New beginning must bring new ideas to reach net zero

Policy announcements from the new government include the promise to build 1.5 million new homes in the next parliament, invest an additional £6.6bn to retrofit five million homes and establish a long-term rent settlement for social landlords.

With funding limited, Labour hopes the heavy lifting will be achieved by planning reform. We eagerly anticipate much-needed action in this area.

While perhaps watered down from earlier, loftier, ambitions, green issues are at the forefront of Labour policy. This is evidenced by the government’s plans to launch Great British Energy and make Britain a “clean-energy superpower”.

Considering the residential housing sector accounts for around 20 per cent of the UK’s total emissions, social housing and sustainability are inextricably linked. The social housing sector, therefore, will undoubtedly play an integral role in Labour’s green objectives.

Questions about where the money will come from remain. But with social housing representing an attractive long-term investment, coupled with the government’s promising policy goals, there are tentative signs that we may achieve future certainty for a sector that has a long track record of reliability and delivery.

Investing in the future of social housing

Investor appetite for affordable housing shows no signs of abating.

The sector’s development of new affordable housing for vulnerable families and the retrofitting of existing homes to reduce carbon emissions meet the environmental, social and governance elements that are key for investors.

But fundamentally, the sector has always proven itself to be incredibly financially resilient over the years. With well over £120bn of private debt channelled to housing associations since the late 1980s, the sector has maintained an impressive zero-loss record.

Angela Rayner, deputy prime minister and housing secretary, has spoken frequently about the need for private finance to contribute to the social housing funding puzzle.

The UK Infrastructure Bank’s (UKIB) allotted £12bn of capital and additional £10bn for government guarantee allowance is one example of an institution which Labour has up its sleeve to catalyse private investment.

The government has now bolstered the UKIB’s capability even further with the recent announcement that the state-backed bank will be allocated an additional £7.3bn through Labour’s National Wealth Fund to increase investment in large-scale green infrastructure projects.

THFC has been working closely with the UKIB over the past few months to create a funding scheme for social housing retrofit projects. We believe it will become an increasingly important institution to support the government’s green ambitions in the years to come.

But the UKIB is not alone in its ambitions to contribute to the affordable housing sector. Ultimately, a combination of creative funding solutions will help the sector thrive.

We all need to work hard to provide new solutions

We must recognise that the solutions of the past may not be the solutions of tomorrow! We hope that the current sense of new beginnings will materialise into new ideas for the sector where providers, funders and other stakeholders – including the government – can work more closely together for the greater good.

At THFC, we are committed to being a catalyst for these solutions and aim to bring people together as best we can, where we believe innovation can be unlocked through open partnerships.

Arun Poobalasingam, funding and marketing director, The Housing Finance Corporation