This week, Homes England unveiled its new five-year Strategic Plan. In an exclusive interview with BE News, chairman Peter Freeman looks back on his first three years as chair of the government’s housing and regeneration agency, elaborates on the five key objectives outlined in the new five-year plan and calls for more “aligned thinking” between the public and private sectors.
What’s in the new Homes England Strategic Plan?
I regard it as, in a way, the agency getting back to its roots, because it was the Homes and Communities Agency and lots of our colleagues that have been here a while were in English Partnerships or in RDAs. I think homes are most successfully dealt when they are part of the wider community, whether that’s employment, schools, parks or playgrounds. Half of the objection to homes that makes it difficult to gain consent is that they [homes] have almost become just a thing in themselves.
What are the big differences between this and the old plan?
There are five key complementary objectives highlighted in the Strategic Plan. We develop homes successfully if we were also developing communities and places. This reflects a change from the last Strategic Plan, which was very heavily focused on providing more affordable homes, especially in areas that were highly unaffordable, which inevitably meant there was a large focus on the south. Then the department was renamed the Levelling Up department and we were focused on the whole country, but we’re slightly more focused now on the North and the Midlands than on green fields around London.
That’s quite a reversal, isn’t it?
I think so. We’re basically identifying a number of places that we’re going to make a real effort in, but we also have a list of 49 new settlements. So, the new settlements are probably primarily green field and the other places are very significant towns where we want to achieve very significant things. We are an unusual operation. We don’t actually build any homes or office buildings. We finance instead and we do that through separate programmes such as the Housing Infrastructure Fund, which would give the local authority the money to put in a road or a bridge or an additional school, the Affordable Homes Programme or the long-term Home Building Fund, through which we make loans to SMEs. They’re all separate silos and we’re working very hard in cities such as Birmingham, Sheffield, Blackpool and Manchester to say to the leadership there: ‘What is it you want to achieve overall? Because we’ve got a spanner, we’ve got a screwdriver, we’ve got a hammer and the Affordable Homes Programme and the Housing Infrastructure Fund and we’d like to bring them all to bear so that we can have a much more joined-up impact. It’s the equivalent of saying one plus one equals three.
Peter Denton, the agency’s chief executive says this a lot, which shows that he is no longer an accountant; he has become a placemaker. If you go to King’s Cross, there are things in King’ Cross that make place, like the fountains in Granary Square. They don’t directly produce any revenue, but they make place and they make people want to come there. It’s part of what community is about; people want to congregate somewhere nice. So, we are increasingly interested in that placemaking side of regeneration. We think that it will drive housing, economic growth and wellbeing.
What are the five key planks?
The first three are: support the creation of vibrant and successful places that people are proud of, working with local leaders and other partners to deliver housing-led, mixed-use regeneration with a brownfield first approach; facilitate the creation of the homes people need, intervening where necessary to ensure places have enough homes of the right type and tenure; and build a housing and regeneration sector that works for everyone, driving diversification, partnership working and innovation. We’ve been a big supporter of modern methods of construction; we’ve been an investor in three or four major MMC companies.
How much of a blow is the news that Legal & General is closing its modular factory in Yorkshire?
All the manufacturers we talked to see it as an issue of getting to scale. But TopHat and ilke Homes are still very much in the game and I think will succeed, because it makes sense. It’s not the answer for every site, but it ought to be possible for some people to make it work.
So, you’re still committed to MMC?
We’re committed to supporting MMC. It’s not just supporting it in that we have helped finance various of these things, but our strategic partners under the Affordable Homes Programme are expected to deliver a minimum of 25% of homes through MMC. Part of sector diversification is helping SMEs to keep going.
What’s the fourth objective?
Promote the creation of high quality homes in well-designed places that reflect community priorities by taking an inclusive and long-term approach. I’m a huge believer that the better the homes and the better the services and the landscape around them, not only the nicer it is for the people who move into them, but the nicer it is for everybody around and the more likely it is for homes to get permission.
And the fifth?
Enable sustainable homes and places, maximising their positive contribution to the natural environment and minimising their environmental impact. So basically, sustainability. We are exploring putting minimum biodiversity net gain requirements on applications and loans. It’s something that isn’t said enough: that development is now producing biodiversity net gains.
What do you think of the UK Net Zero Carbon Buildings Standard currently being developed?
When our cross cutting committee has reached its conclusions and reported to the main board, we’d be happy to answer that, but not yet.
Looking back at the Strategic Plan that has just concluded, what have been the main achievements?
