Funding intended as a ’bridge’ between current programme and future grant to be announced in June
Rachel Reeves has announced an extra £2bn in grant funding for the development of affordable housing.
The chancellor said the latest funding top-up will deliver 18,000 new homes for affordable tenures with the schemes due to complete by the end of the parliament, thereby contributing to the government’s 1.5 million homes target.
The £2bn will be available on the same terms as the 2021-2026 Affordable Homes Programme but providers will have until March 2027 to start construction on the homes.
The government said the funding is intended to be a “down payment” or “bridge” between the current £11.5bn 2021-2026 programme and a new grant funding scheme, the details of which are due to be announced on 11 June in the spending review.
The latest £2bn funding follows two top-ups to the current AHP programme, of £500m and £300m announced over the past few months.
Reacting to the announcement Gavin Smart, chief executive of the Chartered Institute of Housing, said: “This investment signals recognition from government that bold action is needed to boost supply and ensure that everyone has access to a decent, safe, and secure home. It is vital that it forms part of a longer-term, strategic approach to delivering the scale of truly affordable social rented housing needed.
“We are very pleased that the government sees this new funding as a ‘down payment’ ahead of more long term investment later in the year.”
What the sector thinks
Gavin Smart, chief executive of the Chartered Institute of Housing, said: “This investment signals recognition from government that bold action is needed to boost supply and ensure that everyone has access to a decent, safe, and secure home. It is vital that it forms part of a longer-term, strategic approach to delivering the scale of truly affordable social rented housing needed.
“We are very pleased that the government sees this new funding as a “down payment” ahead of more long term investment later in the year.”
Kate Henderson, chief executive of the National Housing Federation, said: “This funding top-up is hugely welcome and demonstrates the government’s commitment to delivering genuinely affordable, social housing for families in need across the country. The additional £2 billion will prevent a cliff edge in delivery of new homes, ahead of the next funding programme being announced.”
David Thomas, chief executive at Barratt Redrow, said: “To increase construction activity and build the homes the UK desperately needs, we need support for demand across all tenures. As well as providing more much-needed affordable homes, this welcome investment will help unlock mixed-tenure developments and to create jobs and economic growth across the country.”
Stephen Teagle, chair of The Housing Forum and chief executive, Vistry Partnerships, said: “This additional funding signals that the government is listening to the sector and reaffirms its strong commitment to accelerating the delivery of much-needed affordable housing while driving economic growth. It represents an unprecedented intervention which, when paired with sustained, long-term investment, will be instrumental in meeting the growing demand for affordable homes.”
Paul Rickard, chief executive, Pocket Living, said: “Tackling the viability issues and getting housing schemes from the point of planning consent to a start on site remains one of the greatest challenges that the house building industry faces.
“This is most acute for SME housebuilders who need a rapid turnaround of their developments to simply survive and stay in business. While this is welcome news, we await further details on the allocation between London and the rest of England, especially given the crisis in housing starts in the capital and the shortage of affordable homes.”
Ian Fletcher, director of policy (real estate), at the British Property Federation, said: “While an additional £2bn in funding to deliver 18,000 extra affordable homes is very welcome, the scale of the challenge remains immense and delivery in many cases will remain closely tied to that of the wider housing market.
”That’s why it is vital that the government adopts a multi-tenure approach to delivery and focuses on areas like build-to-rent, supporting forms of intermediate housing such as discount market rent, which are not dependent upon sales absorption rates. Predictable long-term decisions on funding and social housing rents can also help simulate more investment, including private sector investment, in affordable housing.”
Andy Hulme, group chief executive of Hyde Group, said: “This additional funding is extremely significant for the sector as the government aims to get more spades in the ground.
“Combined with the extra £800m announced over the past six months this government has now backed the Affordable Homes Programme with almost £3bn of extra funding over the past six months. We welcome this top-up for the Affordable Homes Programme, which we hope is a downpayment on future funding, as it comes at a time when new housing starts in England have been falling year-on-year.
“Now we need the government to agree to an expanded long-term Affordable Homes Programme at the spending review, and an ambitious 10-year, inflation-linked settlement for social rents and includes the reintroduction and acceleration of rent convergence.”
Paul Dolan, chief executive of Riverside, said: “This additional £2bn of top-up funding for the Affordable Homes Programme is excellent news and a strong indication of the government’s intention to deliver the biggest boost to social and affordable housing in a generation.
“The over subscription of the previous £850m top up funding underlines the strong demand from registered providers and housebuilders to deliver more affordable homes. Today’s announcement demonstrates that we have a Government that is continuing to listen to the market and will provide more funding when it is needed.”
“While we welcome this additional money, it is even more important for the sector in supporting the government’s ambitious housing strategy, to receive significant, long-term sustainable funding when details of the new Affordable Homes Programme are released as part of the Spending Review in June.”
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