Review finds Homes England ‘right vehicle’ to deliver housing but recommends better co-operation with government

Lead reviewer Mr Poulter said in his report: “It has been a privilege and very interesting to lead this review of Homes England for the past six months. It quickly became clear to me that the government and Homes England play a crucial role in stimulating and supporting housebuilding, regeneration and placemaking in challenging areas of the market.

“I heard a lot of very positive feedback on Homes England from housing associations, house builders, local authorities, developers and investors. Naturally there were also suggestions about how things could be done better. This report therefore makes recommendations for improvements from both Homes England and the Department for Levelling Up, Housing and Communities (DLUHC).”

He added: “However, the recommendations should not distract anyone from the fact that both organisations are full of talented and hardworking people who believe passionately in their mission to make things better for communities, tenants, homeowners and the sector that serves them.

“Key conclusions that I highlight here are that Homes England is the right vehicle for delivering housing supply, regeneration and placemaking; the need to be clear on priorities; the case for taking more risk to deliver more benefits; the need for longer-term and more flexible funding arrangements from government to support delivery; and the expectation from local authorities that Homes England will work even more closely with them locally to plan investment and delivery that responds to the needs in their area.

“There are also recommendations about how the department and Homes England can work better together with a co-ordinated approach to each place around the country.”

The recommendations

The report made several recommendations for DLUHC and Homes England.

Recommendations for DLUHC

It said that DLUHC should determine the balance between the funding for regeneration and placemaking in its funding programmes, including ‘priority places’. Government should also confirm agreement with the agency’s chosen priority places for regeneration and placemaking, and agree overall criteria for how places are prioritised.

The department was recommended to authorise Homes England to take more risk to deliver more impact; to make its programmes easily accessible to small and medium-sized enterprises; and to be “even bolder” by playing the role of master developer on more large regeneration and placemaking schemes.

The review said that DLUHC should transfer responsibilities for the Help to Buy scheme and the Building Safety Programme out of Homes England in the medium term, so that it can “concentrate fully” on its core mission and new responsibilities for regeneration and places.

It added that DLUHC should propose changes to Homes England’s funding arrangements in the next spending review to allow it to commit to large, long-term schemes; and grant it larger delegations for grant and loans.

This would mean that DLUHC would propose to simplify the range of funds for housing delivery and levelling up to have “fewer and larger funds” with “more flexibility and longer availability periods”. 

The review added: “There should also be a five-year rolling funding commitment for [the Affordable Homes Programme], and there should no longer be annual net budgets for land funds.

“Once Homes England has prepared an updated risk framework, HM Treasury and DLUHC should also agree an appropriate delegated authority to DLUHC and Homes England for equity investment, and increased delegations for grants and loans.”

More flexibility into future programmes would allow an effective response when market conditions change, the review said.

On equity capital in particular, the review said: “There is a particular case for considering the delegation for equity. Given the economic environment, it is likely that there is going to be increased demand for the agency to deploy equity rather than loans. It also needs to be able to consider grant, loans, and equity for the same scheme. Having very different delegation limits for the different types of funding reduces flexibility.”

Finally, the review said that DLUHC should set budgets and efficiency targets for Homes England that take account of the increase in its responsibilities for regeneration and placemaking, other new priorities being set by the government, its digital transformation programme and investment in systems, and the net reduction in costs that this will achieve.

Recommendations for Homes England

Looking at the agency, the review made three key recommendations. It said that Homes England should define clear objectives and outcome measures for each priority place in discussion with local partners, and agree them with the government.

It said the agency should also develop its operating model to focus its work as much on places as on national funding programmes, build closer relationships with priority local authorities, and show how resources are being deployed around the country.

Homes England was also recommended to improve its systems and governance to strengthen performance management, forecasting and impact evaluations.

Welcoming the review

Homes England and housing secretary Michael Gove welcomed the report.

Mr Gove said: “Today’s independent report shows Homes England is the right vehicle to deliver more affordable homes and support our plans to regenerate towns and cities across the country.

“I welcome the report and its recommendations and we will work closely with Homes England to finalise an implementation plan. This builds on our long-term plan for housing to further strengthen Homes England’s record of delivery so we can deliver more homes that are affordable, beautiful, and built in the right places.”

Peter Freeman, chair of Homes England, said: “I welcome such positive endorsement of the agency’s efficiency and governance alongside recommendations for both improvement and for developing our mandate and structure. 

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“Much of this work is already happening. Other recommendations will require changes in partnership with the DLUHC and Treasury, but if progressed could be transformational in how we deliver new homes and create thriving places. 

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“While there is much to celebrate, we are steadfast in our resolve to always improve, ensuring that we are effective and efficient in driving forward the country’s housing and regeneration ambitions.” 

Peter Denton, chief executive of Homes England, said: “I’m proud the review acknowledges the hard work, talent and passion of our staff and partners throughout a challenging time for the market and sector. 

“The report makes clear we have a crucial role to play in catalysing local regeneration and housing delivery by using our land, powers, funding and expertise – reducing risk to drive investment and harnessing the potential of private and public sector skills, capital and partnerships. 

“Bringing all of these elements together means we are greater than the sum of our parts as a collective force to deliver effective change.”