Good housing is one of the key determinants of quality of life, yet for many in the Cardiff Capital Region a good quality, modern home is an unmet need.
Earlier this year the CCR’s Regional Cabinet approved a £45m housing investment fund to help stimulate the housing market in areas where there has been little new housing development. Called Homes for all the Region, the fund is intended to deliver 2,800 new homes across the region’s 10 local authority areas. The fund is divided into two sub-funds: a Housing Viability Gap Fund of £35m, and an SME Finance Fund of £10m.
The Viability Gap Fund is designed to address viability issues which have prevented sites from being developed for new housing. In a survey of 38 key stalled sites across the Capital Region, more than half (55%) were held up by the costs of remediation, the removal of pollutants or contaminants typically from land which has had previous industrial use. Other reasons for sites being stalled are the costs of building in access to the road network – often a requirement of planning permission – or of installing other site infrastructure such as utility connections; and topographical constraints such as the need to clear woodland or level land.
The Housing Viability Gap Fund will seek to unlock these stalled sites. It will also kickstart construction and create jobs, enhance the long-term growth prospects and competitiveness of the region, and address the uneven distribution of house building across Cardiff Capital Region.
Ensuring better distribution of house building across the region
The statistics for house building paint a stark picture. New homes construction dropped sharply after the financial crisis in 2007, and as of 2018 had yet to reach pre-crisis levels. Recovery had been taking place before the Covid-19 lockdown with some boroughs booming, but that recovery was uneven, exacerbated in many areas by the prevalence of stalled sites.
A lack of new house building has a big impact on individuals and businesses. It contributes to affordability problems as house prices grow relative to incomes. Across the region, median house prices in 2018 were more than five times median annual incomes.
Other negative effects of low house building include a lack of labour mobility; higher costs for business because of limited local labour supplies; the retention of old, poor quality housing stock which is difficult to heat efficiently; and poor quality of life for residents.
The Housing Viability Gap Fund will aim to address some of these issues through a targeted approach to its viability assessment. In so doing, it will play a key role in helping to ensure we get a more holistic distribution of house building across the whole region.
How will the Fund work?
Funding awards will be made to local authorities on a competitive basis, with an upper limit of £8m permissible for any one scheme. Local authorities, in their capacity as the strategic housing lead, will identify local development opportunities and work with key stakeholders to bring projects forward.
To be eligible for funding projects must deliver a minimum of 40 new homes, have local authority support, have planning permission in place or a clear route to achieving it, be able to complete due diligence including evidence of a viability gap, and be able to meet the deadline for full drawdown of funds.
The Housing Viability Gap Fund will open for applications within the next few weeks, and is likely to remain open until the end of the calendar year.
Officers across the 10 local authorities have been engaging with developers and land owners over the past few weeks to start working through the process in readiness to officially submit an application for the funds. CCR have engaged the support of a technical panel who will provide independent insight throughout the process, along with assisting in prioritising the sites and allocation of awards.
A key point to note is that all offers of investment will be made subject to ensuring maximum local benefits can be achieved.
For more details see: https://www.cardiffcapitalregion.wales/wp-content/uploads/2020/07/home-for-the-region-fact-sheet-2020.pdf
Nicola Somerville, CCR’s Head of Inclusive Growth and Business Development, said:
“The housing viability gap funding is an investment requirement that has been needed for some time to unlock allocated residential sites across the region to assist with the delivery new homes.
“But the funds are not only about delivering new houses. For us it is about the creation of new communities; engaging with new supply chains; and providing equality of opportunity for existing residents and new, and the ability to access good quality housing in area of their choice.
“The fund is a welcome contributor to a suite of financial products that we are developing to help the sector start building again.”
For further information on CCR City Deal priorities and post-Covid areas of focus see: https://www.cardiffcapitalregion.wales/wp-content/uploads/2020/05/10-priorities-powerpoint-web.pptx