Make new homes and engine for growth, say top architects

Alex Ely and Luke Tozer have helped draw up a 20-point ‘positive’ manifesto for change alongside fellow collective members Assael, HTA Design, Bell Phillips, Grounded, and Mikhail Riches.

This is the last in the five-part series written by architects from the group of leading housing specialists explaining how each priority action point could work.

Since launching last month, the campaigners' dedicated website has had more than 4,000 visitors and continues to look to expand the list of supporting practices.

As well as getting the message out to potential parliamentary candidates, the group intends to follow up post-election with the new government.

Luke Tozer (left) and Alex Ely (right)

Priority 5: Empower a self-build and community housing drive

Our failure to deliver the number of homes we need has many causes: a shortage of land supply; a slow planning system; high construction costs; a failure to invest in affordable social housing; and high mortgage costs. One of the causes is, undoubtedly, a lack of small housebuilders and developers after they were ‘squeezed out’ following the financial crash of 2008. As with many industries, if we had more suppliers and if we empowered consumers to be their own agents in the supply chain, we could see more of the housing we need.

We’ve seen greater concentration and consolidation in the industry. Just 10 volume housebuilders construct 50 per cent of our housing, resulting in a lack of competition, diversity, resilience and in poor quality design. They have also monopolised options on land. Just like intensive farming or our global financial system, we lack the diversity and modularity to resist shocks to the system. Our housing system has reached hysteresis.

The biggest suppliers have converged and destroyed their smaller competitors

The big housebuilders have similar strategies and similar ways of managing risk, and near identical techniques of building. If one slows their production, so will the others. If one starts cutting corners, the others follow. This is why their products all look the same and lack ‘genetic’ diversity. The biggest suppliers have converged and destroyed their smaller competitors.

Far from being the solution to our housing crisis, the homogeneous volume housebuilders are one of the biggest problems; enriched through subsidies such as the help-to-buy scheme which in turn inflates prices, they make housing less affordable, not more. It’s not a housebuilder’s priority to meet housing need. As profit-driven private companies with shareholders, they are driven to maximise profit through sales with careful management of absorption rates, drip-feeding the market so that prices are sustained.

We need a system that can better enable the growth of alternative housing suppliers to meet our housing needs. We know there is significant latent demand and a large proportion of society that wishes to build their own home. Self-build allows individuals to have greater control over their home and match the design to their budget, so more self-build would create a system where supply is much closer to need.

Creating the right incentives will help a grassroots movement that in other European countries accounts for a significant proportion of new housing – from France (30 per cent) and Norway (43 per cent) to Germany (55 per cent) and Austria (70 per cent). This would have a knock-on effect, supporting diversity, improving resilience, increasing quality and growing local economies.

There is an opportunity to grow the self-build and community housing sector from a niche, fringe part of the house-building industry, and empower individuals and communities to take ownership of creating the truly affordable homes that they need. It is an opportunity that the next government would do well to engage with and unlock. By doing so, it could transform house-building into a positive collective national project rather than a locally divisive issue.

5.1 Create tax incentives for self-build homes (zero stamp duty)

Without incentives, it is impossible for alternative housing provision to match the volume housebuilders, who through economies of scale can be more competitive with build costs or land acquisition. Alternative housing suppliers have the extra land cost that smaller plots attract or the materials that can’t be bulk purchased.

Tax incentives would give an immediate boost to the sector

Creating tax incentives will give an immediate boost to the sector, for example, offering zero stamp duty or a stamp duty holiday. There could be mechanisms in place that allow the government to recoup the stamp duty from the seller if and when the self-builder chooses to sell on.

5.2 Establish a fund for government mortgage finance for self-build homes

Self-builders and community groups often struggle with obtaining mortgage finance, reducing the number of people building their own home to the already wealthy when it should be more widely affordable.

The Help To Build Fund was established to change this but the incentives it creates are counterproductive and impeding its success. Its equity loan system effectively takes a stake in any uplift in value in the home created by the hard graft of the self-builder and acts as a disincentive to the self-builder to add value or to proceed at all.

