As the FT notes this morning:
Chancellor Rachel Reeves will on Wednesday put a £39bn “affordable housing” plan at the heart of her multiyear UK spending review, as she combines a tight squeeze on day-to-day spending with a £113bn plan to bolster the country's creaking infrastructure.
The Treasury said the £39bn earmarked for affordable homes over 10 years represented “the biggest boost to social and affordable housing investment in a generation”.
In reality, this means the Treasury will spend around £4 billion on affordable housing a year. Call that 16,000 houses a year if you are very lucky, and probably considerably less.
This is not going to appease anyone. There are 1.3 million people on council housing waiting lists at present.
As political gestures go, this is dire.
We have a massive housing crisis that is contributing to a major political crisis, and very little is going to happen as a result for those most in need. Does Reeve3s not understand that this announcement, and pretending that she will have control of the programme for ten years, does nothing to really alleviate the problem?
I have a horrible idea that nothing Reeves says is going to make any real difference today.
UPDATE:
I now gather from a Politco email that:
In practical terms, the money will largely go toward helping housing associations buy up new, currently empty homes built by developers as part of their affordable housing commitments.
In other words, this is not money for new housing. It's just a funding mechanism for social housing already being built.
How much more of this 'Spending Review' is going to be like this?
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After World War II, when the country was arguably as broke as it has ever been, the country embarked on building 4.5 million houses of which 80% (3.6 million) were affordable housing. That’s over 20 times more than Reeves is planning.
If that wasn’t enough, the government also nationalised the railways at a cost of £0. And it founded the welfare state. And created the National Health Service. Not only did it lead to substantial growth, but arguable golden times too. If only the government could learn from history.
Agreed.
What we are seeing is the poverty of Reeves’ thinking.
Starmer says the planning to build 1.5 million homes. Source: https://x.com/Keir_Starmer/status/1932819477126586490
Of course more than one home can occupy a dwelling, think flats.
By my calculation, that’s £39bn ÷ 1.4m = £28K per home. I think he is optimistic.
In practice housing associations take the £39B they receive as equity from the government and then lever that up 6x with debt, just like an individual does with a down payment. That means the £39B realistically equates £234B new funding (equity+debt) available to build new affordable housing. This works out to £156K per house that the government is subsidising. Average affordable housing selling prices is around £260k. Things are not as dire as you make it seem.
They could borrow that much more cheaply from the government
‘ . . . the biggest boost to social and affordable housing investment in a generation’.
Wow. Colour me thrilled.
How high a bar is that ‘in a generation’, may I ask?
The claim is totally false
All this provides is govenment funding for social housing that used to be Housing Association funded with their own market based loans. How many real new houses will be built is hard to guess, but not nearly enough.
A lot of Housing Associations don’t want the S160 or whatever it is houses as they are to small and badly built
Also she has built inflation into the settlement with rents rising at RPI plus 1 per cent
Agreed
I mam sure PSR will have something to say when he has time.
Thank you, Richard.
Come on, Richard. Please be fair. Reeves needs to prepare her golden parachute. This bung to developers helps.
Yesterday, I read a property entrepreneur whinge about people leaving London and prices falling.
My heart is bleeding for him…
Col Smithers, you missed out the socilaism bit:
“helping housing associations buy up new, currently empty homes built by developers as part of their affordable housing commitments”……..which they could not off load onto mugs.
= socialsim for capitalists and capitalism red in tooth and claw for the rest of us.
Oh good god, they must thinks us all mugs & fools.
Shelter have been campaigning for social housing. The charity produced a report (https://england.shelter.org.uk/professional_resources/policy_and_research/policy_library/safe_as_houses_why_investment_in_social_housing_is_great_for_us_and_our_economy) and have been asking people to email their MP (see https://england.shelter.org.uk/support_us/campaigns/social_housing/lets_build_social_housing)
An interesting tool the charity produced exploring local social housing by postcode can be found here – https://visualisation.polimapper.co.uk/?dataSetKey=find-out-about-the-housing-emergency-in-your-area&client=shelterallaccess
I think buying empty housing to use as social housing is a very good idea, depending on the price. Buying housing that developers cannot sell, probably because it is unsuitable, sounds more like bailing out failing private companies than meeting the needs of society.
You’ve rumbled Reeves….
Firstly the amount proposed is pitiful.
Secondly the build specification for affordable homes build by developers is somewhat lower that ordinary residential homes.
Agreed funding the big residential builders is bonkers.
Let’s suppose that some of this £39 bn was going to new housing. I understand that about half the cost of a new house is for purchase of the land it stands on (and the services it needs) So, immediately, that’s about £20 billion to rich landowners. The rest will go into producing brick buildings by traditional methods.
Why can’t we have innovative ways of producing low-cost homes? Like prefabs in finction, but different in detail. Prefabricated homes. Adapted containers. More I don’t know about. Why not adapt the idea for settling the US Midwest, so that land would be supplied and people would get title if they lived on it for 5 years? Desperate people might well start with a tent and gradually put together a self-built house. Help would be available for installation of services — sewers, cables, etc.
