Memorandum from the Department for Communities and Local Government (HCC 2A)
HOUSING BUDGET PACKAGE DELIVERY PLANS On the 7th May my Department responded to the Committee's Report on Housing and the Credit Crunch. In the response we gave some details of the £1 billion housing package announced at Budget on the 22nd April. However, since publication of the response more detailed delivery arrangements have been developed for the new and extended programmes and I thought it would be useful for the Committee to provide a short written update. The aims of the housing Budget package are to provide a fiscal stimulus for the economy, support and protect jobs in the construction industry, provide further support for those in fear of repossession, and encourage Local Authorities to build more social homes, whilst supporting our long-term supply ambitions. Details of the areas of this package for which CLG are responsible are set out below: Kickstart Programme (£400m) The Kickstart Housing Delivery Programme aims to unlock sites that have stalled, but where development could proceed immediately. Stalled sites are offered a contribution to infrastructure or development costs -complemented by support for affordable housing and HomeBuy Direct - for high quality housing projects that provide a mix of tenures. Guidance on application has been issued and can be found on the HCA website. Bids will be accepted up to 8th June with the announcement of successful bidders in July. To ensure value for money a set of strict criteria for sites has been drawn up and includes: · Sites must not be viable or able to be funded in the absence of HCA investment and this will be tested through due diligence and local intelligence. · Sites must be able to start before 31st March 2010 and be completed by 31st March 2011. · Schemes or the relevant phase should be housing led (at least 75 per cent of net internal area). · The minimum size of a scheme or relevant phase is 50 homes (or 30 homes in rural areas, defined as communities with a population under 10,000). · HCA will consider smaller schemes if they achieve Code for Sustainable Homes levels 5 or 6. · All else being equal priority will be given to those schemes intending to meet high environmental standards, measured by Code for Sustainable Homes Level 3, with those at Level 4 and above scoring more highly.. · Value for money will be considered for each intervention type - Investment Support, HomeBuy Direct and Affordable Housing - against the value for money parameters of the relevant programme. · Value for money of the total Kickstart package sought for each site will also be considered with preference given to those schemes which offer best value for money on the basis of the Kickstart investment in the round.
The initiative is expected to deliver up to 9,000 new homes over the next two years.
Local Authority New Build (£100m) It is expected that under this scheme LAs will build approximately 900 new social homes over two years. Guidance for LAs is published on the HCA website. To facilitate delivery, there are two deadlines for bids. The first is the end July with an announcement of successful bids in September. This is for LAs who are in a position to move quickly with existing detailed plans. There is then a second opportunity to bid with a deadline of end October with the successful bids announced in December. It is expected that the first starts will be in quarter 4 2009/10 and final completions in 2010-11. New social homes supported with grant must meet the Code for Sustainable Homes Level 3; schemes which can achieve Code Level 4 or higher are strongly encouraged and will be advantaged as part of the assessment process, subject to providing good value for money..
Extension to Mortgage Rescue (£80m) The scheme is designed to help up to 6,000 of the most vulnerable households at risk of repossession remain in their home. The expansion in the Budget will help us achieve the target by allowing vulnerable households who have been adversely impacted by the housing market downturn to access appropriate support.
The updated guidance for Mortgage Rescue eligibility was issued on 5 May. This makes provision for households with negative equity, up to 120% Loan to Value, to be considered for the scheme. The guidance also increases the regional property price caps for the scheme. These changes have been introduced rapidly in response to early feedback about the scheme's operation. The additional funding, made available through CLG's End Year Flexibility, reflects the expectation following early feedback that more households will need support through Government Mortgage to Rent option than the Shared Equity option.
Local Authority repossessions prevention fund (£20m)
This fund is available to enable local authorities to extend small loans (up to a maximum of £5,000 per household) to families at risk of homelessness through repossession or eviction. The funding has been made available by HMT from CLG's accumulated End Year Flexibility and will be administered through the Homelessness Revenue Grant Programme, under Section 31 of the Local Government Act 2003. It will be a 'one off' payment to all local authorities in direct response to the current market conditions, to be allocated in June for immediate impact. The additional funding will have a primary focus to help prevent repossessions, in particular where households have problems with multiple debts, and to support delivery of the Mortgage Rescue Scheme, but will also be available to support tenants threatened with eviction in the private rented and social sectors. Advice to local authorities on its use was circulated on 13 May.
Social Housing Energy Saving Programme (£84m) This funding is available to help social landlords insulate hard to treat cavity walls that would not otherwise be filled under the Decent Homes programme, by April 2011. It aims to tackle130,000 homes, but will also enable 2,500 jobs to be supported or created, and £120 per year to be saved on bills for each house. In addition there will be up to 800kg CO2 per household saving each year. Guidance for how to bid has been published and is available on the HCA website. Bidding ends on the 12th June with the successful bids announced in July. The work must be completed by end March 2011.
District Heating Schemes (£21m) The aim of this fund is to provide gap funding to sites that can provide energy efficiency and low carbon infrastructure in the next two years in order to unlock housing sites. This could include new or extending existing district heating schemes, schemes to install microgeneration facilities and renewable heat schemes.
The scheme is run under the HCA's existing growth programme and delivery arrangements alongside growth and Community Infrastructure funding. Eligible growth local authorities were approached prior to the Budget and expressions of interest have already been submitted to the HCA and vetted for strategic fit by HCA Regional Directors and teams. Subject to legal clearance that this process is robust the HCA will seek full submissions from local authorities in two phases starting in May. Announcements of successful bids will take place in June and July respectively for the two phases and all funding will be allocated by end March 2010. Longer term In addition to this we are taking all possible measures to facilitate a house building recovery and to ensure that the sector grows strongly over the longer term. The Government will report at the 2009 Pre-Budget Report on progress and set out its strategy to support a timely and effective housing supply response through the recovery, in order to maximise delivery of high quality, energy efficient homes, supporting our long term housing supply and environmental objectives. This will cover measures to:
· ensure sufficient land for development, through housing allocations in local plans and further action on public sector land, supported by a responsive and efficient planning system; · deliver effective and coordinated infrastructure provision; · promote a strong and diverse house building sector; · continue to ensure the increased long-term supply of social and affordable housing; and · ensure a proportionate approach to land-value capture and cumulative regulation.
I hope the Committee finds this information useful. I will be happy to answer any questions you may have on this and any other issues relating to Housing and Credit crunch in my forthcoming appearance on the 1st June.
June 2009
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