Communities Secretary, Sajid Javid, has announced the details of the £2.3bn Housing Infrastructure Fund ("HIF"), which is aimed at unlocking housing delivery by either meeting the cost of infrastructure holding up the development of an allocated site or providing a "forward fund" to pay for strategic infrastructure which will help authorities in their plan formation process.

The HIF was first announced in the Chancellor's 2016 Autumn Statement as part of a total announced spend on housing of £7.2bn and is divided in two parts: a Marginal Viability Fund and a Forward Fund.

The Marginal Viability Fund is to provide the final or missing piece of infrastructure funding to get additional sites allocated or existing sites unblocked quickly. Bids for this funding are welcomed from single and lower tier local authorities and can be up to £10m. Examples proposals contemplated by HIF include:

  • Schemes lacking funding for a single piece of infrastructure which would unlock multiple housing sites - such as a link road which cannot be met by private (i.e. CIL, s106 contributions), local public funding or other funding sources.
  • Schemes involving a single site requiring multiple pieces of costly infrastructure - such as flood defences, extensive remedial works and public realm works - and which were not known at the time of purchase and were discovered following detailed site investigations.
  • Schemes which enable the delivery of a local plan site providing funding to overcome a number of barriers - such as site assembly and site access.

A Forward Fund for a small number of strategic and high-impact infrastructure projects. Bids from uppermost tier local authorities can be up to £250m. Example proposals contemplated by HIF include:

  • Schemes requiring interconnected infrastructure investment to unlock transformational growth to an existing town.
  • Schemes requiring multiple pieces of infrastructure to unlock urban extensions.
  • Schemes requiring a single piece of infrastructure to unlock multiple housing Sites.
  • A region, for example, which requires additional electricity capacity before any homes can be built – holding back small and large sites.

Local authorities can put in expressions of interest online by 28 September 2017.

Any bid must:

  • Require grant funding to deliver physical infrastructure and provide strong evidence that the infrastructure is necessary to unlock new homes and cannot be funded through another route.
  • Support delivery of an up to date plan or speed up getting one in place.
  • Have support locally.
  • Committed to spend the funding by 2020/21.

Comment

Developers will be pleased that additional funding is being provided to bring more sites forward especially smaller sites which have large infrastructure requirements. Developers need to note, however, that this fund is not to be used when developers are able to pay for the infrastructure themselves. Nor is it to be used to bail out developers who have simply overpaid for land.

The amount of any funding award granted to any local authority will also take account of predicted cash flows for the schemes, expected developer contributions and the size of grant needed. In certain circumstances, DCLG may ask developers to open their books to them, before any funding is awarded.

Local Authorities will need have up-to-date plans in place or have them submitted for examination in order to access the funding. It remains to be seen just how many schemes can be identified by the end of September, which have progressed to such an advanced stage and which require such financial assistance. On larger strategic sites - especially in their infancy - it may be difficult to commit to the spending by 2021.

More details about the HIF can be found here.