I think innovatibve housing is required.
MMC – Modern Methods of Construction – was all the rage before 2010.
These are houses/bungalows built out of a steel frame; the steel frame is filled with wood and then you can put in stud walls, create points in the ‘carcass’ for water, electricity, foul drainage and services, insulate and then fit what you would fit on a normal house but not use bricks or anything (other than timber, plaster board, double glazed windows). The companies that make MacDonald’s stand alone ‘restaurants’ built some (those outlets are covered in a material that is fake brick I kid you not). I went to a production line in Birmingham some years ago and went inside a two bed house, walked up the stairs (which did not creak!) and emerged to observe the second floor being made next to it, to be bolted on top! You would build offsite, then deliver it by lorry to the site; the ground work would all be done, the unit craned into place, hooked up to utilities, testing, then letting. Just like they deliver Ronald’s burger joints. A lot of work has to go into the ground works beforehand,
The problem? The market, its natural conservatism with a small c, and the Ronan Point effect. The market likes bricks and mortar, it knows the product, its longevity, how many times it can be exploited for rents (loan and occupation). These MMC units will not last forever, but all you would have to do is crane the old one out, crane the new one in and refurb/refit the old carcass to be reused. What is the problem.
But no one wants to thing about the fact that a property is an asset AND a liability. No one wants to think about tomorrow. Those units that were made out of containers have proven to be utter crap – poorly insulated and already not fit for purpose, a very short term solution. A container is a container for a purpose – not for bloody living in.
And what has happened to our MMC industry? So many have gone under through lack of orders and support from the State. And that includes a commitment to all social housing for future management and maintenance costs which now all fall on local council housing revenue accounts with no top ups from London. So social rents go up to 80% market rent and tenants have to pay. And then the next government comes in and moans about the housing benefit part of universal credit and it all starts again.
Policy in this country for housing and much else is not fit to be called policy. Because of the simple fact that much of it lacks a fundamental thing: commitment.
Money is not just for Christmas or for making new stuff including houses to prop up markets; money is also for looking after what you’ve got, making sure that it is shared fairly and producing more if there is not enough. Simple right?
This concept that I have just described in the paragraph above no longer exists in British government – supply is everything and that includes non-supply BTW, the most cynical use of need ever by your post-Thatcherite state.
And finally a plea on behalf of private developers, many of whom I have worked with and feel some affinity with because it is a very hard job getting stuff coming out of the ground. Why is it that the likes of Bellway Homes, Keepmoat, Taylor Wimpey, Persimmon etc., are expected to build infrastructure like schools, parks, shops, community centres to get planning permission and set up management companies to clean streets and tend public spaces on new estates? They build houses for goodness sake, not public buildings.
Why isn’t the sodding government you vote for building those? I’ll tell you this – the government has forgotten all about you. They don’t want to know. We are all being set to be catapulted into a privately owned world where we will answer to the rich investors and our public buildings and commons will be private income generators when the developers move off site and hand it over.
Can’t you see what is happening? Where you live will be part of a vassal system. It is all part of the capital order. Thatcher seems to have won the long game. The state has rolled away.
Much to agree with.
PSR, I mentioned timber frame housing in the 1970s. Peterborough Development Corporation built them, mainly for London overspill families. People did not like them then.
Now Taylor Wimpey have a factory making the panels – in Peterborough!
There was also a district heating system, which people decided they didn’t want. Now they are all the rage.
You are right on the need to find innovative ways of producing low-cost homes.
Even Musk came up with an affordable housing option.
Elon Musk’s $6,789 Tiny House FINALLY HIT The Market!
https://downsizegeek.com/elon-musks-6789-tiny-house-finally-hit-the-market/
I hate the fact that it is Musk, but to solve the housing crisis we desperately need out-of-box type thinking. The traditional land, bricks, and mortar answer really isn’t affordable, not on the scale required. More so as Labour has no intention of building the necessary numbers of affordable housing to rent.
When I walk around my city centre, I see plenty of empty, old buildings that could be refurbished to provide affordable housing. Fact is, some have been, but by private developers who then charge a fortune to live there.
One big crisis brewing is that as we are living longer, more and more people are facing retirement priced out, and are becoming lifelong renters.
Since 2003, the number of over 55s living in private rented accommodation has more than doubled – a trend which is set to continue.
https://ageing-better.org.uk/housing-state-ageing-2020
What Reeves has said today will do little to stop things getting worse. There again, did we honestly expect her to do anything? I didn’t.
https://www.facebook.com/photo/?fbid=10005362622885240&set=a.376700779084854
Musk wasn’t the first to build tiny homes. Love the fact that it’s a Canadian millionaire.
It will be interesting to see how the £39bn will be distributed, and how much money will end up:
❌In the pockets of the well-off
❌In the value of the houses themselves
❌Being owned by the people that live there
❌Being owned by the well-off and rented back to the tenants
Aren’t there non-profit-making charities that build good value houses for people?
