Pension funds may help finance the construction of 300,000 new UK homes every year without spending an ‘extra penny’ of public money, a new industry report has found.
The report, carried out by the Future Homes Commission — which was set up by the Royal Institute of British Architects to build better quality homes — places local councils at the heart of the so-called ‘housing revolution.’ It recommends that new housing developments be kick-started by investing just a fraction of the £180 billion currently being held in pension funds by local councils.
Sir Merrick Cockell, Chairman of the Local Government Association said: “Councils are very keen to explore the opportunity to use pension funds to drive local economic growth. A few projects are already off the ground, however with a bit more support we could put even more of the schemes’ billions of pounds in collective assets to work.”
These pension funds may be used to create an independently managed £10 billion Local Housing Development Fund, rather than being invested in stocks and shares. They might draw in potential investors looking to develop on brownfield sites, the report said.
Big institutional players currently invest around one percent of their funds in housing, compared to an average of 15 percent in Northern Europe and 19 percent in the US. For each pound spent on construction projects like housing, another £2.54 aims to be created in the local economy. In order for UK housing spending to be in line with countries like France and Germany, an extra £35 billion may be need to invested in the economy.
Renting and shared ownership housing schemes might also be expanded, which may create ‘mixed-tenure communities’ and accommodate an estimated six million renters by 2016.
The report also suggested that the housing market may be radically changed through its proposed programme of building, which would provide “good sized rooms, storage, natural light, privacy, good sound insulation and the flexibility to accommodate futures needs.” said Rob Campbell, Chief Executive of Shelter, a national charity.
A new development in York, produced by the Joseph Rowntree Foundation, is one such example of innovative housing designs built with families and the local environment in mind. The 640-home structure goes beyond the requirements set out by government agencies, and was specifically designed using research to meet the needs of families, older people and those with disabilities.
Kathleen Kelly, Programme Manager for Place at the Joseph Rowntree Foundation said: “We need to build homes that will stand the test of time.The development at York demonstrates just how successful these new housing schemes can be.”
The full report may be found at the Future Homes Commission website.