12 SEP 2024

Calls to clarify scope of Barratt "master developer" deal with Homes England

Calls to clarify scope of Barratt "master developer" deal with Homes England

This week the Government's housing delivery agency, Homes England, announced a joint venture agreement, the 'MADE' partnership, between Homes England, the largest housebuilder Barratt and the largest mortgage lender Lloyds. The new partnership is intended to provide skills relating to large site finding, master planning and master developing within a new commercial joint venture legal partnership which is benefitting from an injection of £50million of taxpayer cash.

It is undoubtedly the case that there is a scarcity of high quality master planner and master developer skills in the public sector. So with a big build commitment by the new Government, the question arises how to fill that capacity gap. Step forward the MADE partnership.

But hot on the heels of the announcement, there have been calls for Homes England to urgently clarify the scope and operational framework of the new partnership. One rival housebuilder is reported to have commented that "Homes England has put £50million of public money into a joint venture that seems to allow Barratt to get preferential access to more land and decide whether to build it out or sell it". Meanwhile, City analysts have praised Barratt describing the deal as "shrewd" for them and there was modest uplift in the share price of Barratt following the announcement of the Homes England deal.

Additional capacity for delivering new homes is always welcome. It is important that the public and private sectors work together to plan and deliver the homes our country needs. Homes England have a long record in entering into joint ventures in developments. However, this partnership is more unusual than many in its apparent geographical reach right across the country as well as its close alignment with the operational powers of Homes England, including access to public funding and planning consents.

It is vital that all hands are on deck in order to deliver the scale of the challenge to build 1.5million homes this Parliament. This will require a range of different ways of working to attract larger, smaller and new entrant participants, and a diverse range of funding sources and products. It's essential that Homes England retain the trust and confidence of a diverse and vibrant housing and finance market in order to meet the scale of housebuilding challenge, which includes clarifying the extent and operational framework of the MADE partnership so that any concerns may be readily addressed and opportunities for participation and collaboration made clear.

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Housing Delivery Snapshot - August 2024 

• The Bank of England cut interest rates to 5% in a move expected to begin to boost confidence. The close 5-4 vote of the MPC came with a cautionary message that the Bank was not going to cut “too quickly or by too much”.

• Mortgage lender Nationwide released its latest UK house price index report, with an annual growth in house prices of 2.1% in July, its fastest pace since December 2022.

• The latest NHBC housing pipeline figures for Quarter 2 2024 show the scale of the current housebuilding slump with a 23% fall in new registrations compared to the same quarter in the previous year.

• Latest MHCLG data reported a significant fall in residential Planning Permissions over 30%, another key housing pipeline indicator.

• Following the General Election, the new Government confirmed its 1.5 million new homes target for this Parliament.

• The Housing Secretary took immediate action to impose compulsory housebuilding targets on councils, with a warning of direct intervention if housing targets are not met.

• The Housing Minister confirmed on BBC Radio 4’s Today programme on 31 July that the Government’s New Towns programme is not expected to deliver any completed homes this Parliament.


HFI Housing Delivery Newsletter - August 2024

The Bank of England’s rate cut was a ray of light, but the housing pipeline remains a cause for concern. At the Housing & Finance Institute, we look at the latest news and developments in housing since the election, including in the Housing Spotlight and Delivery Snapshot.

Rate Cut Boost

Amid a challenging year for housebuilding and mortgages, there was a ray of light on 1 August, with the Bank of England announcing a long-awaited interest rate cut to 5%. The close 5-4 vote of the Monetary Policy Committee came with a cautionary message that the Bank was not going to cut “too quickly or by too much”.

Ahead of the rate rise, the mortgage lender Nationwide released its latest UK house price index report, with an annual growth in house prices of 2.1% in July, its fastest pace since December 2022.

The latest Bank of England announcements will provide a little relief for some current mortgage holders and those needing to refinance. However, many first-time buyers are facing a continuing double challenge of finding money for a deposit while meeting stringent affordability criteria. So while generally mortgage market confidence may begin to rise off the back of the Bank of England interest rate cut, access to home ownership remains difficult for many, given the affordability and home deposit challenges.

Housing Pipeline Concern

However, housing pipeline figures remain a cause for concern with the latest NHBC housing pipeline figures showing the scale of the current housebuilding slump. Latest MHCLG data reported a significant fall in residential Planning Permissions, another key housing pipeline indicator.

Housing Policy Interventions

Following the General Election, the new Government has confirmed its 1.5 million new homes target for this Parliament. Immediate action has been taken by the Housing Secretary to impose compulsory housebuilding targets on councils, with a warning of direct intervention if housing targets are not met. However, the Government’s New Towns programmes is now not expected to deliver any completed homes this Parliament, the Housing Minister told Radio 4’s Today programme. This raises questions as to how the 1.5 million new homes target will be delivered, without these major new developments coming forward at pace.

Further Government intervention on the demand side to support new buyers and home deposit savers is likely to be necessary over the next period to reverse the current housebuilding slump, together with far-reaching interventions for skills and building materials to meet a housing target that hasn’t been met since mankind first landed on the moon over 50 years ago. The HFI’s purpose is to support increased housing supply, back councils and businesses working together to build more homes and promote new ways to finance housebuilding.

Do get in touch if you would like to share ideas and suggestions on building the homes our country needs.

Best regards

Natalie Elphicke Ross
Head of Housing Delivery

natalie@hfi.org.uk


December 2024