The Chancellor’s headline pledge of £39 billion in funding for affordable housing over the next decade has drawn a mixed response with concerns that the announcement lacks clarity and overlooks the critical role of first-time buyers in housing delivery.
The commitment, made in ththis week’s Spending Review, promises grants for local authorities, housing associations and private developers to boost affordable housing – predominantly for rent.
While the annualised £3.9 billion represents a headline uplift on 2023/24’s £2.1 billion allocation via Homes England, only £1.8 billion of it can be classed as new funding each year.
And long-term funding may offer some confidence to social landlords and developers, without a clear homeownership pathway or market-based support, questions remain over how this policy will translate into mortgage-ready demand.
LIMITED APPETITE
Francis Truss, Partner at Carter Jonas, says: “It’s welcome news in theory, but we need to understand whether this is truly additional to Spring’s announcement. The funding will help registered providers, but appetite for new stock is already limited while many focus on improving existing homes.”
Crucially, as yet, there was no revival of support for first-time buyers, such as Help to Buy, which many in the mortgage and housing sector hoped would return to bolster demand. Although the Mortgage Guarantee does appear to have been maintained.
VITAL ROLE
Truss adds: “There’s a noticeable absence of support for first-time buyers in the open market. Help to Buy played a vital role in driving delivery pre-Covid.”
The government’s parallel ambition to create twelve new towns was also light on housing detail.
While a financial transaction budget could, in theory, be used to crowd in private capital for infrastructure, no new commitment has been made.
Truss says: “None of the new towns will come forward during this Parliament,” said Truss, “but viability work is already happening – and without assumed grant support, delivery will be constrained.”
