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News Release

London

Government’s Comprehensive Spending Review – Social Housing Measures

Jones Lang LaSalle Reaction


London, 21st October 2010 – The coalition government announced today in its Comprehensive Spending Review (CSR) plans to cut funding for social housing to £4.4 billion. This marks a drop of over 50% compared to the previous Labour government’s commitment to spend £8 billion between 2008 and 2011. Also announced in the CSR is the plan to place social rents at 80% of market value for all new tenants, with money raised from this increase to fund the building of 150,000 new affordable homes over the next four years.

Commenting on the measures announced in the CSR affecting social housing, Richard Ashdown, Director of Affordable Housing at Jones Lang LaSalle, said: “The slashing of capital grants to UK housing was entirely predicted. The ability to charge rents at 80% of market value is a welcome encouragement to new development, but we await the detail and timing of this move. The biggest threat to new development and land values remains the cuts to local planning departments, the abolition of new homes targets and the localism agenda.  This has not been thought through.”
 
James Thomas, Head of Residential Investment and Development comments on how these changes will affect the private rented sector and the residential development market: “The market will be compelled to establish new models incorporating both public and private sector involvement, the government has shown a willingness to support 'intermediate housing' models and this is might partially circumvent the problem of mortgage availability constraining buyers in high-demand locations.  Over the four year term, 150,000 'affordable' homes is an exacting target which will be difficult to achieve.  The lack of supply will add to our residential market forecast of accelerated price growth by 2013, partly fuelled by the structural undersupply of new housing in the UK.”