Lunchtime news Thursday 3 July 2023

Caroline Flint announced a series of measures designed to prop up the housing market yesterday. As reported in our daily news, she confirmed plans to change payments to housebuilders from the public sector so they receive more upfront money, while developing a clearing house to help housing associations find appropriate properties that developers cannot sell privately. Also announced is a £270 million fund to be allocated through the Housing Corporation to deliver 3,800 homes for social rent and 1,500 for shared ownership over the next three years. She is said to be considering plans to extend a £200 million scheme to buy new-build flats to rent to social tenants.

Meanwhile, the Local Government Association (LGA), a cross party organisation representing councils in England, is calling on the government to end the practice of putting rent from local authority homes into a government fund that is then redistributed centrally. The LGA is calling for council rent (totalling nearly £1 billion) to be used to build thousands of new council homes and improve existing stock where there is the highest demand for them. Last financial year local authorities built just 245 council homes compared to the 22,000 homes built by housing associations.

The House of Commons Public Accounts Committee has accused the Pathfinder scheme, a government housing programme launched in 2002 to revive the housing market in depressed areas of England, of being more successful at demolishing properties than building new ones. The Committee argued that the schemes have also threatened the historical character of some local areas, although more than £2 billion has been invested. While the scheme refurbished 40,000 properties, it demolished 10,000 and only built 1,000 new ones – which has lead the Committee to claim that waiting lists for affordable accommodation in some areas have doubled.

Housing equity withdrawal, the amount of money borrowed by people cashing in on the increased value of their homes, has dropped by 64 per cent, to a seven year low. During the first quarter of the year the amount of money borrowed against an increased mortgage was £5 billion, down from a little over £7 billion in the previous three months, and well down on the £13 billion from a year earlier. These figures are believed to add to the mounting pressure on consumer spending.

And in more figures released today British construction activity fell at its fastest rate in 11 years in June, adding pressure to the government’s housebuilding targets. The Chartered Institute of Purchasing and Supply (CIPS) added that the housing sub-index was also at its lowest ever, having fallen from 32.7 to 25.6 points in June for the seventh consecutive month. The institute said that the performance of the housing industry was ‘by far the worst, with activity levels falling steeply’.