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What the Levelling Up agenda means for SME housebuilders

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Paragon Development Finance’s Deputy Managing Director, Neal Moy, assesses what the Levelling Up announcement could mean for SME housebuilders and property developers. 

The Government’s flagship Levelling Up White Paper launch was somewhat overshadowed by other events at Westminster, but its importance should not be underestimated. The Levelling Up goal was supposed to define Boris Johnson’s Premiership before the onset of Coronavirus, but its launch should set the political agenda for the rest of this decade.

Although considered by many to be light on detail, lacking fresh funding and, in a lot of instances, reheated policies previously announced, the ethos behind the initiative should be broadly welcomed by the housebuilding sector.  

The initiative’s overarching objective is to create a fairer spread of wealth and opportunity across the country, outside of London, and thus boost regional economies. The Government unveiled 12 ‘Levelling Up missions’ to help ‘left-behind’ areas catch up.

This brings new opportunities for housebuilders, particularly in locations targeted for regeneration.

The creation of ‘innovation accelerator’ centres in the likes of Greater Manchester, the West Midlands and Glasgow, in addition to the relocation of Government departments, for example, should create new demand for housing in these regions.

Key measures of interest to housebuilders and property developers include:

  • Creating new responsibilities for Homes England to oversee the regeneration of 20 towns and cities in a ‘King’s Cross style’ design, starting off with Wolverhampton and Sheffield. This will be backed by a £1.5 billion Brownfield Fund, first announced in the October 2021 Budget, to develop derelict brownfield sites.
  • Linked to this is the scrapping of the 80/20 rule, where 80% of Government funding for housing supply was directed towards ‘lowest affordability areas’. That meant that funding was weighted towards London and the South East. A total of seven mayoral combined authorities in the North and Midlands will now receive £120m to deliver 7,800 homes on disused brownfield land.
  • The launch of the Levelling Up Home Building Fund, a £1.5bn fund providing loans to support SME builders. The Government estimates this will deliver an additional 42,000 homes. This funding will be prioritised for homes in key Levelling Up regions.
  • A clearer pathway to homeownership and making the buying and selling process more seamless through improved provision of digital information. Details of this remain scant at present and further information should become available in future consultations.
  • The introduction of a Decent Homes Standard for the private rented sector. The Government will launch a consultation on what this could look like in the Spring.

What we didn’t have is any clearer guidance on the forthcoming planning reforms, which could arguably do more to unlock housebuilding potential than the Levelling Up agenda. Some in the sector have also expressed disappointment that the Government hasn’t moved quicker to address more urgent issues, such as labour supply or the cost and scarcity of materials.

The Levelling Up plan will be hotly debated by the property sector for months and years to come, particularly as further details emerge, and whilst it is not perfect and unable to please all, it is a step in the right direction that should create a more balanced economy.