Social housebuilding starts set to hit 67,000 in next two years

The Housing Corporation will fund up to 67,000 homes in the first two years of its new tougher approach to development – up 16,500 on the previous two years.

Corporation sources said the construction figure for 2004/6 showed the quango was on course to deliver the "step change" in supply called for by deputy prime minister John Prescott.

One source said: "We will fund between 65,000 and 67,000 homes across the two years.

"We are now driving a harder bargain in our negotiations with associations and developers to get more housing for our money. This as figures are coming through showing we will complete about 20,000 homes in 2003/4."

The corporation submitted its proposal for £3.3bn of funding to cover the two years last week. It is now waiting for the go-ahead from the ODPM.

The proposal also includes the final list of the corporation's development partners – between 60-70 associations that will each be contracted to build a certain number of homes in 2004/6 to give the 67,000 total.

The corporation will also run its traditional investment programme – the approved development programme – which funds individual schemes, but it is understood that Neil Hadden, the corporation's assistant chief executive for investment, hopes to phase this out to concentrate on the new partnerships.

The 67,000 total would – if split evenly between the two years – see 33,500 homes funded each year. This would dwarf the 28,500 funded by the corporation in 2003/4, but still fall short of the 45,000 demanded by economist Kate Barker in her interim report into housing supply.

ODPM figures show that just 11,125 homes were started by housing associations in 2002/3 – down 143 from the previous year – and 13,330 were completed – down from 14,326 in 2001/2.