A new report from the Resolution Foundation think tank indicates that the government's commitment to a significant council house building program could lead to an £8 billion shortfall in its projected spending. The plan aims to deliver 300,000 homes for social rent by 2036, a goal that the think tank estimates will require £47 billion in funding, exceeding the current allocated £39 billion for the 10-year Social and Affordable Homes Programme (SAHP).
The SAHP, initially established under the Keir Starmer administration, is designed to create 300,000 social and affordable homes over the next decade. A key component of this program is the target of dedicating at least 60 percent, or 180,000 homes, to social rent, where tenants pay approximately 50 percent of the local market rate.
According to the Resolution Foundation, achieving an all-social-rent build of 300,000 homes would necessitate an additional £800 million annually over the program's lifespan. This increased cost stems from social rent properties providing housing associations with lower lifetime rental income, thereby requiring greater upfront grant funding to ensure their viability.
Without an increase in SAHP funding, the think tank warns that prioritizing social rent for all 300,000 homes would result in 51,000 fewer affordable homes being built overall within the decade. The report states that if all £39 billion of the SAHP funding were dedicated to social rent, approximately 250,000 homes could be delivered by 2036. While this number is higher than recent social rent figures, it falls short of the program's overall affordable housing target.
The report suggests that the funding gap could be addressed by allocating more homes to 'affordable rent'—where tenants pay around 80 percent of the local market rate—and by leveraging the National Housing Bank's £2.5 billion low-interest loan facility for housing associations. These measures, the think tank notes, could allow the government to increase the number of social rent homes built while also boosting the total supply of affordable housing.
However, the report cautions that even with these adjustments, the ambition still falls short of what is needed for the 'biggest council house building programme since the post-war period' that has been promised. Such a large-scale undertaking, especially if led by local authorities that currently build a limited number of homes annually, would require substantially more financial investment.
Hannah Aldridge, a senior research and policy analyst at the Resolution Foundation, acknowledged the necessity of boosting affordable housing, citing the 134,000 families in temporary accommodation and 1.3 million on housing waiting lists in England. She emphasized the need for the government to balance tenant affordability with the scale of building required. Aldridge suggested that strategic use of the SAHP, developer contributions, and the National Housing Bank could help increase social rent housing and overall affordable housing supply.