is for ministers to offload the management of Help to Buy loans and cladding programmes from Homes England in the medium term, so the agency can concentrate on its “core mission” of housing delivery and its new regeneration powers.

“There’s a total logic to Tony’s recommendations there,” says Mr Denton. “Help to Buy and building safety are elements that, in theory, could be managed by others.”

While his team has been doing “amazingly good work” in those areas, he says, “we are a housing and regeneration agency with a £20bn mortgage book on the side, as well as building safety”. But that’s for ministers and officials to consider in due course, he adds.

The report concluded that Homes England “materially underdelivered and/or underspent” against its targets over the three years from 2020-21 to 2022-23. It said this was caused “primarily by external economic factors”, including COVID-19, increased interest rates and inflation, and the effects of the 2022 Mini Budget.

However, the Department for Levelling Up, Housing and Communities’ (DLUHC) design of some of the major funding programmes and the length of time taken to launch or adjust them were “a secondary factor”, as was Homes England’s “forecasting and communication of projected underperformance”.

Communication between Homes England and the government was tested in late 2022, when the market faced an inflationary shock after the Mini Budget. The report suggested that improved communication would allow funding schemes to be adjusted more quickly amid future market challenges.

“The agency is dealing with difficult, failed, broken, hard things,” says Mr Denton. “It’s not there to help a functioning market; the market itself can function. We’re there to support things that are unviable or needing love and care and attention, such as regeneration work or affordable housing delivery or viability grant funding. So therefore, when markets start to deteriorate, we’re the first to feel it, because we’re always dealing on the margins.”

The report laid out examples, which are “now more historical”, where the feedback loop between the DLUHC and Homes England “didn’t work as well”, says Mr Denton.

“But I would say that, in recent examples – the Housing Infrastructure Fund, which does transport infrastructure investment, and the affordable grant programme – the way government overall has worked has been really, really good.”

The agency is “a couple of years into meaningful regeneration and levelling-up work”, he says. “We are getting more and more joined up now with other parts of the government.”

The report is saying, he suggests, that, “‘You’ve got an awful lot of money going into place now, and resources. More coordination is needed between the agency and the department and other departments to get best outcome.’ And we all agree with that.”

Last month, Fiona Fletcher-Smith, L&Q’s chief executive, warned that housing associations could stop buying Section 106 homes, as they face a new-homes “cliff edge”. Is this something Mr Denton has observed?

“There’s no question there’s a challenge here, that we’re hearing from both the house builders and the housing associations,” he says, pointing out that of the roughly 60,000 new affordable homes a year, half of them come from Section 106 and half come from grant.

He has heard views that the house builders are asking too much, and concerns about the quality of Section 106 homes. “But also, we have far more housing associations [that] are now land-led developers in their own right, and therefore doing their own thing.” In addition, there is a confidence issue, as “the market has been quite challenging”.

Homes England’s role, he says, is to “convene house builders that are selling sites and housing associations that we can work with to try and take those sites on. And I’ve given assurances to both the affordable housing sector and to the housebuilding sector that we will work very, very tirelessly to try and help them both achieve a better outcome.”

The G15, which Ms Fletcher-Smith chairs, also warned recently that starts of affordable homes in the current financial year are expected to have fallen by 76% in the capital. Although Homes England does not operate in London, is Mr Denton worried about that malaise spreading across the country?

“I’m not overly concerned that building safety itself will be an impediment to delivery of new homes around the rest of the country,” he says. Although landlords face “a very significant number” of challenges, “I’ve met housing associations recently that are talking about increasing their delivery, and are already delivering thousands at the moment, and then I’ve met other housing associations that are having a pretty tough time with it”.

The way the agency needs to support them is not just through grant, he says. For example, “You’re a housing association that was going to deliver 80%-90% affordable on a site of scale. The maths don’t quite work for you anymore. But if we help bring a build-to-rent investor in and you turn 20%-30% of that into build-to-rent, you get the proceeds upfront for that and that helps the dynamics to allow you to continue to deliver on that site.”

When he arrived at Homes England, his perspective was that the agency acted “predominantly as an agent for change”, Mr Denton says. However, “we are acting more as a principal now”.

“We should take a principal position at Forth Yards in buying that land. Or we should take a principal position at Worcester Parkway, which is just a piece of greenfield at the moment… working with partners to deliver 18,000 homes as a completely new town.”

He sees the report as a validation of that approach. “The recommendation is rocket boosters… the agency should take more principal positions to influence and create catalytic change. That’s already well underway, but will become more and more visible over the coming years.”