Affordable Homes a Distant Dream as Government Falters on House Building Targets

House building took centre stage once again, as the Prime Minister continued to make a false claim about record house building in the UK. The claim that the Conservative Government is delivering a record-breaking number of newly built homes contradicts reality. The number of newly completed homes at the end of the first quarter of 2022 was 173,520, against 181,900 during the corresponding period in the previous year. These figures are from the Office of National Statistics.

Government scraps mandatory house-building targets

The recent announcement by Michael Gove to water down mandatory housing targets by terming these as 'advisory' instead of 'mandatory' puts an end to the government's commitment to building 300,000 homes annually. Scrapping the housing target will cause a drop in the number of completed houses in a year by 100,000. It is detrimental to the economy, as an investment in affordable housing will decline by 2.8bn.

House builders have struggled with multiple problems over the last two years, such as

1. Eleven newly enacted levies and taxes
2. Pathetic planning reforms
3. Incoherent proposals
4. Deterioration of the planning process

Removal of negotiable housing taxes

The UK's housing crisis is worsening. Construction activities in the UK are declining because of the bleak economy and the mounting cost of borrowing. The recent scrapping of mandatory housing targets and Sunak's false claims about the government building a record number of homes show that the government is not determined to end the UK's housing crisis.

The UK's problems stem from the housing crisis

Seventy-two years ago, Winston Churchill announced his commitment to deliver 300,000 houses a year at the annual conference of the Conservative Party. The present government's move to water down the mandatory housing targets puts an end to Churchill's commitment. Governments in the past decades did nothing more than offer symptomatic reliefs like stamp duty holidays. An increase in mortgage rates, the announcement of new taxes and levies, and the withdrawal of many deals are just a few factors that are wrecking people's hopes of purchasing their first home. In the private sector, rents in big cities are out of reach for most individuals, along with the reduced number of social housing units in several cities.

Possible reasons for lackluster performance

Although the government expresses its commitment to building 300,000 affordable homes a year, there is no likelihood of achieving these objectives. The relatively low construction activities during the COVID-19 pandemic retarded the speed of completion of new homes. Costs of construction materials rose by over 24 percent, which slowed down construction. New developments in the housing sector during 2020-21 witnessed a drop of 11 percent from the pre-pandemic period. Developers' margins eroded during these times with supply chain issues and skyrocketing fuel prices.

The plight of affordable housing

There is a shortfall of 32,000 homes in the UK's affordable housing scheme. The major deficit is in rural areas. There will be 157,000 homes against the target of 180,000 homes under the 1.2bn government program. There is a record number of people on waiting lists as over 1.2mn families hope to benefit from the social housing program. The government is facing accusations from builders of giving in to the Tory backbench rebellion and scrapping mandatory housing targets. Though social rent is the most profitable approach, the 2021 affordable housing program focused more on ownership than renting.

The importance of housing targets

According to the Home Builders Federation, the drop in supply may account for 100,000 fewer homes annually. The persistent gap between demand and supply is causing a steep rise in house prices, boosting mortgages and deposit requirements. Housing targets facilitate supply, besides ensuring uniformity and stability. These are crucial factors in stabilizing demand and supply. There is a strong probability of a fall in housing supply following the announcement to scrap mandatory housing targets.

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