Enterprise zones can accelerate house building, one of the UK’s most senior housing figures has told agendaNi. Mark Henderson is Chief Executive of Home Group, the fourth largest housing provider at a national level and was speaking at the Northern Ireland Housing Conference.
In the current planning system, permission for housing is granted sporadically e.g. 25 in one location and 100 in another. He terms his alternative as a housing zone.
“You don’t get necessarily houses in the right place to support people getting into jobs,” Henderson remarks. “Let’s have a system whereby you notionally allocate housing demand. Put in place a fairly competitive system that brings local authorities, housing associations [and] developers together to bid for housing in an enterprise zone.”
Local authorities would have stronger compulsory purchase order powers, thus allowing them to acquire land without paying upfront. The land would be put into the development programme for the area. With profits rising as the project develops, the landowner would be reimbursed at a later date.
Using a simplified housing design guide right at the start can also remove the need for seeking planning permission e.g. if a developer agrees to build 25,000 homes to that specification. Infrastructure funds could be merged so that they support housing and the economy at the same time rather than the two sectors operating independently of each other.
“This is not about using new cash,” Henderson adds. “This is about using existing things more effectively in the right place in the right time, and actually just by doing that, you can have huge savings in cost in delivering new homes and jobs.”
Enterprise zones offer developers incentives such as low rates and fast-tracked planning permission. They were introduced by the Thatcher Government and the last one in Northern Ireland expired in 1993. The zones have been re-introduced in Britain by the Coalition Government and the legislation to set up them up exists in Northern Ireland. A pilot is planned in Coleraine.
The DUP and Sinn Féin had planned to introduce a similar status – economically significant planning zones – through their Planning Bill amendments but the Bill was suspended last October. Simon Hamilton has indicated that he will move ahead with enterprise zones as he has the power to lower rates in those areas.
Despite his support for this Conservative Party innovation, Henderson is an ardent opponent of welfare reform. He comments: “The bedroom tax has increased voids and arrears – not as much as we expected [as] we’ve been really tight on managing that.”
He’s more wary about the next wave – universal credit – and casts doubts on its government-led IT system: “Already you can see this thing collapsing. What kind of chaos will that leave us with?”
Henderson adds that cutting housing benefit for under-25s will not release the savings that the Coalition Government wants to achieve. That said, he adds: “The effects now are manageable. Like any good, tight commercial organisation that holds true to its values, we can get by. It’s the uncertainty of what might happen or when it might happen that really causes concern.”
Flexibility, he explains, is an important factor in housing provision. An English affordable rent is considered to be 80 per cent of the market value. In Cumbria, the market rent is “much the same as affordable rent” but there is a considerable gap between the two rent levels in the cities.
“We were bidding on a scheme in London that, if we applied affordable rent, it would have been £360 a week for somebody,” Henderson adds. “That’s not affordable – I can’t afford that – so a one-size-fits-all approach just doesn’t work.”
He would prefer a blended rate which would, for example, start at 10 per cent of market rate for new graduates who need to go to cities for their first job. This could potentially “staircase up” to full market rent. The housing sector could also cut a deal with the Government, allowing it to take all the housing benefit grant in return for giving back a percentage of rent – as long as there was “the flexibility to suit different customer types.”
Home Group was founded as the North Eastern Housing Association in 1935. Nowadays, the group houses 120,000 people in 55,000 homes across England, Scotland and Wales.
Henderson is also excited about his organisation “taking the next step” over the next few years. The group plans to invest £30 million in ICT and he’s looking forward to his workforce becoming more mobile. This means “getting as many people as possible to get in front of customers on their terms rather than forcing people to come to offices.” Delivering this involved cultural change and a move towards working from the car or indeed from home.