The Conservative party, in a press statement released to clarify comments made by Theresa May, says the government’s proposed extra £2 billion for affordable housing will provide only 25,000 additional homes over five years.
Claiming she would “reignite home ownership” May - in her already-legendary speech to her party’s conference - challenged house builders by saying that if ministers made land available and gave young people the skills to build houses, developers should step up and “build the homes our country needs”.
However, it was her pledge to boost funding for affordable housing from £7 billion to £9 billion that had been billed beforehand as a way to boost housing on a scale not seen for over half a century.
In her speech May said: “A new generation of council houses to help fix our broken housing market” and added: "So whether you’re trying to buy your own home, renting privately and looking for more security, or have been waiting for years on a council list, help is on the way.”
But after the speech a party statement was issued which played down the impact of the funding. It read: “We will provide £2 billion more funding for the affordable housing programme. This will increase the government’s 2016-21 affordable homes programme to £9.1 billion. This extra £2 billion will lever in a total investment of £5 billion (public and private) in new housing. In those areas of the country where rents are high, we will allow bids for social rent which are further below market rents. With a typical subsidy of £80,000, £2 billion of investment can supply around 25,000 homes available for social rent.”
Housing commentator Henry Pryor said on Twitter: “Blaming builders and demanding developers solve the housing crisis is neither plausible nor fair. The misery for millions will continue.” Prominent residential research expert Neal Hudson tweeted a quote from an Office of Fair Trading Report in 2008 which read: “Homebuilders deliver new homes as fast as they can sell them, not as fast as they can build them.”
Shelter commented: “All new money is welcome but...with over 1.2m households on waiting lists this is only fraction of long-term investment required."
This leaves the government’s earlier announcement at the Tory conference - an extra £10 billion for Help To Buy - as its major commitment to “reignite” home ownership.
Anthony Codling of investment consultancy Jefferies - which advises some house builders - commented in a note to investors issued after May’s speech: “This bodes well for continued support for Help to Buy. The PM also said she would make sure land was available, but the house builders must build houses. Our take is that if land is more readily available, house builders will shorten their land banks and we would therefore expect enhanced cash returns in the medium term.”