The government is to launch an Affordable Homes Guarantee scheme which is designed to help housing associations borrow money at a lower cost in order to build more affordable homes.
Speaking in his Spring Statement today, Chancellor Philip Hammond said the scheme would support housing associations to build 30,000 affordable homes.
Under the plans, the government is expected to guarantee £3bn of private sector lending to housing associations to allow them to borrow more cheaply rather than directly funding construction itself.
It is understood that the cost of providing these guarantees formed part of an £8bn package of measures announced in the Autumn Statement 2017.
At the time Hammond promised “£8bn of new financial guarantees to support private housebuilding and the purpose-built private rented sector”.
Today’s news prompted a lukewarm response from industry commentators who pointed out there was very little in the statement to help home buyers.
The National Housing Federation, which represents housing associations, welcomed confirmation of the scheme which it called for in the Autumn.
NHF head of policy James Prestwich says: “It will help housing associations borrow more cheaply and therefore build more homes.
“However, whilst this is an important contribution, we desperately need new money in the next spending review to build more social housing.
He adds: “”his is more crucial than ever in the midst of Brexit uncertainty – the lack of affordable housing is now pushing hundreds of thousands of working families to the brink – the number is rising year on year, many are living in debt, at threat of eviction or homeless.
“We need to build 145,000 affordable homes every year to house these people – this is not a one off investment, the government must commit billions of pound every year into building more social housing.
“We hope, as the Comprehensive Spending Review approaches, the government will see sense and commit the significant investment needed into social housing.”
Shelter chief executive Polly Neate says: “This initiative will support the building of more desperately needed social and affordable homes.
“While this is good news, it has to be noted that we cannot deliver social housing on the scale we need on borrowing alone.”
Neate argues that 3.1 million social homes are needed in the next 20 years to tackle the housing crisis.
She adds: “We need much more grant funding for social housing in this year’s spending review to get a grip on our ever growing housing emergency.”