Unlocking the delivery of new homes

The UK Government has set the ambition of delivering 300,000 new homes a year. Attaining and sustaining this level of housing development will depend on the availability of a rolling, long-term pipeline of residential development sites. 

Over the last six months, Steer Economic Development and Steer have been working alongside the Ministry for Housing, Communities and Local Government (MHCLG), Homes England, the Department for Transport (DfT) and local government partners on the Forward Fund component of the Housing Infrastructure Fund (HIF). Spanning 45 places nationally, the purpose of this multi-billion programme is to increase housing supply through a better co-ordinated approach to infrastructure planning, investment and delivery. We take this opportunity to share some of the key insights that we are applying to our ongoing HIF-related work and beyond. 

Recognising that transport is necessary but not sufficient

Although the majority of HIF investment will be used to deliver transport infrastructure, it will also fund a diverse package of ‘other infrastructure’ including utilities, land assembly, flood defences and schools. Delivered in isolation, transport interventions are not sufficient to unlock housing sites. But by facilitating the delivery of a co-ordinated package, HIF aims to address a range of strategic infrastructure constraints and unlock commercially viable residential development sites. 

Basing the case for investment around housing impacts

Sponsored by MHCLG, the primary purpose of HIF is not to ‘solve’ transport problems but to unlock new housing. Bids are being assessed primarily on the basis of their housing impacts. Because of this, HIF requires a multi-disciplinary approach to case-making, combining housing, transport and other professionals. This collaborative approach to problem-solving has been one of the most valuable and rewarding aspects of our HIF work, as it has brought together innovative teams, both internally and externally. 

Establishing a clear link between infrastructure investment and housing delivery 

HIF Forward Funding projects are typically geared towards unlocking multiple sites over a 10- to 20-year timeframe. Developing a clear rationale for intervention can, therefore, be complex. Establishing the dependency of the development on the new infrastructure is important, but the linkages between the infrastructure and housing delivery must also be underpinned by site viability and property market evidence. MHCLG and Homes England need to be satisfied that HIF investment will be sufficient to bring forward the desired new homes. 

Combining housing and transport impacts

Our work has focused on supporting the development of ‘Economic Cases’ for HIF investment, combining Land Value Uplift (LVU) methodology with an assessment of transport impacts into a single, integrated value for money assessment. Reflecting the emphasis on housing, LVU is the core metric for HIF, and, as such, is based on site-specific valuations undertaken by a qualified valuer. This must be combined with transport impacts which involve quantifying i) the number of homes that the infrastructure improvements could help unlock relative to the number of homes that would be likely to be delivered in any event (i.e. the deadweight) ii) any detrimental impact that these new homes might have on the network iii) any beneficial impacts to the ‘base load’ traffic (i.e. existing network users) because of the transport improvement. Although the ‘combined method’ is set in guidance, many applicants have not applied this approach before. Our role has been to help applicants to navigate their way through the economic impacts and to do so in a way that best captures the benefits of their proposal while giving bid assessors confidence in the analysis. 

To meet Britain’s housing needs, the HIF model needs to become the norm, not the exception. This model could be further refined and enhanced, but at its heart sit three powerful principles which should be rolled forwards. Firstly, HIF is not a short-term, headline-grabbing initiative. It recognises that the ‘housing crisis’ has been a long time in the making and will require a long-term fix. Secondly, it is explicitly and resolutely outcomes-focused, with the primacy of housing impacts embedded in business planning. Thirdly, it adopts a co-ordinated approach to the design and delivery of packages of infrastructure, essential to unlocking new homes in the right places. 

Written by Josh Stott, Associate, Steer Economic Development