PM announces extra £2bn for council housebuilding

Prime Minister Theresa May announced an additional £2bn of affordable housebuilding as part of her “mission” to solve the housing crisis, at a speech to the Conservative Party conference in Manchester.

In addition to heralding a “new generation of council houses” during an eventful speech disrupted by a comedian and a persistent cough, the PM also confirmed £10bn of Government investment of extra Help to Buy loans.

She directly addressed housebuilders, saying that they needed to increase delivery: “I want to send the clearest possible message to housebuilders that we the Government will make sure the land is available, we’ll make sure you have the skills you need, and in return, you must do your duty to Britain, and build the homes our country needs.”

On the new social housing initiative, May said: “In those parts of the country where the need is greatest,” new homes will be built for social rent at “well below market level, getting Government back into the business of building houses.”

“It won’t be quick or easy,” said May, “but as PM I’m going to make it my mission to solve this problem, and I’ll take personal charge of the Government’s response, and make the British dream a reality by igniting home ownership in Britain once again.”

Industry reaction

Dave Sheridan, CEO of Keepmoat Regeneration, welcomed any action on social housing, which is “long-awaited” and desperately sought.”

He said: “This is a welcome announcement for both the construction industry and the 1.2 million families on local authority waiting lists for a social tenancy. We have seen significant inroads in the provision of new housing and government funding to support first time buyers over the past few years, but what we have not seen as readily is aid for local authorities to build more homes for social rent.

“It is time to take this seriously, and address the rising number of people that live on the streets, in subpar homes or are waiting on the social housing waiting list, as the country does not have the capacity to house them.” 

Andy Sommerville, Director of Search Acumen, commented: “Theresa May’s pledge to invest an extra £2bn in affordable housing is the first building block to making up for years of under supply and we can only hope that this is not simply another empty promise to fix our broken housing market. Now that our leaders share the industry’s sense of urgency, we must act to build more homes and we must act quickly. The gulf between supply and demand is widening each day. For the property and construction industry, this is the cue for Britain to start building.”

Jeremy Raj, head of residential property in London for Irwin Mitchell Private Wealth (IMPW) commented: “While this announcement is incredibly welcome in the context of massive under-supply in the housing market, it will only really work if it is combined with repeal of the Right to Buy legislation that has effectively decimated council housing stock since its introduction, and will continue to do so.

He added: “The fact that councils could have their best stock taken away from them at a discount under the legislation meant that effective planning and management has become impossible.”

“Punitive increases in the tax regime and browbeating of the housebuilding industry by successive housing ministers was never going to have the desired effect. To be fit for purpose, the sector requires a carefully considered blend of public and private sector activity.”

Brian Berry, Chief Executive of the FMB, said: “Despite the Prime Minister’s precarious political position since the General Election, Theresa May has today managed to take a braver and bolder stance on housebuilding than any Prime Minister of recent years. The private sector will continue to expand the number of new homes it builds, particularly so if the Government succeeds in its aim of removing barriers that hold back small scale housebuilders. However, in the housebuilding heyday of the 1950/60s, a healthy private sector was always complemented by significant levels of social housebuilding. Indeed, we have only ever built at the level we need to keep pace with demand when both the private and public housebuilding sectors have been firing on all fronts. In the 1960s, for example, we were building around 400,000 homes per year and half of those were social housing.

“The Prime Minister’s plan is also an opportunity to help shape a stronger local housebuilding industry. If councils can start to engage with smaller, local builders to deliver this new generation of council housing, it could further help to diversify the industry. This would also boost the capacity of the private sector through the provision of more public sector work. Indeed, the increased use of small and medium-sized building firms will limit the problem of land banking, as this is something small builders simply don’t do.”

Berry concluded: “There do remain however, some significant roadblocks to the Prime Minister’s vision. Following Brexit, the serious shortage of skilled labour the construction industry is already dealing with will be exacerbated if it becomes much more difficult for EU tradespeople, who have come to play a crucial part in plugging the industry’s chronic skills gap, to move to and work in the UK. Although the industry must seek to overcome this crisis by recruiting and training many more young people than we currently do, the Government must also be mindful and realistic about the continuing need there will be for skilled EU workers as it puts in place its post-Brexit immigration policy. Otherwise it will risk jeopardising the delivery of the bold new housebuilding ambitions the Prime Minister outline today.”

Andrew Kafkaris, Founding Partner at residential property management firm Bruton Street Management, said: “This is an astonishing announcement. The Government should be applauded for this meaningful measure to tackle the housing crisis. It has all the hallmarks of an ex-Housing Minister (Gavin Barwell) as Chief of Staff.

“Having a housing advocate in Number 10 bodes well for the industry. Grenfell was a tragedy and sadly residential management still has many deep-rooted issues, which are also likely to benefit from Government intervention. It appears the PM is putting domestic policy words into action.”

John O’Brien, Associate Director, Construction Innovation at BRE, said: “Following the Prime Minister’s announcement to assist local authorities through setting aside an additional £2bn on new council houses and affordable homes for rent, we need to make sure that quality remains a priority to guarantee the endurance of new homes and prevent future housing shortages. Turning to offsite construction and high-quality modular homes, such as the homes on the Innovation Park at BRE Watford , which can be assembled quickly and effectively and to a good quality, could be the best route for councils to turnaround vital accommodation quickly. We’ve been researching and developing these types of homes for a number of years and feel there are some excellent house types available that are cost-effective and highly adequate to help ease the growing housing crisis.”