Hammond launches new £3bn affordable homes guarantee scheme

Philip Hammond has announced a new £3bn affordable homes guarantee scheme, the second such initiative, which he claimed would lead to the delivery of 30,000 new affordable homes across the country.

Giving his Spring Statement to MPs today the chancellor (pictured giving his speech today) also confirmed £717m from the Housing Infrastructure Fund would go towards building 37,000 new homes in west London, Cheshire, Didcot and Cambridge.

But while industry figures welcomed the initiative they warned it would only scratch the surface of the problem.

Responding to the guarantee scheme announcement, Paul Hackett, chair of the G15 and chief executive of Optivo housing association, said: “Brexit uncertainty and the deepening UK housing crisis underlines the need for longer-term funding for affordable housing.

“The new funding announced today for the affordable homes guarantee programme is welcome, but our sector’s cross-subsidy model of delivering affordable housing is broken.

“A new funding deal is imperative if the government wants to hit its target of 300,000 new homes a year.”

Hackett said the G15 would be calling for longer-term, ‘infrastructure’ style funding for affordable housing to help tackle the country’s housing crisis, ahead of the Comprehensive Spending Review planned for later this year. 

David Montague, chief executive of L&Q, said that at face value the guarantee scheme was a positive step and would help with the delivery of affordable homes.

“However, we also need to see the detail and this cannot be a one-off investment - delivering homes on the scale needed requires continued investment especially through the uncertainty of Brexit.”

Hew Edgar, policy head at the RICS, said while his organisation was encouraged by the £3bn that was being made available, “if added to the 220,000 new homes last year, this does not reach the government-set target of 300,000 new homes per year.

“We continue our call on the government to prioritise housing and address the shortages which pose real long term problems.”

In a written ministerial statement Hammond said he would introduce additional planning guidance to support housing diversification on large sites  in response to the  Letwin Review, which concluded that greater differentiation in the types and tenures of housing delivered on large sites would increase build out rates.

There woulds also be a package of reforms including allowing greater change of use between premises, and a new permitted development right to allow upwards extension of existing buildings to create new homes. 

And the government would introduce an accelerated Planning Green Paper setting out proposals on how greater capacity and capability, performance management and procedural improvements can accelerate the end-to-end planning process. 

The chancellor told MPs the UK had built 220,000 new homes last year, the highest total in all but one of the past 31 years.

He said the abolition of stamp duty for first-time buyers had helped nearly a quarter of a million people, and the proportion of first-time buyers securing a home was now running at more than 50% for the first time.

In an inevitable nod to Brexit, Hammond said that leaving with a deal in place and an orderly transition would present the country with a “deal dividend”.

But he warned that without a deal the risks to the domestic economy would be severe, with short and long-term damage likely to include lower productivity, rising unemployment, higher prices and lower wages.

He said a deal was achievable, despite the prime minister’s crashing defeat yesterday and with just over two weeks to go before the UK departs the EU, if people could reach a compromise “in the national interest”.