Just 21% of government funds earmarked for affordable housing

September 14, 2017 / Isla MacFarlane
Just 21% of government funds earmarked for affordable housing

New analysis from CIH shows that government investment in the private market dwarfs support for affordable housing.

It is due to spend £32 billion (79% of its housing-related budget) on programmes such as help to buy up to 2020/21, and just £8 billion (21% of the budget) on programmes such as shared ownership and affordable homes.

The number of affordable homes funded by the government has plummeted by 50% between 2010/11 and 2016/17 from 56,000 to 28,000, according to figures from the Department for Communities and Local Government analysed in CIH’s UK Housing Review briefing. At the same time, the number of homes for the cheapest social rents built using government finance has collapsed, from 36,000 to just over 1,000.

The government no longer funds homes for social rent, which tend to be around 30-40% cheaper than market rent. Instead, funding is targeted towards homes for ‘affordable rent’, which can be up to 80% of market rents.

CIH argues that ministers must focus on affordability as well as building more homes to fix the country’s broken housing market.

Chief executive Terrie Alafat CBE said, “People on lower incomes are finding it increasingly difficult to make ends meet as they experience the impact of stagnant wages, rising inflation and welfare reform cuts. These factors and the shift towards “affordable rent” all mean that housing is becoming increasingly unaffordable in many parts of the country.

“We know we need to build more homes to get to grips with our national housing crisis – our UK Housing Review briefing highlights that annual supply remains at least 30,000 homes short of household growth. But it’s not just about building more homes; it’s about building more affordable homes for people on lower incomes. The government needs to take an urgent look at rebalancing the housing budget and investing more in genuinely affordable homes for rent.

“The November budget gives the government a golden opportunity to rebalance investment away from the private sector towards affordable housing without having to increase its overall commitment to housing.”

Tom Dacey, chief executive of Southern Housing Group, which is hosting the launch of the UK Housing Review briefing today, said, “In uncertain times, this important analysis clearly demonstrates the need for a comprehensive evidence-based housing policy that truly addresses the issue of affordability. It is great to see the real contribution that housing associations make to the lives of those in housing need highlighted. I welcome and support the work of the CIH and the important role that the UK Housing Review plays in providing a sound information basis for change.”

The briefing is being launched at Southern’s headquarters in Farringdon, London. CIH policy adviser John Perry, one of the authors of the briefing, said, “It was already striking that February’s housing white paper contained no discussion of public investment and now the issue looms large. If the extra work needed receives no or insufficient government support, costs will fall on landlords’ rental incomes and will inevitably displace other investment. If the government offers support but without adding to the national pot, there would be a similar effect but at national level.”

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