Government announces £3bn fund to deliver more affordable housing

Almost lost amid the Brexit noise, Chancellor Philip Hammond announced that the Government would guarantee up to £3bn of borrowing by housing associations in England to enable providers to build 30,000 new homes through an Affordable Homes Guarantee Scheme.

How will the Affordable Homes Guarantee Scheme work?

No more details were made available, although the Chancellor claimed the fund would help put the UK on course to raise its housing supply to its highest level since 1970 by the end of the current Parliament. The Government has pledged to deliver 300,000 new homes per year by the mid-2020s, up from the current figure cited as 220,000.

Inside Housing magazine has reported that a previous scheme, controversially scrapped in 2015, allowed the Government to underwrite housing association borrowing to lower its cost, while Patrick Gower told Homes and Property that lower borrowing costs would encourage providers to look at alternative tenures, such as Build to Rent, student housing and retirement living.

Mr Hammond also announced that the government would make £717m available from the Housing Infrastructure Fund to “unlock” 37,000 homes in Old Oak Common, west London, Cheshire, and the so-called Oxford-Cambridge arc stretching from Didcot to Cambridge.

No more fossil-fuel heating systems?

The Chancellor also signaled that there would be a “future homes standard” that would aim to end the use of fossil fuel-based heating systems in all new houses from 2025. Under the new standard, all new-build homes will be required to have low carbon heating and “world leading” levels of energy efficiency.

The move will form part of the Government’s Clean Growth Strategy, which pledges to halve energy use in new buildings by 2030. The strategy is also expected to inform a review of Part L of the Building Regulations, on which the Government intends to consult later this year.

What will happen next?

While a lot may depend on the outcome of Brexit negotiations, the Chancellor stated that the Treasury would conduct a full spending review before the summer recess, to be concluded before the autumn budget.

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