Recent budget announcements demonstrate a commitment to support the construction industry, but will we ever hit the 300,000 homes per year target?

Posted by Derek Mason

4th August 2020

“Build, build, build” said prime minister Boris Johnson, a month ago, as he announced £5billion of spending on construction. This cash will include spending on hospitals, schools, roads and more.

In the speech he gave to announce this, he said, “This is a government that is wholly committed not just to defeating coronavirus but to using this crisis finally to tackle this country’s great unresolved challenges of the last three decades.

“To build the homes, to fix the NHS, to tackle the skills crisis, to mend the indefensible gap in opportunity and productivity and connectivity between the regions of the UK. To unite and level up. To that end we will build, build, build. Build back better, build back greener, build back faster and to do that at the pace that this moment requires.”

Having said that the government is committed to building homes, it’s not clear how much of the £5bn cash will go towards housing construction. With large chunks already allocated, including £1.5bn for hospitals, it’s clearly not enough to tackle the housing shortage in the UK.

But, this does come on top of the extension of the Affordable Homes Programme, which had £3billion added to the pot back in March, just before the World Health Organization declared we were in the midst of a pandemic.
The Affordable Homes Programme is a joint-funding exercise between the government and private investors. The government made £4.7 billion of capital available over the five years to 2021, to help build at least 135,000 Help to Buy and Shared Ownership homes, 10,000 Rent to Buy homes and 8,000 homes for supported and older people’s rented accommodation.

So, given this extra funding, are we making progress when it comes to reducing the shortage of homes in England? I thought it would be interesting to take a look at the figures. Back in 2018, researchers at Edinburgh’s Heriot-Watt University showed us that the housing backlog had reached four million homes. We would need to build 340,000 homes each year until 2031 to meet the backlog and to allow for future demand. Not only that, but researchers showed that 145,000 of these homes each year would need to be affordable housing.

So how are we getting on? At what rate are we building homes? And are they the right homes?

A total of 241,130 homes were added to the market in the year to 31st March 2019, compared with 222,190 in 2018. These figures include conversions as well as new builds. It’s not always clear which numbers are the best ones to follow, as some organisations measure from January to December, some from April to March, and some July to June, and they use different measures. According to The National House Building Council, 161,022 homes were registered with them in 2019. Of those homes, 48,936 were affordable or rental homes. So both of these figures are a long way off the number of homes that needs to be built.

Projections show that the number of households in England is likely to increase by 210,000 every year until 2039. So even without the backlog, the need for new homes is crystal clear.

It’s unfortunate to see how far off the necessary targets we are, both for the population of this country, and for the construction industry as a whole, which would benefit from a sustained level of house building. As it stands, young people will continue to struggle to buy their first home unless they have access to the Bank of Mum and Dad. And, for many people, this means living with family, renting in less than ideal accommodation, or even homelessness.

However, the government committed, back in 2018, to building 300,000 homes each year by the mid-2020s. As we watch the numbers over the next few years, it will be interesting to see whether it looks like the government is on track to hit that target.

With new measures, such as the ability to add two more storeys to purpose-built flats without planning permission, it seems like the target could be reached. But it may take a while.
Let’s hope those targets are in sight soon, for the sake of our industry and for the sake of all the people who are stuck in unsuitable housing.

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