The chancellor’s announcement to invest over £6bn in new homes puts the housing sector at the heart of the solution.
Opinion piece by Suzanne Forster, Group Finance Director, Orbit Group
We can now use our expertise and financial strength to deliver more homes and work in partnership with government to address the housing crisis.
It also moves us on from a period of uncertainty about the sector’s future as a partner of government.
From a capacity point of view, the £4.5bn investment in shared ownership is an efficient move by government because it requires half of the public subsidy of an affordable rented home, so can deliver more from the same investment.
Orbit already delivers 330 shared ownership homes a year, generating a profit of almost £4m which we re-invest in more affordable housing.
The product works, and so does the business model. But it’s not all plain sailing – growing this pipeline increases our market exposure and risk profile.
Fluctuations in the market can also impact on staircasing and of course we now also have to factor in the Right to Buy.
Ultimately though, we support this move.
It delivers against aspiration, is affordable and demand for shared ownership currently outstrips supply by a factor of around 1 to 10.
Orbit, the Chartered Institute of Housing (CIH), National Housing Federation (NHF) and others have pushed relentlessly in the past year for government to recognise the value of shared ownership, and now it is here.
Now we need to maximise what we can offer, we need to get better at marketing our offer, better at enabling customers to staircase, so that we can generate the profits needed to re-invest further in the building of new homes and demonstrate the value in our business model.
So what are the other implications of the biggest housebuilding programme since the 1970s?
There will be a big gap in new affordable homes for rent and I expect many organisations to chose to plug that gap with low-cost rented homes built through cross subsidy.
Ensuring our homes remain affordable and accessible will be an ever-increasing challenge. We will need to work with lenders to ensure the huge increase in mortgages required for shared ownership (and other ownership products) are available.
We also need to think more broadly about how we build sustainable communities alongside these new homes. How we work with partners locally to invest in communities and ensure that families have the right employment and educations opportunities to meet their aspirations.
Finally, we have this one opportunity to show government what we are made of through pace and invention. We need to demonstrate now how we bring a commercial steel to our social purpose and deliver on what we have asked for.