Govt To Spend GBP 3bn On Affordable Housing

The UK government is set to spend an additional GBP 3 billion on affordable housing in the coming years. In the chancellor's comprehensive spending review for 2015/2016, he told the House of Commons that billions more will be invested in housing across the UK.

The UK government is set to spend an additional GBP 3 billion on affordable housing in the coming years. In the chancellor's comprehensive spending review for 2015/2016, he told the House of Commons that billions more will be invested in housing across the UK.

However, he did not elaborate on how the investment will be delivered and the impact this will have on the affordable housing stock.

George Osborne also said that housing benefit will be included in the overall benefit cap and announced a new social rent formula that will see landlords able to increase rents by the consumer price index of inflation (CPI) plus one per cent for ten years. This means with a CPI rate of three per cent, landlords could increase social rents by four per cent, a move designed to give them more confidence over future finances.

David Orr, chief executive at the National Housing Federation, described the social rent formula as a positive step.

"This could help housing associations to start planning the construction of more homes and allow them to focus on tackling Britain's desperate housing crisis," he said. However, he conceded that the full implications depend on the yet to be announced detail of capital spending for housing.

His view was echoed by Mark Henderson, chief executive at Home Group housing association, who said that this income certainty is something landlords have been calling for for many years. Grainia Long, chief executive at the Chartered Institute of Housing, was less supportive, however. She warned that the CPI plus one per cent formula could reduce landlords' income and, as a result, their ability to invest in new homes.

"We are seriously concerned about the welfare cap and specifically the inclusion of housing benefit within it. We believe that housing benefit is affected by cyclical changes to the economy – placing a cap on this could limit help with housing costs at times when households need it most," she added.

The announcement follows proposed government plans revealed earlier this week to refurbish empty homes in towns around England.

- Monday 01 July 2013

*This page is provided for information purposes only and should not be construed as offering advice. Flex Profit Hub is not licensed to give financial advice and all information provided by Flex Profit Hub regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.