Could a new government introduce a wider roll-out of a simpler Help To Build Fund based on debt rather than equity?

Source:Gabriel Spera

Green Oaks, Laindon. Essex - Unboxed Homes, Mæ and Pitman Tozer

As Gus Zogolovitch, of Unboxed Homes says: 'I've experienced first hand the difference between raising finance for self-build and custom build and normal speculative housing. The latter is easy, well understood and ubiquitous. The former is complicated, hard to find and expensive.

'The next government has the opportunity to make small but meaningful interventions in finance by taking more risk. A simple self-build and custom-build Help To Build mortgage guarantee scheme would allow smaller funders to lend more and lend more cheaply to self-builders. A streamlined homebuilding fund would enable more custom-build enablers to buy land and provide the serviced plots we so desperately need to get more affordable self-build.'

When we (Unboxed Homes, Mæ and Pitman Tozer) started our custom-build project at Green Oaks in Laindon, we were able to draw a loan from Homes England to help pay for the upfront infrastructure. We needed to build a service road and get utilities connections to each plot before we could market them. As enabling developer, the responsibility fell to us but commercial funding wasn’t readily or affordably available.

The fund can really unlock development; the loan and interest gets paid off as plots get sold. However, it needs reform, and the funder needs to better understand the risk associated with self-build and reflect the nature of the market. It is often the upfront infrastructure costs that stymie development. In Freiburg in Germany, or Almere in Netherlands, the municipality build the roads and the tram infrastructure.

If the government were able to offer more enabling funds to kick-start development, that could be recouped through land value capture, realised once homes are built and mortgageable. Then it could create a cost-neutral virtuous circle or even deliver a net gain to the public purse as realised in the new towns programme of the 1970s.

Source: French+Tye

Blenheim Grove, designed by Poulsom Middlehurst, a custom-build development for Unboxed Homes

5.3 Allocate public land for wider adoption of self-build and community housing

The biggest barrier to most community housing and self-builders is the availability of land. At the same time, the challenge for most affordable housing developers of small sites is viability. We know from experience the challenges local authorities and housing associations face in getting small sites to stack up. As a result, too many small sites remain undeveloped with their potential unrealised. Self-builders have the potential to bring their focus and sweat equity to bear on an individual site and make seemingly unviable sites work.

Too many small sites remain undeveloped and their potential unrealised

Community-led housing projects often falter due to both land availability and land cost, due to higher build costs than housebuilders. However, the social value of community-led housing is well documented and should be a determining factor in both local authority land disposals and within the planning system. Being clear about the requirement to obtain social value through local plans, or within the sale of assets, could have significant positive outcomes.

5.4 Provide specific funding for community housing and to incentivise multigenerational communities and homes

Funding barriers are even harder for community groups seeking to develop land. They ultimately need development funding rather than mortgage products. If the community housing sector is to grow, the government will need to act as a catalyst and develop financial products specific to the sector.

Whoever is elected later this week should reinstate the Community Housing Fund to provide a boost to community development through Community Land Trusts, introduce government-backed loans for not-for-profit community housing schemes and widen the eligibility of the Housing Infrastructure Fund to include self-build and community-led housing schemes.

Comments

Russell Curtis, founding director, RCKA

Local authorities are within their rights to prioritise social value above financial returns when considering the disposal of small sites, but even then, these two considerations are not mutually exclusive.

Community-led housing not only delivers better-designed, higher-quality homes than much private housebuilding, it also achieves a wider positive impact through the delivery of genuinely affordable homes for local people.

'The disposal of public land – and the procurement of public housing generally – needs to be refocused on long-term societal and health impacts, rather than short-term numerical gains.

Meredith Bowles, director, Mole Architects, architect of Marmalade Lane co-housing, winner of the RTPI Jubilee Cup

Schemes such as Marmalade Lane in Cambridge would never have happened without seed funding through the government’s Right to Build programme, which allowed the community to procure professional services to get the scheme off the ground.