Government will miss 1.5 million homes target by almost a third without funding, the NHF and HBF warn

The government is set to miss its target to build 1.5 million new homes over this parliament by nearly half a million homes, without funding for social housing delivery and first-time buyers, according to research from Savills.

The Savills report, commissioned by the National Housing Federation, and supported by the Home Builders Federation (HBF), warns there will be a shortfall of up to 95,000 new homes a year on average, if the government does not provide additional funding.

The report says the fastest way to address this delivery gap is through targeted grant funding for social housing.

This funding would enable councils and housing associations to forward purchase section 106 homes from private developers, which they are currently struggling to do due to financial constraints.

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This could sit alongside a government support scheme for first time buyers.

The report says that without additional funding for social housing, the government’s target depends on building 200,000 homes for private sale each year as a “key component” of delivering the 300,000 net additional homes per year required.

It points out that achieving this level of home sales would require new homes to account for around one-fifth of all property sales in England, which is “unprecedented.” Typically, new homes make up about one-tenth of sales.

As a result, Savills has said it estimates that there will be a gap in demand of between 40,000 and 95,000 homes per year, against a target of 300,000 per year. 

Achieving 200,000 private home sales would also require more than two million total home sales annually. However, based on projected market conditions without intervention to assist first-time buyers, total sales are expected to be roughly half that amount, around 1.16 million.

The publication, ‘Delivering 300,000 homes per year in England’, said that since the 1940s, net housing supply has only reached close to 250,000 homes per year on a sustained basis either alongside a substantial social housebuilding programme, or with government support for first time buyers, as with Help to Buy between 2013 and 2022.

Kate Henderson, chief executive of the NHF, said: “An immediate and substantial boost in investment and funding for new affordable homes, particularly those for social rent, is the best way for the government to meet its housing targets and its ambition to build a generation of new social homes.

Neil Jefferson, chief executive at the HBF, said: “More and more households are dealing with the consequences of the housing crisis so tackling the undersupply of housing in this country cannot wait a moment longer.”