Affordable house building is in danger of grinding to a halt this year – as money already pledged for new projects is threatened with withdrawal, budgets are cut, and sweeping changes to the planning system make it increasingly difficult to get homes built, a campaign group has warned.

The National Housing Federation, which represents England's housing associations, said radical changes to the planning system combined with threatened funding cuts could see the number of social homes built this year slump by 65%, to just 20,390.

That would be the lowest annual total of affordable homes built since 1990/91 and would come as a devastating blow to the record 4.5 million people on waiting lists in England. Around 2.6 million people are also living in overcrowded accommodation.

The Federation has written to the Housing Minister Grant Shapps to urge the Government to honour its spending commitments on new housing schemes during this financial year and to halt further changes to the planning system, which could make it almost impossible to get new homes built.

Mr Shapps warned earlier this week that around 150 social housing projects were under threat because of a £610 million 'black hole' in the Government’s finances. Many housing associations have already invested millions of pounds in developing sites for new homes – but now face the bleak prospect of the promised money being withdrawn.


The Government has already announced £100 million will be cut from the National Affordable Housing Programme (NAHP), which was meant to deliver 59,0000 new social homes this year 2010/11. The withdrawal of this funding will see plans to build another 1,453 social homes axed.

But the sector faces a double blow as changes in the planning system could prevent tens of thousands affordable homes being built.

Around 40% of all new affordable homes are delivered through so called planning gain agreements, whereby private developers are granted planning permission for new housing developments if they agree to build a set number of social homes on the site.

But the Government is thought to be considering scrapping of these 'section 106' agreements – paving the way for private developers to end their commitments to building affordable homes on new private developments.

This could lead to around 19,000 social homes being axed as a result this year.

And the Government's re-designation of gardens from brownfield sites to greenfield – in a bid to end so called garden grabbing – could see a further 10,000 new homes hit.

Although the measure will save some gardens from development, it will also make it far more difficult to build on sites, ideal for housing such as in the grounds of sprawling, unused Victorian properties.

The final and potentially lethal blow to the affordable house-building sector is the Government’s decision to scrap regional house building targets, which could see house building grind to a halt. Ministers have failed to implement an alternative system, giving councils the freedom to reject all new social housing developments if they wish.

Last year 2009/10, housing associations built around 50,000 affordable homes – the highest level for a decade, despite the tough economic climate. Housing associations typically fund 60% of the cost of a new affordable home, with the remainder being met by government grants. This ensures new homes are built at the lowest cost to the taxpayer.

(CD)