Labour pledges billions to 'get Britain building' amid housebuilding slump

The government has announced an additional £3bn to deliver more than 20,000 new homes as new housebuilding figures reveal the scale of the challenge it faces to deliver 1.5 million homes.

Official statistics show a total of 221,070 additional dwellings were added to England’s housing stock in 2023-24 – down 6% on 2022-23 – with fewer than 200,000 new homes built.

That’s well short of the 300,000 homes the previous Conservative government had pledged to build each year.

Labour are targeting a similar goal in a bid to end a housing crisis that is seeing record numbers of people living in temporary accommodation as well as dealing with sky-high rents and house prices that are out of reach.

Before the statistics were released, the government announced it would be investing an additional £3bn to existing schemes to boost SME builders and the build-to-rent sector.

The funding, which builds on the £5bn to be spent on housebuilding, including £500m on affordable housing announced at the autumn budget, will deliver 20,000 new homes, according to housing minister Matthew Pennycook.

“SME housebuilders and build to rent operators have a crucial role to play in delivering the government’s target of 1.5 million new homes in this parliament,” said Pennycook.

“The significant additional support provided by our housing guarantee schemes will enable them to access low-cost loans and support the building of thousands of new homes across the country.”

The housing minister told a parliamentary committee last week that delivering 1.5 million homes while in power would be “more difficult than expected” while in opposition.

But Pennycook insisted the “stretching” target would be “deliverable” and said that ministers would not set annual interim housing targets after acknowledging a “difficult inheritance” from the previous government.

The government’s own net additional dwellings statistics show why.

A total of 198,610 new homes were built in 2023-24 with additional 21,590 dwellings coming from changing the use of a property from non-domestic and residential.

A further 4,360 homes were converted between houses and flats alongside 1,900 other gains, including caravans, house boats and other non-permanent dwellings. These increases were offset by 5,390 demolitions.

A total of 8,825 properties had their use changed through permitted development rights – a controversial method that allows the change of use without planning permission.

Experts had predicted a fall in the number of homes built, citing labour and skills shortages, rising construction costs and uncertainty in the housing market off the back of rising mortgage rates.

Labour is hoping its multi-billion-pound investment in housebuilding will change the direction of travel.

The £3bn support package offers housing guarantees to help builders apply for more accessible loans from banks and lenders.

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The government said guarantees will reduce risk for lenders and encourage them to increase the supply of credit for housebuilders. This will “give them the confidence they need to get Britain building again”, ministers insisted.

The money will go into existing schemes.

It will double the ENABLE Build scheme to £2bn so smaller housebuilders and firms can support the delivery of over 10,000 new homes, including more student accommodation and specialised housing for older people, in areas most in need.  

Meanwhile, build-to-rent developers will also see the private rented sector guarantee scheme reopen at the end of the year, with nearly £2bn available to ramp up housebuilding. 

Brian Berry, chief executive of the Federation of Master Builders, said: “SME house builders have a crucial role to play in helping to deliver the government’s ambitious target to build 1.5 million new homes over the next five years. In recent years, small house builders have faced a particularly difficult set of financial challenges. Diversification of the UK’s housing market is essential to deliver the number of homes needed.

“Today’s government announcement providing greater support for small housebuilders is welcome news. For the government’s plans to succeed, it will be crucial that this lending is available for those small house builders who need it most and can build the homes this country needs.”

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