The National Federation of Builders (NFB) fully supports efforts to build more council homes because they contribute to diversifying the housing market.
However, research by the Chartered Institute of Housing (CIH) revealed that 95p in every £1 of Government housing spend ends up financing housing benefit payments, rather than the building of new homes.
According to the National Housing Federation, the Government has increased its housing benefit spend by £10 billion since 1996, with private sector housing costing on average 23% more than public sector housing.
This has created huge financial challenges for the Government to build more social housing, but also shows a failure to replace homes sold through the Right to Buy initiative. This has created a vacuum that the private sector has stepped in to fill.
The Government replicated the same error of judgement in the private sector, with Help to Buy continuing to stoke demand in the open market.
The NFB recognise that the Housing White Paper and National Planning Policy Framework review will help unlock a more diverse housing market, but urge the Government to take another look at how they can better encourage and fund the construction of new homes.
Richard Beresford, chief executive of the NFB, said:
“Limited diversity of housing supply has pushed up house prices which, in turn, increases the spend on social housing and the demand for properties. The Government should keep pushing for reforms to the planning and funding processes, while looking for new ways to diversify the housing market.
“Since SMEs remain the preferred partners for councils, housing associations, and other local stakeholders, planning policy needs to alleviate barriers facing regional contractors in order to meaningfully solve the housing crisis.”