Architects urge use of £10bn council pension funds to build 6m homes

http://www.guardian.co.uk/business/2012/oct/26/architects-council-pension-homes

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The retirement savings of more than four million council workers should be used to fuel a surge in house building in every city, town and village in Britain, an investigation concerning the quantity and quality of new homes has concluded.

Six million new homes, the equivalent of 600 new housing estates a year, should be built over the next 20 years using £10bn drawn from struggling local authority pension funds, according to the Future Homes Commission.

The commission, a national inquiry established by the Royal Institute of British Architects to investigate the housing crisis, says that investment should be pumped into high-quality designs to end the construction of what have been described as "rabbit hutch homes.

The programme would produce a better return than shares and bonds and would drive the wider economy back towards steady growth, the commission claims.

New national minimum standards for internal floor areas, storage, light and noise insulation are needed, the commission says, adding that the huge acceleration in house building would require land "in or close to virtually every city town and village".

The idea adds to growing interest in Whitehall and in town halls in using the assets of council pension funds, worth more than £120bn, to help Britain's economic recovery by bankrolling infrastructure projects.

However, a survey of 100 local authority funds published by the Smith Institute, a left-wing thinktank, found none of the funds was prepared to accept a lower return in exchange for achieving social benefit.

The greater Manchester pension fund last month announced a £25m investment in 240 new homes on sites presented by the council, in a scheme that is thought to be the first of its kind. But most funds have been wary.

Ian Greenwood, chairman of the Local Authority Pension Fund forum, said: "This is people's pensions we are talking about, and if this goes wrong and the councils are called on to provide more money, it will ultimately affect retirement incomes."

The commission was formed in response to growing concern that ministers in the last two governments had presided over a decline in house building, apparently powerless to increase construction.

Last year 113,340 homes were built in Britain, less than at any time since 1923, despite 230,000 new households being formed each year.

There is evidence of widespread dissatisfaction among homeowners over design standards. A quarter of buyers are refusing to buy new-built homes, mainly because they are too small, an Ipsos Mori poll has found.

New homes in Britain are the smallest in Europe with one bed-flats 20% smaller than equivalent flats in Germany and three-bed houses 16% smaller.

The factors causing most dissatisfaction are the lack of storage space, an absence of outdoor areas, the internal layouts and finishes, and the size of rooms, the commission says.

The commission took evidence from 140 experts and organisations including councils, Barratt Homes, NatWest bank, the Council for the Protection of Rural England, and the Royal Town Planning Institute.

Half of the homes that need to be built every year should be for sale, while the others 150,000 should be for rent, says the report.

Sir John Banham, a former chairman of Whitbread, Kingfisher and Tarmac, said: "I don't think people have comprehended the scale of this. We have got used to moaning about the scale of the crisis that we haven't realised that this represents a huge opportunity."

The commission found that only 1% of institutional property investments were linked to homes in the UK, compared to the equivalent for the Netherlands of 47%, while France notched up 15% and Germany 13%.

The report claims that further investment is undermined by the lack of in-house expertise. It believes the largest 15 funds could pool 15% of their assets (at least £10bn) in an independently managed "local housing development fund" which would finance the construction of swathes of new housing for rent and sale.

The commission argues that a greater emphasis on well-designed housing would reduce local "nimby" opposition and cites a 2011 Policy Exchange survey that found 69% of people saying the quality of homes built in their area was more important than the quantity.

Attempts to kickstart housebuilding in Britain have been numerous but unsuccessful. The commission report identifies inter-connected issues that hold back house building, ranging from a lack of mortgage finance for buyers and British pension funds' reluctance to invest in property, to "onerous" planning conditions on house builders, and concerns about the design quality of new homes that puts off buyers and leads to planning objections from communities.

According to Peter Williams, director of the Cambridge centre for housing policy, the "sponge effect", whereby homes are used more intensively, for example, with more adults living with their parents, means the real crisis could be deferred a couple of years. "If we don't turn the corner in three to four years, we are going to see a sharp rise in levels of homelessness," he said.

Designs on a home

The award-winning design of Mike Hammerton's newly built £300,000 home in Osbaldwick near York has eased some of the pressures of modern family life.

The 51-year-old civil servant moved with his wife, Lorraine, son Chad, 14, and 20-year-old daughter, Claire, from a 1950s semi which they had outgrown.

"We were getting on top of each other," Hammerton says. "We felt we needed the kids to have more privacy and this new development has a dining room on one floor and a living room on another which helps.

"There are three bathrooms too so if our daughter can't afford a house she can have her own floor here. We have to look to the future. There are big rooms, plenty of storage and high ceilings.

"If we become disabled we can fit a lift shaft and the rooms are made so you can get a wheelchair in and out. They have thought of all that."

The three-bedroom home in the Derwenthorpe development was built by David Wilson Homes for the Joseph Rowntree Housing Trust as part of what will eventually be a 540-home development.

In a contrasting case, Sarah Althorpe, 35, moved into a new four-bedroom house in Corby in 2007 and was left very dissatisfied.

The design of the house, which, she says, has thin walls and bedrooms too small to use, leads her to describe it as "slap and dash".

She moved in with her partner, Aaron, daughter Olivia, two, and son Reece, six. "There were damp walls that they'd covered with paint, window panes were scratched, and the front door dropped on its hinges."

It was difficult to get the builders, a British residential properly developer, to rectify the problems, she says.

There were design faults too. "The only storage is under the stairs so everything gets shoved in there. The smallest bedroom you can barely fit a single bed in. We had my daughter's nursery in there but she had no room to play so we moved her out.

"My son's bedroom is above the garage and is cold in winter and summer. The walls are paper thin and you can hear the shower upstairs when you are in the downstairs living room."