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The Welsh local government and housing committee has called on the Development Bank of Wales (DBW) to play a bigger role in funding social housing.
In a letter supplied as evidence in the committee’s ongoing inquiry into social housing supply in Wales, John Griffiths, committee chair, asked the DBW if more could be done to increase the proportion of social and affordable housing on the developments it funds.
The DBW did not provide evidence for the inquiry because it claimed it was “not active in the social housing sector”.
But Mr Griffiths pointed out that the DBW has previously reported funding social and affordable housing within multi-tenure residential developments and that the Welsh government had asked the lender to do more in this area.
He also asked what potential there is to expand lending directly to housing associations to fund social housebuilding.
Giles Thorley, chief executive of the DBW, responded that the only way to increase affordable housing “in the context of the private sector would be to improve the commercial viability of such schemes”, following high inflation.
This could be done through influencing the release of more land for SME development at a lower-than-market value, with the requirement that more affordable housing would be built than would be achieved via a Section 106 agreement.
“This is something DBW would welcome involvement with,” Mr Thorley said.
He also suggested that subsidised funding could be offered, potentially via the DBW, to SME developers for building sites with a greater level of affordable housing.
Another option would be for the bank to increase its direct lending to the commercial arms of social landlords.
“DBW has some limited experience in this space but would be open to working more broadly with the social housing sector on similar models if this was something Welsh government wanted us to pursue,” he said.
So far, the DBW’s role in delivering affordable housing has been linked to its support for SME developers, which has included offering “commercially priced, repayable loan funding”.
Although the DBW has no influence over the planning process, as full planning approval has to be in place already before it can fund a scheme, Mr Thorley said it does include support for related build costs of affordable housing.
“We actively encourage SME developers in Wales to consider schemes with affordable housing requirements on the basis that we will offer the necessary loan funding support,” he said.
As part of the inquiry into supply, a senior figure in the Welsh government has acknowledged that it needs additional budget to deliver on its target of 20,000 low-carbon social homes.
Speaking last week at a meeting of the Local Government and Housing Committee, Stuart Fitzgerald, deputy director of the Welsh government’s homes and places team, said the situation was “really pressured and we do require extra budget”.
A recent report from Audit Wales, the body responsible for making sure public money is managed well, predicted that the Welsh government would miss its target of delivering the homes “without significant additional spending”.
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