The UK government is to invest more than £3 billion in affordable housing but provided few details of how it will be spent.
Chancellor George Osborne, announcing his comprehensive spending review for 2015/2016, told the House of Commoms that billions will be spent on housing.
He also said housing benefit will be included in the overall benefit cap and a new social rent formula will see landlords able to increase rents by the consumer price index of inflation plus 1%, for a period of 10 years.
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.
But Grainia Long, chief executive at the Chartered Institute of Housing, said it is concerned about the rent settlement because it could reduce landlords’ income and therefore their ability to invest in existing and 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 and placing a cap on this could limit help with housing costs at times when households need it most,’ she explained.
However, Mark Henderson, chief executive at Home Group housing association, said it ends income certainty for landlords and makes it clear what they can expect from rents over the coming months and years.
Jeremy Blackburn, head of UK policy at the Royal Institution of Chartered Surveyors, said that a £3 billion extension to affordable housing would go some way to kick starting construction of much needed homes.
‘Building of new homes is way behind target, with construction workloads at historically low levels. Recovery is still incredibly fragile. Well planned infrastructure projects commissioned in the right places and at the right time must deliver growth, homes and jobs in the next 18 months, providing immediate economic returns and much needed work for the construction sector,’ he added.