Democracy & Devolution - How housing in the North East is changing

Julia Thomson, Partner in the Residential team based in Womble Bond Dickinson's (WBD) Newcastle office, shares an update on the exciting times for housing in the North East following the recent devolution deal and new Mayoral appointment.

The current picture

The North East is poised for a bright housing future following the recent deeper devolution deal combined with its cost advantage compared to elsewhere in the country. However, housing in the region is still facing its own set of challenges with rising rates of homelessness, growing social housing waiting lists and the supply of affordable housing.

In the annual autumn 2023 rough sleeper count the North East saw a 46% increase in the number of people estimated to be sleeping rough on a single night compared to 2022.

According to Shelter the number of households on social housing waiting lists across the North East went up from 50,453 in 2022, to 75,985 in 2023, an increase of almost 51% which is disproportionately higher than elsewhere in England.

In Sunderland, the social housing waitlist increased from 1,483 in 2022 to 9,237 in 2023, according to the Local Democracy Reporting Service. This is a drastic and unsustainable increase of 523%. Newcastle’s waiting list nearly doubled from 6,149 to 12,072.

There are many factors behind these alarming stats, but the cost of living crisis has played a huge part with many people no longer able to afford the exorbitant rent fees in the private sector or to get on the property ladder.

This problem is compounded by the dwindling supply of social houses to rent throughout England . Between 2022 and 2023 there was a net loss of 11,700 social rent homes because of insufficient social housebuilding, loss of homes through Right to Buy sales, loss of homes through demolition and loss of homes through converting from social rent to affordable rent.

(Image: Womble Bond Dickinson)

What is the devolution deal? How can this help?

Last year the regions' local authorities of County Durham, Gateshead, Newcastle, North Tyneside, Northumberland, South Tyneside, and Sunderland signed a landmark devolution deal with the government.

This brought the seven local authorities together into the North East Combined Authority (NECA  ) unlocking access to new funding of more than £4.2bn of additional investment over 30 years and significant powers. The key aim for devolution is to restore power to the North East so we do not have to ask permission from the government  to take action. By keeping the decision making closer to home resources can be better allocated to what matters.

This is great news for housing in the North East. NECA will receive a consolidated single pot of housing and regeneration funding, meaning support can be targeted to the areas that need it most, improving the region as a whole.

While NECA will continue to work closely with government bodies - they will enter into a Strategic Place Partnership with Homes England to facilitate the delivery of thousands of new homes and revitalised places.

From 2026, it will be able to set the overall strategic direction, objectives and local leadership for the deployment of the Affordable Homes Programme across the region, working closely with Homes England and The Department for Levelling Up, Housing and Communities (DLUHC) to deliver this.

Establishing a Homelessness Prevention Blueprint will also be NECA's responsibility, working with the government to innovate homelessness prevention, with particular attention being paid to those with the most complex and multiple needs.

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What does Kim McGuinness offer?

On 2 May 2024 the region's voters elected Kim McGuinness as the first North East Mayor. Kim will  spearhead this drive for development with her manifesto making some strong promises to fix the flaws that blemish the North East housing sector, in which she vow to address the slipping standards of social housing, arguing that social housing should be the gold standard and this can be achieved through working with councils and social landlords.

The newly-elected Mayor proposes to do this by retrofitting more homes to make them cheaper and warmer. She aims to ensure the houses most in need of retrofitting are tackled first, prioritising improvement works for families suffering hardship, individuals with disabilities and retried households struggling with bills.

The former Northumbria Police and Crime Commissioner also recognises the demand for more, especially social, housing. A barrier to providing these homes comes from a lack of suitable land being available and the Mayor says she will support the local councils to ensure the land required is ready and available.

What exciting projects illustrate this?

We are lucky that there are a plethora of exiting projects under way that illustrate the ambition to reshape the North East's economy, many with a particular focus on regeneration which is great for the housing sector.

Riverside Sunderland is one of the UK’s most ambitious regeneration projects. First proposed by Sunderland City Council in 2019, the project will transform the city centre and inject new life into the former Vaux site, Sheepfolds, Farringdon Row and Galley’s Gill. The project is set to create 1,000 homes, 1 million square feet of offices and workspace for 8,000-10,000 quality jobs, with the inclusion of beautiful parks and public spaces to create a memorable landscape setting for Riverside Sunderland.

The project is set to include both houses and apartments to rent or buy, giving the people of Sunderland and the wider region the opportunity to be part of the city-living experience The inclusive community set to be created will provide a great place to live for people of all ages, for families, key workers and young people.

The new homes created will also double the population of the city centre from 2,500 to 5,000, with hopes Riverside Sunderland will dramatically increase the daytime population, making the city a place to be enjoyed by locals and visitors. New civic and cultural amenities, parks, open spaces and allotments, as well as community facilities and meeting places, will be included as well.

Riverside Sunderland will also play a huge role in Sunderland City Council's ambitious plan to achieve carbon-neutral status. Homes will be built with energy efficiency in mind using modern methods of construction, promoting the use of renewables and the smart energy network.

Elsewhere in the region, the Gateshead Regeneration Partnership, formed in 2012, pledges to build more than 2400 homes over the next two decades through the partnership between Vistry Partnerships, Home Group and Gateshead Council.

The initiative includes the regeneration of 19 separate sites, building homes for private sale, shared ownership and affordable rent alongside community facilities and public spaces. The initiative means the unused brownfield sites owned by the council are being utilised and a total of 309 homes at Birtley, Deckham and Bensham have already been delivered. There will also be new developments at Kelvin Grove (off Saltwell Road), the former Rowlands Gill primary school, and Whitehills Drive (Windy Nook), behind the Queen Elizabeth Hospital.

Not only does this initiative work towards providing the housing the region desperately needs but it is boosting the local economy. A quarter of the sub-contracting and supply work was awarded to Gateshead-based businesses during the first two phases and a quarter of all the new jobs created by the scheme are filled by local people. So far, 11 previously unemployed people have been taken on, three apprentices employed and £1.5 million spent with local suppliers.

In November 2023, as part of a broader strategy to help regenerate Gateshead town centre and its surrounding areas, the council began work on a brand-new housing development on the site of the historic former Freight Depot railway sidings. Once completed, it is expected 165 of the new homes will be available for sale, 25 to be offered for affordable rent, with the remaining 80 available for private rent.

The development will also be the first housing scheme to be connected to Gateshead's District Heating Network - a new, low carbon energy centre which generates both heat and power locally, via a new 5km underground network of heat pipes. This will provide low-carbon energy to homes at prices below market rate, utilising sustainable sources.

(Image: Womble Bond Dickinson)

WBD at the forefront

With lots already happening in the region – and so much more to come – our team of real estate lawyers at Womble Bond Dickinson is well placed to provide practical, targeted advice and support to our real estate clients.

In 2022, we advised Karbon Homes Limited in connection with £250m development Seaham Garden Village ), which Karbon describes as an innovative and sustainable new community located near the breath-taking views and vibrant wildlife havens of Durham's heritage coast.

Over the next ten years, the Garden Village will establish 1,500 homes, with 750 of them being highly energy efficient and delivered by Karbon for a range of affordable tenures, including affordable rent, shared ownership and rent to buy.

Additionally, a primary school, an innovation centre, and a health and wellbeing centre will be created, fostering a sense of community spirit and sustainable living on a daily basis.