The government has today announced £1.67bn funding for building social and affordable housing, and encouraging bids for extra borrowing powers, but both will be limited to areas with affordability pressures.
Housing and communities secretary James Brokenshire today announced plans to deliver about 23,000 affordable homes. This will include at least 12,500 homes for social rent in places the government has called “high cost areas”. These areas are defined as places where there is a difference of £50 more per week between average private sector rents and social sector rents.
The £1.67bn fund announced today is in addition to an extra £1.67bn funding set aside for London in March.
At the Conservative party conference last October prime minister Theresa May announced an extra £2bn for affordable and social housing. At the time, LGC reported how the Conservative party estimated the fund could deliver up to 25,000 homes for social rent, albeit based on an assumption that all of the money would be spent on providing social housing.
LGC also reported at the time how senior figures in the sector warned that local authorities were unlikely to bid for a share of the funding pot, which is for councils as well as housing associations, because it would not deliver enough homes at the scale required.
The Ministry of Housing, Communities & Local Government was asked by LGC why there is £330m less in today’s announcement compared to what was announced last October, and why the fund would deliver half the estimated number of homes for social rent.
LGC was told the £1.67bn comes from a total £9bn set aside for affordable housing projects through to 2022, including the extra £2bn announced last October, but did not provide a breakdown for how that has been divided up.
Meanwhile, councils are also being encouraged to bid for a share of £1bn extra borrowing to build homes, although this will again be limited to “areas of high affordability pressure”. The ministry said the £1bn “will be split equally between London and the rest of England”. LGC reported in January how Treasury plans showed only £880m had been earmarked to this programme as it had expected too few applicants from councils to raise the borrowing caps on their housing revenue accounts.
Responding to today’s announcement on the extra borrowing capacity, Local Government Association housing spokesman Martin Tett (Con) called it “a positive step in the right direction towards triggering the renaissance in council housebuilding that we urgently need to ensure more affordable, secure and stable homes for everyone”. However, he added that the government needed to “scrap the cap on council borrowing in every community across the country” in order to enable councils to help build the homes the country needs. Allowing councils to retain all of their right-to-buy receipts and giving them greater flexibility on the discounts offered to residents would also help, Cllr Tett said.
Areas with successful bids for affordable homes funding will be “notified throughout the year”, the ministry said. It added: “A list of successful councils who have had their borrowing caps increased will be announced in due course.”
Mr Brokenshire said: “The government has ambitious plans to fix the broken housing market and build the homes our communities need.
“Today’s announcement is a further milestone. It will secure the delivery of an additional 23,000 much-needed affordable homes as well as paving the way for a new generation of council houses.
“The majority of these new homes will be in high cost areas helping to ease the burden of rent on hard working families and delivering stronger communities.”