Government must better fund affordable homes to meet 300,000 target, says report

The government will not meet its 300,000 homes a year target unless it increases funding for affordable housing, according to a new report published by the National Housing Federation, the G15 and Homes for the North.

The report, produced by Savills, says that a slowing private market, weakening of the Help to Buy scheme and a potential Brexit downturn will deepen the housing shortfall and that directly funding housing associations will be critical to delivering more affordable homes.

While new home completions look set to reach 260,000 homes per year by 2021, the report shows that longer-term delivery remains decidedly uncertain.

The report argues that housebuilding in England may need to increase by up to a third between 2021 and 2025 to make up for the end of the current Help to Buy scheme and hit 300,000 homes a year.

The research also claims that increased government funding for affordable housing, which has fallen dramatically from 50% of the cost of building a home before the financial crash to just 12% today, will add to, and not displace, existing investment from the private sector.

As well as investing in affordable housing, the report calls for more joint ventures between the private sector, councils and housing associations, and increased use of long-term funding models such as the strategic partnerships rolled out by Homes England and the Greater London Authority. The research shows this would help ensure new funding adds to overall delivery.

Kate Henderson, chief executive of the National Housing Federation, said: ‘This research shows that relying on private developers to end the housing crisis is fatally flawed. Without Government investment in affordable housing, it just won’t be possible to build enough homes to ensure that everyone can have somewhere stable and affordable to live.

‘If we are serious about ending the housing crisis, the government must do the right thing and invest in affordable housing at the upcoming spending review. Doing nothing is simply not an option.’

Paul Hackett, chair of the G15 and chief executive of Optivo, added: ‘Increasing grant funding for affordable housing will reduce the market risk that housing associations are currently exposed to and help us build during downturns’

‘Our sector is reliant on a cross-subsidy model where the money we make from private housebuilding is reinvested into affordable homes. But this model is at full stretch and massively exposed to the market. Savills’ report shows that a new funding deal for affordable housing is now imperative if the Government wants to hit its housing targets over the next decade.’

In February, the Affordable Housing Commission (AHC)  issued a call for evidence around the current housing crisis.

The commission, which is chaired by Lord Best, is calling upon organisations and individuals to submit evidence that will lead to policy changes that help renters and those who want to get on the housing ladder.

AHC’s recent focus groups revealed first-time buyers and struggling renters think that the private rental sector is ‘broken’ and in need of radical change and many of those privately renting report they are currently paying 40% – 45% of their household income on rent.