In January David Cameron announced a new Government initiative – direct commissioning of thousands of new homes to be built on publicly owned land.
The project forms part of the Government’s latest efforts to deliver on its pledge to build 200,000 new homes over the next five years. The first wave comprises up to 13,000 homes, up to 40% of which will be discounted ‘starter homes’ aimed at first time buyers under the age of 40 and sold for at least a 20% discount on the market value.
Construction is intended to start later this year on brownfield sites at five locations across the south of England. Direct commissioning has not been used on this scale since the commencement of the Docklands regeneration in the early 1980s.
The top eight housebuilders currently provide 50% of new homes in England. It is hoped that this new approach to direct commissioning will enable homes to be built at a faster rate on Government sites where planning permission is already in place. It will also open doors for smaller building firms who are unable to take on bigger projects because of a lack of resource and access to land.
Communities Secretary Greg Clark said that the “ … radical new approach will mean the Government will directly commission small and up-and-coming companies to build thousands of new homes on sites right across the country.”
A £1.2bn starter home fund has also been launched to prepare brownfield sites for fast-track residential redevelopment. This is intended to see the creation of at least 30,000 new starter homes and up to 30,000 market homes on 500 new sites by 2020.
The Government says that the new investment will kick-start regeneration and renovate disused urban sites, enabling builders to commence work without delay.
Whilst the scheme sounds like a great opportunity for smaller building firms in theory, there have been few details provided by the Government as to how the scheme will work in practice. Many questions remain to be answered, for example, how will contracts be structured? What criteria must be met by builders who apply for such schemes?
It remains to be seen whether smaller building companies will really benefit, or whether larger housebuilders, who are inevitably better resourced to deal with the complexities of these types of developments, will simply mop-up this new stream of work.
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