£11.5bn affordable homes pledge sparks cynical reaction – Autumn Budget

Chancellor Rishi Sunak has made a renewed pledge to build 180,000 affordable homes from £11.5bn of investment.

While this is being reported as a fresh development in some news outlets, this was originally announced by former housing minister Robert Jenrick in September last year.

Marc von Grundherr, director of Benham and Reeves, said: “The Chancellor has chosen to give the sector a bit of the cold shoulder with just a handful of headline figures, clearly believing his job is done having fuelled house prices to record highs via the recent stamp duty holiday.

“We need more homes to satisfy our ever-growing appetite for homeownership and an insignificant level of brownfield development is more of a slap in the face than it is an outstretched hand

“As for the £11.5bn pledged for 180,000 affordable homes, it’s a start, but hardly news given it was announced by Robert Jenrick a year ago.

It simply isn’t enough and with the government consistently failing to meet their previous housebuilding targets, it will be a miracle if we see a brick laid on brownfield land or a meaningful level of affordable homes delivered in our lifetime.”

Others called this announcement a smoke and mirrors exercise.

Sundeep Patel, director of sales at specialist lender Together, said: “At first glance, the Chancellor’s £11.5bn commitment to the development of more affordable housing, as part of the £24bn multi-year housing settlement, isn’t to be sniffed at. With an additional £1.8bn announced today, there are clearly attempts to solve the housing supply crisis.

“That said, we all know today is a bit of a smoke and mirrors game. It’s fair to challenge whether or not this funding will go far enough. Even with the national living wage set to increase, house prices and the strict mortgage lending criteria as set by the high street continues to limit the options available for aspiring first-time buyers.

“And while focussing on smaller brownfield sites for housing is a good first step, given the plethora of unused buildings, shopping centres and warehouses after the pandemic, it’s puzzling why the government is yet to seize opportunities here too.”

John Goodall, chief executive of Landbay, responded to the announcement with some cynicism.

He said: “In this Budget the Chancellor seems to have rolled back the years of austerity with yet another spending spree. We will need to see if tax receipts really do cover this if the Chancellor is to meet his goal that every day spending is to be paid for through taxation.

“The £11.5bn investment in 180,000 new affordable homes will be helpful – if they actually get built. The government is woefully short in its target to build 300,000 new homes a year so we need to see the detail of exactly how that is to be achieved.

“The investment relief to encourage businesses to adopt green technologies will be a welcome help limited company landlords to achieve the required EPC rating of C or above which will be required to rent their properties out from 2025”

Comments 1

  1. No wonder people are cynical, despite what they pledge the Government don’t actually build houses nor do many local authorities. Houses are built by developers all of whom have profit as motivation.
    Let’s face it affordable houses as built by developers are not affordable for many people as detailed the article “National living wage hike ‘doesn’t touch the sides’ of housing affordability crisis” in this same bulletin. Sadly for many owning a home of their own will remain a dream.
    £11.5b for 180,000 homes equates to about £64K per home. Give that money to developers and you can wave it goodbye and lower income families won’t get housed.
    Assuming we are talking about England the £11.5b could be divided amongst the 333 local authorities on condition it is used exclusively to build social housing for rent (not affordable rent at 80% of market value but social rent at 60% of market value). This would give each authority about £34.5M. Most authorities already own land they are doing nothing with so land is not a problem. This could be used for a mix of housing based on local need e.g. Flats for single people or couples starting out, family houses, and places for older people to cope with all stages of life. Assuming £64,000 as an average home cost on land you already own this would provide the 180,000 homes or 540 houses for each local authority. The houses would essentially be free for the local councils. Average social rent in the UK is about £400/month, average council tax would be about £100/month. Assuming the council keep this their income could be 540×400=£216,000/month. This could then be used to build another 3 homes per month and it could grow cumulatively as the number of homes increases until in 10 years’ time you could theoretically have 5000 homes or 1.6M in total over the 333 authorities if the policy were relentlessly pursued and inflationary rent rises could keep up with inflationary building costs. Of course Persimmon, Bellway, Wimpey etc. would hate this and would lobby against it.
    Social rents would allow some people to save for a deposit on their own place. I hate to say it, but the increased availability of social rented housing will push private rents down, more social housing also means less pressure on the private housing market and would temper house price inflation.

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