Healey pledges £1bn for social housing as housebuilding slump threatens Labour target

John Healey has promised over £1 billion in extra funding for social and affordable housing as recent statistics reveal a significant decline in housebuilding, casting doubt on the government's objective of constructing 1.5 million homes. This funding, set to be announced in Wednesday's Budget, will surpass the £40 billion committed to the government's ten-year social and affordable housing initiative.

The funding will also provide new borrowing powers for local councils and regional mayors. However, data from the National House Building Council (NHBC), published on Monday, indicates a 13% decrease in new home registrations during the third quarter of 2026 compared to the same period in the previous year. The number of registrations fell to 26,231, down from 30,279 in the third quarter of 2025, as affordability issues and rising construction costs continue to impact the market.

Affordable and rental sector registrations dropped even more sharply, declining by 23% to 7,872 registrations, while private sector registrations decreased by 8%. NHBC's chief strategy officer, Daniel Pearce, emphasized that the industry has reached a critical juncture, with demand remaining fragile, affordability stretched, and the pipeline of new homes shrinking.

Without intervention to boost demand and address delivery barriers, increasing housing supply will remain a significant challenge. These figures intensify concerns about Labour's ability to meet its promise of constructing 1.5 million homes. Angela Rayner, representing Labour, acknowledged on Sunday that the target was ambitious and attributed the difficulty to rising construction costs due to the conflict in the Middle East.

She stressed the need to support the market and help deliver the homes required. The Treasury highlighted that the additional housing funding would assist councils in replacing sold homes and expand affordable property availability. The government will also extend preferential borrowing rates to facilitate councils in financing new housing projects.

Regional leaders and mayors will receive an initial £285 million in funding in the upcoming year, along with plans for a £1.5 billion borrowing facility from 2028 to support housing, transport, and regeneration initiatives. A subsequent £150 million will aid strategic authorities in managing more extensive investment projects. The Budget is also anticipated to detail the government's Your First Home scheme, enabling eligible first-time buyers to purchase new-build properties with a 2.5% deposit, backed by a government equity loan worth 20% of the property's value.

However, NHBC cautioned that additional demand-side support must be paired with planning reforms and greater regulatory certainty to motivate developers to increase construction rates.