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New Homes England guidance will prioritise social rent and consider funding for acquisitions
The government’s housing delivery agency has made a number of changes to its Affordable Homes Programme (AHP) guidance, including bringing homes originally intended for market sale into the scheme.
Homes England updated the guidance in response to “changing market conditions”, introducing social rent-specific grant rates alongside the ability to target market sale acquisitions.
Previously, affordable housing funds were limited to new build projects.
In an update to its guidance at the end of last month, the agency said: “Most homes delivered through the fund should continue to be provided through new land-led delivery. However, we’ll consider proposals that include an increased number of homes that were originally built for market sale.”
The AHP is the primary channel for funds to be distributed to housing associations and local authorities to build new homes.
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Since it was launched in the early 2010s, the AHP has dished out billions of pounds to providers to build hundreds of thousands of affordable properties.
Buying market sale homes will be applied where there is a need for near-term delivery to keep the market moving, for example through acquisitions of unsold new build homes, forward funding of new build delivery or where it will contribute towards supported housing delivery, including through remodelling or improving existing housing stock.
The social rent-specific grants are subject to Homes England’s value-for-money assessments.
The update reiterates Homes England’s commitment to affordable homeownership as a priority, but it recognised that partners may have a reduced appetite for market-sale risk associated with delivering homeownership tenures.
As a result, Homes England will look to be flexible in its approach to assessing the strategic fit of proposals with routes into homeownership.
Research by Inside Housing using Freedom of Information legislation found that the number of grant applications that were refused under the AHP were down by 96% in 2021 compared with five years ago.
A government spokesperson said: “In response to changing market conditions, we are making changes to the Affordable Homes Programme 2021-26.
“This includes the opportunity to provide grant funding to our partners to deliver affordable homes in the near term, by bringing homes originally intended for market sale under the scheme. This will contribute to the ongoing supply of new affordable housing and help keep the housing market moving.”
Towards the end of last year, a National Audit Office report described the AHP as a poorly designed scheme marred by inadequate oversight, the targets of which were unachievable. It said, ultimately the AHP was a programme that lacked the necessary incentives to deliver homes in areas of highest need or unaffordability.
In January this year, Inside Housing revealed Homes England was considering a rebrand, as part of a shift in focus to regeneration.
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