We’ve supported the development of 152,700 new homes. We’ve unlocked the land for 380,000 new homes. We’ve helped 228,996 households into home ownership. We’ve lent and recovered £6.85bn of loans to house builders. The recovery rate is shockingly high. It’s almost total. And we have set up various alliances. Something probably very few people know is that we are jolly good at leveraging the government. So, we have working relationships with Lloyds Bank, Octopus Real Estate, Mann & Co, L&G, AXA and Barclays. We act as a cornerstone investor. We put up a very significant minority amount of money, probably up to 10%, which enables them to go off and get 90% from big pension funds or whoever. We get the same term as the other investors. There will be a positive return to the taxpayer in the long run. But the main point of us putting up the cornerstone money is not to earn a return but to help pension funds to back affordable housing. In our Greener Homes Alliance with Octopus Real Estate, the more green you are, the lower your interest rate, which is a nifty thing.
Will you only ever fund homes rather than develop homes yourself? Is that set in stone?
Yes, and I think it is probably set in stone for at least two good reasons. Government has a limited amount of money, but also the government is only intending to intervene when there’s some kind of market failure. There are tonnes of private sector people who can build well. There are fewer private sector people who can assemble land (they don’t have a CPO power). There are fewer private sector people who can fund large infrastructure where the payback is over 15 years. There is not a lot of point in us building the actual houses because there are lots of other people who are skilled at doing that. Why would the government be competing?
What impact has the abandonment of the 300,000 a year target by Michael Gove last November had? Should government be spending more?
No comment on the first part. Could we spend more? Obviously, yes. And my personal advice, irrespective of whether there was or wasn’t a target, is that government helping to assemble land and helping to fund putting the infrastructure into the land, is a very, very positive thing. It’s not just a positive thing for housing numbers, it’s a positive thing for generating better places and more joined-up, more mixed-use communities.
That’s something you experienced first-hand at Argent, isn’t it?
Brindley Place transformed Argent from being another developer into doing mixed use and placemaking on public squares. Nobody in the private sector could have acquired it. I think there were something like 300 ownerships. Strangely, King’s Cross was in a way public sector land assembly. When we came along, 95% of the land was owned by two landowners. If government wants to do big things and to help the development sector, it shouldn’t build buildings, but it should help assemble and it should help fund the infrastructure.
Have you achieved what you hoped to in the past three years?
I’m too ambitious, so I can’t say to the extent I wanted to, but to a great extent. We’ve recently struck a strategic partnership with Manchester and are in negotiations with the West Midlands. We are already making things happen.
In Digbeth, we bought 30 or 40 acres. It was a really miserable abandoned canal side and in the short period since we bought it, we’ve been able to work with the mayor and Steve Knight, as in Peaky Blinders – the BBC are coming there with MasterChef. One of the things I’ve been really surprised at from the drop is how much derelict land there still is in major cities.
We are a funder of Victoria North, which covers around 300 acres immediately to the north of Victoria station in Manchester. It is a few 100 yards from Manchester train station, yet it has been derelict for a long time. You’d think if you flew over it that it was virgin forest. That’s potentially a project of 15,000 homes. So, there is a lot to do. We are building very close, strong working relationships with the mayors and the cities where we think the leadership have the vision to do it. We don’t have the authority to go in and impose. So, it’s about finding the local authorities where the officers and political leaders say: ‘Can you help us? Let’s get some stuff done.’ Digbeth, which we brought Stanhope in on as a partner, is just a brilliant example of how quickly something can happen.
Are you happy with the progress being made in terms of forging public private partnerships?
We have ongoing relationships with lots of major private sector people. Leaving the housebuilders alone, we’ve got relationships with LendLease, Delancey, British Land and Argent (which predates me, but I do step out of board meetings from time to time).
Our job is to be a catalyst, to be a facilitator, to be three-in-one oil, to be a Swiss army knife with lots of solutions. When there’s a land owner, a developer and a council and it doesn’t quite add up, we ask: ‘Can we help bring you together?’ So, rather end up in the hands of the sort of spoiler who often buys a bit of land in a rundown area thinking that sooner or later there will be a big government grant and they will make out like bandits, we took it out of the market. We know that we can deliver it.
Do you think land-banking is getting worse?
I think it is an unfair assertion that the house builders are sitting on land. But I think there are speculators, particularly when interest rates were nothing, that would buy a site for £500,000 or £1m with absolutely no intention of doing anything on it, and I think that that is unfortunate and holds things back.
Looking back over the first few years of your tenure, is there anything you wish had gone better?
Yes, but housing is a long-term thing. The more government can provide consistency, the easier it would be for organisations like Homes England and the private sector to operate.
Should there be a much longer-term plan?
I think it would help. We’ve just about finished at King’s Cross and it will have taken 25 years. That’s been possible because there was one master plan at the outset, there was one business plan at the outset and there was a single ownership at the outset.
What do you hope at the end of the five years to have achieved?
A lot of happier people and better homes in more places, and a more cooperative approach between landowners, developers, government and local authorities. At the moment, there’s too much conflict because they’re not aligned. The more we align thinking so that people aren’t in conflict, the more likely we are to get more homes at less cost.
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