Andrew Milsom, sector lead for Affordable Housing at NHBC, examines the importance of affordable housing in efforts to deliver the Government’s housing targets
Demand for housing in the UK is at historically high levels. The Financial Times revealed that in January the average UK house price rose to a new record high and, according to the Office for National Statistics, average UK private rents increased by 8.7% in the year to January 2025.
That kind of demand is far outstripping supply in many areas, not just in the capital and the South East which have always been very competitive, but now all around the UK. The government’s much publicised aim to deliver 1.5 million new homes over the course of the current parliament is a welcome step forward, but all tenures must be considered when developing on order to meet this growing demand.
The recent Budget announcement from Rachel Reeves, promising an extra £2bn in funding for affordable housing, is a welcome one. The government said this cash injection should help deliver an additional 18,000 homes and these homes must start construction by March 2027. This top-up for the Affordable Homes Programme is good news of course and should accelerate a part of the sector in great need, but the complete mix – private, Build to Rent (BTR) and affordable – should be incorporated into planning at a local level. Homes need to be available to people of all income levels and in the locations where they are needed most.
The government has taken some other positive steps, particularly with regard to local authority devolution and with the aim of empower local communities. The English Devolution White Paper sets out the government’s plans to widen and deepen devolution across England, providing mayors with unprecedented powers and funding and hardwiring them into the way government works, giving mayors strong new powers over housing, planning, transport, energy, skills, employment support and more, backed up with integrated and consolidated funding.
Private homeownership demand
While our neighbours in continental Europe are far more likely to embrace life-long renting, which is often seen as the norm there, we in the UK strongly aspire to home ownership. Our preoccupation with house prices dictates many dinner party conversations and consistently fills countless column inches in the British press. This is at least partly due to a constant demand for homes for sale – mortgage approvals are predicted to rise by over 13% in 2025, a trend which has been building for a number of years. As a result, first time buyers have found it increasingly difficult to get on the property ladder and affordable starter homes in particular are sorely needed.
Affordable housing demand
Given my role as Sector Lead for Local Authorities at NHBC, it’s unsurprising I would champion the importance of affordable housing when discussing the tenure mix in the government’s drive for new homes. According to recent data released by housing charity Shelter, an estimated 1.3m households in England are currently stuck on waiting lists for an affordable home, a substantial rise of 10% in the last two years.
Quite apart from the acute social need for all forms of affordable housing, no single sector alone can deliver the volume of homes required to meet the government’s target. Private developers, housing associations and local authorities all have a role to play to ensure these much-needed new homes are delivered.
Private homeownership and BTR developments will likely form a significant part of the future housing supply, but affordability issues mean many households are priced out of both buying and private renting. This segment of society has to be catered for, without quality being compromised.
How could affordable and local authority housing development be accelerated?
Historically, local authorities were major developers in their own right with many having dedicated building arms delivering thousands of new homes across the UK every year. The abolition of the Housing Revenue Account borrowing cap in 2018 has been successful in encouraging local authorities to build more, but still more needs to be done to keep pace with demand. While there’s no single solution, various tactics could be used to accelerate affordable and local authority housing development:
- Empower local authorities to build at scale – facilitating favourable borrowing, reforming Right to Buy and increasing grant funding could all help local authorities deliver considerably more homes.
- Housing associations have long played a key role in delivering new homes for affordable rent. Long-term funding commitments to support their efforts and expand stock would make a big impact on housing supply.
- Planning reform could streamline processes and speed up development, along with more flexible Local Plans and more robust compulsory land purchasing powers.
- Stronger requirements for mixed-tenure developments, to include a mix of private sale, shared ownership and local authority and affordable rent will boost housing supply while creating balanced, sustainable communities.
Viability
Increasingly we’re seeing the value of partnership working, with both local authorities and housing associations utilising private sector investment to help build more. As well as accelerating delivery and boosting scale, tenure mix is improved and commercial construction and planning expertise can be drawn upon easily. Local economies benefit too, with local and regional building firms fulfilling contracts in their areas, generating income and jobs. While some local authorities and housing associations have their own successful building arms, there’s opportunity for all affordable housing providers to harness the potential of commercial partnerships, with big and smaller building firms.
Infrastructure must also be considered when building at scale – factoring in good communications and easy access to utilities when planning new developments is essential. In order to build inclusive and sustainable schemes these need to be available – this is where brownfield or greybelt development can be an advantage, as such infrastructure may already be in place, or is close by.
The skills gap in the construction industry has been well-publicised. It’s estimated over 250,000 new construction workers will be needed by 2028 to meet industry demand and achieve the government’s aim of 1.5m new homes over next five years. With demand for skilled workers high, some developments can be delayed while waiting for the right construction professionals to be available. NHBC is taking action to address this however – we’re investing £100m in a national network of new multi-skill training hubs which will immerse apprentices in real-site conditions from day one, fully preparing them for life on site.
While traditional training routes can take up to 30 months, NHBC’s fast-track approach enables apprentices to complete their training in just 14 to 18 months – nearly twice as fast as other more traditional programmes. By investing in key skills, we believe we can help the industry deliver quality homes at scale.
Maintaining existing stock while developing new
Greater access to funding to help maintain existing stock, as well as funding for new would be a massive help and a social leveller. Some existing stock is post-war and doesn’t meet the energy efficiency standards of today – sustainability principles should be applied evenly to all affordable housing, not just new homes.
In demand
I would argue local authority housing is the most in-demand tenure at present and the most deserving of investment. The sector is experiencing higher-than-ever demand for its services at a time of extreme economic pressure. With the budgets of council housing departments stretched, many are struggling to maintain and improve existing stock, let alone develop new homes. Population growth, coupled with decades of under-supply, has created multiple stresses on a system very many people rely upon.
By building across all tenures and all parts of the market working together, the UK can enjoy a fairer, more balanced housing system that meets the needs of today and creates high-quality homes for the future.
NHBC’s role in the affordable housing sector
An established and trusted industry partner, NHBC provides unrivalled support throughout a development’s build journey helping you build it right first time. As a direct insurer underwriting its own policies, NHBC has a vested interest in the prevention of structural defects. We offer a unique, tailored approach, from conception to completion, providing long-term asset protection benefitting developers, housing providers and residents.
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