Community land trusts, discounted homes capped at £100,000, and taking a more direct role in housing delivery through its own development company are all part of a bold and innovative new housing strategy to be recommended to the Cambridgeshire and Peterborough Combined Authority Board on Wednesday, 26th of September.
The housing strategy, backed by Mayor James Palmer, will urge a new, ambitious and flexible approach to accelerating building rates and making homes more affordable in order to help tackle the severe shortage of housing of all types across Cambridgeshire and Peterborough.
The strategy recognises the need to go beyond conventional methods of housing delivery, which for many years have not delivered enough affordable and other types of housing and has led to house price and rent levels far outstripping wages.
Schemes like community land trusts, discounted market homes priced at £100,000 at first sale and mechanisms like land value capture are all designed to bring new impetus and innovation into tackling the area’s housing problems. The strategy seeks to address the large section of working people who are not earning enough to afford high house prices, but are earning too much to qualify for traditional social housing and so are pushed into the expensive private rental sector.
The strategy would also see the Combined Authority launching a development company, which will be solely focused on the delivery of additional housing stock, in line with the overall strategic housing goals, and in ways which minimise risk.
The housing strategy will set the direction of travel for the Combined Authority to meet its ambition to deliver 100,000 additional homes and 40,000 affordable homes by 2037. Lack of housing, and high house prices and rents were identified as a serious threat to Cambridgeshire and Peterborough’s future prosperity in this month’s final CPIER report, as well as to people’s health and wellbeing generally. A central pillar of the strategy is to make home ownership more accessible to more people. The CPIER report also recommended increasing housebuilding rates from the current target of about 4,700 per year, to 6,000 to 8,000 per year, an ambition the Mayor of Cambridgeshire and Peterborough, James Palmer, endorses.
The strategy also directly addresses the £170 million the Combined Authority was given when it was established last year to deliver 2,500 affordable homes to be started by March 2022. Here, the strategy aims to be more innovative than conventional approaches, going beyond simply handing out the funding as one-off grants for a finite amount of homes.
Of the £170 million, £70 million is ringfenced to deliver 500 affordable homes in Cambridge, and which is being overseen by Cambridge City Council, as agreed under the devolution deal.
Given the scale of the long term housing challenges facing Cambridgeshire and Peterborough, the housing strategy makes clear that spending the other £100 million on grants to deliver only 2,000 affordable homes across the rest of the area over five years would only have limited impact on addressing the scale of the housing issues that exist.
Instead, the strategy would see £60 million used to deliver more conventional grant-funded affordable homes, through, for example, housing associations, and which will deliver the target of 2,000 affordable homes to be started by March 2022, as set down in the devolution agreement.
The remaining £40 million would be used as a fund to accelerate the delivery of a range of housing schemes across Cambridgeshire and Peterborough. This fund would be capable of being expanded further using the Combined Authority’s borrowing powers, and where it would meet the aims of the authority’s wider investment strategy. The focus would be on housing schemes which will see the investment from the Combined Authority repaid and reinvested into further housing developments.
It is this ability to recycle and reinvest the funding into more housing schemes up to and beyond 2022 which will unlock far more affordable homes than just relying on conventional grant funding. It also means the revolving £40 million fund can be used both within and beyond the designated five-year period of homes delivery to 2022.
A wide-ranging ‘toolbox’ of innovative and interventionist approaches would be used and all of which would be subject to oversight by the Combined Authority Board.
Mayor James Palmer said: “The housing crisis is one of the most intractable problems of our age, but it is clear that relying on the market and conventional local and national government programmes alone will not deliver the volume of homes, of all types, that we need in Cambridgeshire and Peterborough.
“The Combined Authority has an aspiration to deliver an additional 100,000 homes and 40,000 affordable homes over the next 20 years. That simply won’t be possible without a fresh approach and a strategy that goes beyond simply handing out taxpayers’ money in grants for a finite amount of homes. We have to face facts that we might not be able to go back to the Government, cap-in-hand, when the money runs out. We have to think differently.
“That’s why we need to make strategic investments in certain schemes that include an element of being able to clawback that investment to reinvest in further schemes, creating a revolving fund. An entrepreneurial approach is not about making a profit, it is about the ability to recapture any investment of taxpayers’ money to then plough back into delivering even more housing. Community land trusts, discounted market sale homes with prices capped at £100,000 and land value capture are all exciting ways through which we can achieve this.
“By setting up our own development company, with a sole focus on accelerating the delivery of a range of homes schemes strategically, and in new ways, we will be able to play the active role we need to in grappling with our housing challenges.
“This month the Housing and Planning Minister Kit Malthouse met with me and other Combined Authority leaders, and was impressed at our direction of travel on housing, describing it as pro-active, entrepreneurial and bold. We would press for Government support with the housing strategy wherever possible.
“I’m a passionate advocate for home ownership, and it is simply not fair that so many hardworking people are locked out of owning their own property. There are huge swathes of working people earning too much to qualify for social housing, yet cannot hope to put a deposit down on a house and so are forced into astronomically expensive private rented homes.
“This strategy puts real focus on making home ownership more achievable.
“The solution, and the challenge everywhere, is to build more homes of all types and tenures. But we need a strategy that will actually deliver and is joined up with the other priorities of the Combined Authority, most notably transport. The infrastructure has to be in place in order to unlock this housing and that’s why schemes like the A10 and A47 dualling, as well as the Cambridgeshire Metro, are so important. They will create transport corridors that will sustain new homes, enable garden towns and villages and create opportunities for land value capture that will unlock further housing.
“The Combined Authority was set up to help tackle these major infrastructure challenges, and to deliver for people in new ways. I believe we are at a point on housing where there is no alternative but to think differently and be bold. This housing strategy offers precisely that approach.”
The housing strategy advocates a range of approaches to enable housing schemes to come forward. That might include direct investment into a scheme, an enabling investment, such as a loan or grant, to get a scheme started, or a collaborative action, working with partners to deliver housing.
All schemes supported would be expected to meet certain criteria, as set down by the strategy. That includes ensuring a spread of housing across the Combined Authority area, supporting small and medium sized construction businesses which support local jobs and increase skills, and that the schemes can be delivered in a timely way, and offer value for money.
The Combined Authority Board will hear the Housing Strategy paper and its recommendations when it meets on Wednesday at 10.30am at Shire Hall, Cambridge.
Example: Community Land Trusts
In March this year the Combined Authority approved a £6.5 million loan to deliver 54 homes in Haddenham, 19 of which would be affordable rented homes, managed by the community, for people living or working in the community, in perpetuity. The market homes of the scheme pay for the affordable housing element and the developer will also need to repay the loan to the Combined Authority. That recycled loan funding could then be used to support another community land trust delivering housing somewhere else, and so on.
The affordable homes within community land trusts provide rents that are in many cases cheaper than those offered by typical social housing providers. This allows working people who are typically not earning enough to afford a home, but earn too much to qualify for social housing, to save money to eventually get on to the property ladder.
Example: Discounted market homes
Discounted market sale homes are proposed as an innovative way the Combined Authority can making homes affordable for people on lower incomes. Here, new houses would be capped at £100,000 at first sale with any uplift in value thereafter to be shared between the Combined Authority as developer and the initial purchaser.
If a discounted market sale householder decided to move on, for example after five years, it would be sold back to the Combined Authority and made available again to those on lower incomes, on the same terms. Although inflation would be taken into account, the house would still offer the same market discount in real terms.