The five reasons why Reeves’s £2bn affordable housing boost could fail ...Middle East

Rachel Reeves called the funding the “biggest boost in social and affordable housebuilding in a generation”.

The funding will contribute to Labour’s plans to build 1.5 million new homes by 2029.

Here, The i Paper takes a look at why the plans might not be effective.

In a report published last year, it found 90,000 social homes would need to be built as early as 2027/28 to meet the target.

Half of the promised homes are not for social rent

The Government said at least half of the promised 18,000 homes would be for social rent, rather than affordable rent, which is more expensive and can be up to 80 per cent of market rent.

Charities argue that building social homes is key if the Government wants to use its housebuilding blitz to fix the housing crisis.

This plea was echoed by Shelter, which said the funding is a “positive step” but that it is “vital that the majority of this funding is directed towards social rent housing, not expensive alternatives that won’t help struggling families”.

“Without a major funding commitment to 90,000 social homes a year for ten years, homelessness will keep spiralling, and millions will remain trapped in unstable, overpriced housing.”

Another 25,000 bricklayers, 3,000 extra plumbers, 4,000 additional plasterers, 10,000 more carpenters, and 3,000 new electricians would be needed, according to figures from the Home Builders Federation and the Construction Industry Training Board.

Developers also warned that increases to employers’ national insurance contributions, which take effect in April, will make it more difficult for firms to hire more people.

“Next month’s national insurance hike will hit family-run construction businesses already struggling with a deepening skills crisis, while changes to inheritance tax risk forcing thousands of firms to sell vital equipment and assets just to cover the tax bill.

Developers aren’t building homes after getting planning permission

Affordable and social homes are often built as part of housing projects that include homes being sold or rented at market rates.

square CUTS Explained

All the people set to be badly-hit by Rachel Reeves's looming cuts

Some 1.4 million homes have been left unbuilt by developers since 2007, according to a report published by the Institute for Public Policy Research last month.

Common reasons for this include developers wanting to increase the land’s value before selling it on and a desire to limit supply to maintain high house prices.

High mortgage rates are hurting demand

Planning permissions issued have fallen to a record low of 10,180 sites, according to the Home Builders Federation. In July to September 2024, they reached the lowest point since 2006.

Many people, particularly renters, want to buy a home but cannot afford to take out a mortgage.

Persistently high inflation has made the Bank of England reluctant to cut interest rates, which has kept mortgage rates much higher than they have been in recent years.

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