The money is goinmg to Housing Associations, in the main, but there are serious questions for them to answer about the extraction of value from them by their seniopr managements, who often appear to be as excessively paid as arew university vice-chancellors.
In the late 80s my parents lived in a large Edwardian terrace house, 7 bedrooms. Their neighbour lived on his own in a similar house.
They were bought by North British Housing Association and turned into rooms for 16-18 year old boys as halfway houses to give them some security when they could no longer live in homes.
My parents were given a flat to rent by the same association, and the neighbour was moved into sheltered accommodation run by the same association.
It’s not just new build and families that need help. It’s all stages and all ages.
My husband designed houses for disabled and over-55s for Hull Churches and Hanover Housing, all of which were supposed to be not-for-profit Housing Associations. I wonder if they still are.
In the 70s he worked on some timberwall houses for Peterborough development corporation, many of which were used for London overspill accommodation. These days timberwall construction is thought to be a novel way, come over from Scandinavia. In the 70s people didn’t like them because they weren’t proper brick construction.
What on earth has happened in between.
I looked up four postcodes on that map for Shelter, and even in York there are 1500+ households waiting for social housing, despite the fact that 12% of their housing is affordable social housing. In Hull it’s only 2%
As usual BBC R4 R5 this morning had housebuilders reps and lobbyists – ducking and diving as to why ‘affordable’ homes in new developments often don’t materialise, unless builders get various bungs.
No real investigative journalism – how much social housing will materialise, what about taking planning permissions away from builders who just bank them, nothing about how we did it post war – what about German / Swedish flatpack homes , why not limit rent rises , ‘planning gain’ on land etc etc
No one asking Richard’s questions – about how paltry this is – in relation to what required.
Labour just continuing Tory headline stuff…… ‘once in a generation’, ‘golden age of nuclear’, ‘war footing’. etc etc … uuuuggggghhh
One of the biggest issues though is surely inflated property prices
As George Monbiot has pointed out its effectively a private tax levied by landlords
Going back to the inter war period as little as 5% of the cost of a new house was the cost of the land, these days its more than half
So, because you are all intelligent people, you have rumbled the Government again certainly without my help.
What I do know is that Housing Associations (HAs) (who are really in hock to your high street banks, if not others because your government gives them paltry grant for new build) have been ducking out of schemes they were in contract to buy because of interest rates and other costs going up recently.
So, for all I know, this means that they might be able to go back into contract and buy homes already approved by the planning system and accounted for provided by private home builders where the planning system asks for 11% affordable units or a compensatory payment from the private developer. When it comes to the numbers game therefore, there could be some shenanigans going on there too.
HAs have also been handing back Affordable Housing Grant to Homes England because of pulling out of new build – I should know because we have bid for some of the loose money hanging around in last year’s AHP funding round that has been returned and it must go – so one of my council built schemes will be getting some of that cash, but only out of duress. We’ve been lucky – this time. But what has luck got to do with policy?
But at the risk of being tautological, I must remind you that the grant levels I see from Homes England for purchasing from the private sector can be as high as £65K per unit that do not even meet nationally prescribed space standards (NDSS) , yet I’ve seen grant for new build by the council and HAs as low as £18K built to those standards. Why? Why the fuck why? We’ve even rescued private units from falling down and refurbished them with as little as £10K grant from the government. And then seen that investment – a £150K refurb’ project, walk off into RTB 3-4 years later.
And why does the government not help council general funds that are being bled dry into bankruptcy with temporary housing costs? A result of a failure to build.
And why is RTB still possible in the face of supply issues? The cost floor has changed, but really, it needs to go.
Did we say FUBAR last time? SNAFU (Situation Normal All Fucked Up)?
It’s worse. Policy? There is no policy. Policy is joined up isn’t it? If there is a policy it is laissez faire – simple as that.
Thanks
Why buy up what private property speculators gambled on? Perhaps because these ghost properties are taking up much-needed land? That must be the only reason for this madness.
Build, build, build. Purposely-designed dwellings for those that need them (more bedrooms needed than the private sector I would hazard).
Creates jobs which creates spending which boosts the economy thet helps keep inflation down and interest rates as well.
And saves sh*tloads of cash currently paid out to the rentier class.
Oeps, I see why these red tories don’t want that.
These are social housing properties absurd rules have prevented housing associations buying to date. In effect, the rules have changed, a bit. But this just looks like financial engineering.
Housing associations should be government-appointed (and overseen) ‘managers’ of low-income rental properties, built by the government.
Am I really and old-fashioned fool for believing this?
As soon as housing associstions join the property speculation market, we’re up the Swannee sans paddle.
They are in that market and far too many of their managers see themselves as property developers
“We have a massive housing crisis”
I still cannot get my head around it: Is there a housing shortage problem or a housing distribution problem?
In the USA, the housing distribution problem is much greater than the housing shortage problem.
Both