Expanded public investment similar to the new National Housing Bank could unlock up to 200,000 currently unviable homes across England by 2031, a report has found.
The impact is projected to be strongest in London and the South of England, where housing needs are most acute (picture: Alamy)
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Expanded public investment similar to the new National Housing Bank could unlock up to 200,000 homes across England by 2031, a report has found #UKhousingResearch by CBRE and Mandala Partners has set out how further investment of “public risk capital” can unlock housing schemes that have stalled.
The report set out how high costs and flat prices have made housebuilding increasingly unviable for developers.
This includes a 39% rise in construction material costs since 2021, 8% house price growth since 2022, and a 36% fall in new dwelling starts since their peak in 2022.
An investment of £8.5bn in public risk capital could close viability gaps and have funds returned to the Treasury within 10 years.
This sum could unlock between 94,000 and 104,000 homes by investing in projects across England’s core city regions.
Between 123,000 and 198,000 homes could also be unlocked by investing in a geography-agnostic approach across every local authority in England.
The impact is projected to be strongest in London and the South of England, where housing needs are most acute.
This includes 37,000 build-to-rent (BTR) homes in London, where development has slowed significantly, without traditional grant funding. Nearly one in five of these homes would be built within the Oxford-Cambridge Growth Corridor.
The new housing finance model would also stimulate substantial economic benefits to the UK economy, the report said.
These include £22bn in private investment in housing and between £5.6bn and £5.8bn in cumulative GDP uplift generated by construction activity.
That could see between 71,000 and 73,000 new jobs supported through construction by 2031.
Delivering housing supply supports the government’s economic agenda with a 3.1% productivity uplift from the equivalent of 187,000 additional homes in London, the report said.
It would also bring labour mobility and wage benefits, with £1,300 higher annual earning potential from moving to high-productivity areas.
The research also provides a framework for the government’s newly launched National Housing Bank, backed by £16bn of public finance capacity, demonstrating how it could mobilise more capital into housing delivery.
Nick Williams, a senior advisor at Mandala Partners, said: “Every £1 the government invests pulls in £2.60 of private capital. And because the money invested comes back with interest, it can be reinvested again and again.”
A spokesperson from the Ministry of Housing, Communities and Local Government (MHCLG) told Inside Housing Living: “We’re investing to build the homes this country needs, including £39bn for social and affordable homes and £21bn through the National Housing Delivery Fund.
“This funding will speed up housebuilding, provide more affordable housing and make sure people get the homes they deserve.”
Earlier this month, it was announced that the National Housing Bank will invest £100m over several phases in Canadian property company Starlight Investments’ UK BTR fund II.
In Scotland, it was also announced that Legal & General’s BTR fund received £50m from a Scottish government-owned bank to support the development of purpose-built private rented homes.
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