Prime minister Andy Burnham’s plans to accelerate social housing delivery could struggle to match his earlier ambitions after the government confirmed how the first £10bn of funding will be allocated.
The government plans to spend the money on 70,000 affordable homes outside London. Around 60% will be for social rent, with the remainder including shared ownership and sheltered housing.
The funding forms part of the 10-year Affordable Homes Programme.
Burnham had previously called for the programme’s £39bn budget to focus entirely on council housing. During his campaign to become MP for Makerfield, he argued that the money should be “dedicated to council homes”.
The latest plans therefore represent a shift from that position.
London will receive a further £6bn, although the government will allocate that funding at a later date.
Ministers say the programme will support their target of delivering 300,000 affordable homes over the next decade.
The government will distribute the initial funding through 33 strategic partners. They will receive funding commitments covering the next 10 years.
Three local councils will participate directly in the programme for the first time.
Burnham has previously pledged to deliver “the biggest council housebuilding programme since the postwar period”.
New Economics Foundation (NEF) has responded to the Affordable Homes Programme by stating that the PM’s plans for social housing will struggle to meet his ambition.
Molly Harris, senior researcher at the NEF, said: “This government is signalling their serious intent in tackling the housing crisis. But without a greater commitment to funding and with councils only making up one tenth of delivery partners, the prime minister will struggle to fulfil his ambition to deliver the largest post-war council housebuilding programme.
“A secure, affordable home is the foundation for a good life. With over a million households on council house waiting lists, a mass social housebuilding programme has never been more essential.Today’s announcement should be a first step to something bigger: grant funding at a serious scale to build the council homes that we desperately need.”
The government’s £39bn fund for social and affordable homes is welcome, but grants alone do not build houses, say leading audit, tax and business advisory firm, Blick Rothenberg.
Mark Cunningham, a partner at the firm, said: “The government has allocated almost £10bn of its £39bn fund to organisations it has identified as delivery partners, who have already demonstrated development capability and substantial pipelines. But grants alone don’t build houses.
“The main question is if planning, infrastructure, construction capacity and development viability allows these schemes to progress efficiently and result in the 70,000 social and affordable homes being completed over the 10-year period.”
“Successful delivery will rely on housing associations, developers, investors, lenders and contractors working together to bring schemes forward at the required pace and scale,” Cunningham continued.
He added: “The relatively small proportion allocated directly to councils (392.2m – roughly 4%) suggests the government has prioritised organisations with established delivery structures who, it is expected, can realistically convert the funds into completed homes.”
Marcus Dixon, UK head of living and residential research at JLL, also responded to the government’s announcement outlining where more than 70,000 social and affordable homes will be built across England over the next 10 years.
He said: “More clarity on funding for affordable housing is always welcome. However, with the £10bn coming from the existing £39bn allocation, this is not new money but rather the allocation of an already committed funding pot. Some may be disappointed that more homes will not be delivered at social rent levels. But the reality is that social rented homes cost more to deliver and, at 100% social rent, ambitions around overall delivery numbers do not align with the funding available. This means the 60% allocation may be a more realistic route to increasing supply than delivering all homes at social rent, at least in the short term.
“There’s a clear ambition to build more homes, reduce waiting lists and get households out of inappropriate temporary accommodation, all of which should be applauded. However, delivering these homes requires a fully functioning housing market. Viability challenges, a shrinking construction workforce and sluggish sales rates for new developments, particularly in London where housing need is most acute, will constrain delivery, whether affordable housing or private sale.”
RICS has welcomed the UK government’s commitment to expanding the supply of social and affordable housing
RICS director of external affairs, Julian Francis, said: “The Royal Institution of Chartered Surveyors (RICS) welcomes the UK government’s commitment to expanding the supply of social and affordable housing through the first major allocation from its £39bn Social and Affordable Homes Programme.
“The investment to strengthen local authority capacity, combined with the expansion of the Pathways to Planning programme into specialist roles including surveying and construction project management, is particularly positive. Delivering homes at scale requires not only funding but also sufficient professional skills and expertise across planning, valuation, development, construction, and asset management.
“As more responsibility for housing investment is devolved to local leaders and authorities, it is crucial that funding is matched by robust capacity. RICS and its members will continue to aid the UK Government, Homes England and local partners in turning this long-term investment into high-quality, sustainable and affordable homes.”
